The sales of cotton from China’s state reserve were strong during May although the quantity weakened during the first week of June. Sales started on May 6 with a target of selling 1.0 million tons (4.6 million bales) by September. As of June 6, about 220,000 tons had been sold representing about 85 percent of the total offered for sale during the period. The state reserve’s total beginning volume is estimated at 2.7 million tons. The mechanism for sales is similar to that used in the previous 2 years: about 10,000 tons in lots are listed daily, ranging between 50 and 400 tons.
The lots are auctioned with a reserve price based on the weekly average of foreign cotton (A-Index) and domestic prices adjusted for quality, the Foreign Agricultural Service of the US department of agriculture (USDA) said in its June 2019 report ‘Cotton: World Markets and Trade’. Of the estimated 220,000 tons of cotton sold during the first month of the sale, the majority was sold directly to spinners and the rest to traders with roughly half of the sales being Xinjiang cotton. The sales rate in May was over 90 per cent but dropped sharply in the first week of June as the base price increased slightly. “It is expected that nearly all of the available cotton will be sold by the end of the sales period,” the USDA report said.
