China's stockpiles of cotton create uncertainty for the market, the International Cotton Advisory Committee said Monday.
China started importing cotton in September to replenish its stocks, which were depleted last year when prices reached record highs. The purchase program ended Saturday.
The ICAC estimated Chinese imports at 4.2 million tons for the marketing year that ends July 31, up 61% from the previous year.
"While the purchases supported both domestic and international prices so far, sales from the reserve could reduce Chinese imports and depress world cotton prices in the future," said the ICAC, an association of governments of cotton-producing and consuming countries, in a news release.
Global stocks are expected to rise 41%, to 13.1 million tons of cotton in 2011-12, but two-thirds of that is locked up in China, the ICAC said. "If we subtract the expected amount in the China national reserve from global stocks, the remaining 'free' stocks may increase by only 5%, to 9.4 million tons this season," the association said.
Mike Stevens, an independent analyst, said China's import intentions have made it difficult to evaluate where the price of cotton should be.
"China has been an enormous buyer but mostly to rebuild their strategic stockpile and not for consumption," Stevens said.
Cotton for May delivery on the ICE Futures U.S. exchange ended down 0.4%, at 93.12 cents a pound Monday. Prices have fallen more than 50% from last year's highs.