China said on Thursday it will start to sell down its massive cotton stockpile this year, in a move likely to depress demand as the country’s mills hold off buying in anticipation of sales of discounted fibre.
Market rumours have swirled for weeks that Beijing was preparing to release some of its holdings, which have swelled to around 10 million tonnes - more than 40 per cent of world stocks - under a now-abandoned state buying scheme to support farmers.
China, the world’s top consumer of cotton, would issue detailed sale plans in the next 10 days, Yin Jian, an official at state planner the National Development and Reform Commission (NDRC), told an industry conference.
Yin added to China’s repeated indications that it does not want to pressure the market, saying the conditions for the stockpile release were stable prices and a stable market.
"We will not pressure market prices," he told Reuters on the conference sidelines.
However, industry participants have said old crop cotton from reserves would have to be heavily discounted to attract buyers.