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Nation may start sale of cotton reserves this week
Last Updated: 2013-11-14 09:43 | Global Times
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China is expected to start sales from its huge reserves of cotton as early as this week, trade sources said on Wednesday, increasing supply to the local market and pressuring international prices already steeply off August highs.

China holds about 10 million tons of cotton, more than half the world's stocks, after a three-year stockpiling program, and any move to sell down the State reserves is closely watched in the global market.

Worries that China will unleash some of its bulging stocks has contributed to a sharp drop in prices on ICE (IntercontinentalExchange), where spot prices dropped to their lowest since January at just over 75 cents per pound last week from near 94 cents in August.

The decline in prices was also fuelled by growing harvest pressure and speculators liquidating bullish positions.

"The warehouses have already started to pack the cotton," said a Chinese trade source. "It's very likely they'll start next week."

The exact timing for the sale is unclear, with traders giving dates ranging between Friday and Wednesday. It is also unclear how much cotton will be put up for sale, sources said.

China is widely expected to set its reserve sales price at 18,000 yuan ($3,000) per ton, about a 70 percent premium over the December cotton contract on ICE.

"The market consensus is that the sales will be priced at 18,000 yuan per ton," said another trade source.

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