At the end of the 2010 crop year, China's ending stocks (cotton still on hand from that and previous crop years) had reached a very low level of only 10.6 million bales — 23 percent or roughly three months of annual use. Beginning in the 2011 crop year, China began to significantly increase its imports of cotton in an apparently conscious effort to build stocks back to a more comfortable level.A certain level of stocks is needed and desired. Stocks provide supply to the pipeline, transitioning from "old crop" to "new crop." Stocks also provide a buffer or cushion in case the next crop is reduced or shorter than expected for any reason. If stocks are considered high, this generally reduces pressure on both old crop and new crop supplies, and prices decline. If stocks are considered low, this generally puts pressure on old crop and new crop supply, and prices increase.
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