Editorial: Will sales from the Chinese cotton stockpile drive down world prices?

The global textile industry faces a period of uncertainty as China starts to auction off its 11 mn ton stockpile of cotton fibre. The stockpile equates to about 46% of the cotton fibre expected to be consumed globally in the 2015/16 season and about 151% of the amount expected to be consumed in China alone. Despite the magnitude of the stockpile, its presence has not yet had a dramatic effect on global prices as it has not been available to the world market. But this could change once the Chinese authorities start to sell it off. The impact on global prices will depend on the speed with which it is auctioned off and the prices obtained. Much of the fibre is of low quality and will therefore be hard to sell at market prices. Moreover, the quality of the stockpile is deteriorating over time. The stockpile has built up because of the Chinese government's former policy of buying cotton fibre to keep the price high and encourage farmers to plant the crop. The government had hoped to profit from buying cotton at low prices when the market was weak and selling it at higher prices when it was stronger. But when it auctioned cotton during July-August 2015 it lost an estimated 26% on its original investment. Furthermore, it wanted to sell 1 mn tons of cotton but sold only 63,413 tons because the asking price was too high. Since then global prices have dropped. In the forthcoming auctions, the government plans to sell at least 2 mn tons. One factor on its side is that the cotton crop is likely to fall short of demand in the 2015/16 season, and it may attempt to sell more than 2 mn tons if there is a shortfall. In this report, Robin Anson discusses the possible effects of the auctions on the global cotton market and draws comparisons between the current situation in the cotton market with the Australian wool crisis of the 1970s-1990s.

To read the full report buy issue 179 now	Subscribe

Six times a year, Textile Outlook International provides up to 200 pages of expert comment and analysis. A subscription provides an overview of the global fibre, textile and apparel industries. It is essential reading for senior executives in the fibre, textile and apparel industries ? and for anyone who is not involved in the industry, but needs to quickly gain an understanding of the key issues.
Reports in Textile Outlook International include:
	country profiles ? providing a comprehensive guide to the textile and clothing industries in a range of countries and regions. The reports include an economic and political profile together with a comprehensive overview of the main issues, plus an outlook for the future.
	company profiles ? giving you the opportunity to learn from strategies employed by others. Companies profiled recently include retailers, manufacturers, innovators and sourcing companies involved in textiles and apparel as well as smaller companies which illustrate the opportunities for firms which are interested in selected sourcing locations.
	trends in world textile and apparel trade and production ? taking into account current issues facing the industry ? such as global fibre prices; competition from China and other low cost countries; the elimination of quotas and imposition of selective new ones; relocation of production operations; the impact of economic factors affecting trade; international trade agreements; trade promotion agreements (TPAs); and much more.
	trends in EU and US imports of textiles and clothing ? providing comprehensive statistical data and analysis of the top ten supplying countries to the EU and US markets. These reports are updated each year and contain value and volume data as well as average prices and analyses of trends for up to 15 product categories.
	innovations, technological developments, business development opportunities, individual sector analysis and political implications which affect players in the global fibre, textile and apparel industries. Some of the topics which have been covered in recent reports include: new innovations in the textile and clothing industry, such as environmentally friendly textiles, plant based fibres, and developments in textile colorants; innovations in textile machinery; and overviews of the European swimwear, hosiery and lingerie markets.
So whether you are involved in fibres, textiles or clothing ? in manufacturing, spinning, weaving, knitting, sewing, import/export, retailing ? or if you are in education or consultancy or investment or finance, a subscription to Textile Outlook International will tell you what you need to know about the key trends in the industry.
Textile Outlook International is available on subscription ? either in printed format only, or in printed and electronic format. If you choose the printed only option, you will receive 6 printed publications a year, containing a total of 30 reports plus editorials written by Robin Anson, our editorial director and in-house industry expert.
Electronic supplement If you choose the printed and electronic option, you will receive an extra service. You will still receive each issue in printed format, delivered to you by traditional post. In addition, you will be able to download PDF files containing the same information ? but the PDF files will be available immediately on publication, so you don?t have to wait for the printing and mailing. You also have all the benefits of electronic files: instant access even when you are away from the office; convenient storage in your PC or laptop; portability; electronic search facility; and copy/paste facility.