China is planning to release cotton from state stockpiles to boost supplies, according to people familiar with the matter, underscoring concerns that the crop, to be harvested later in 2023, has been hit by poor weather.

China may gather a smaller crop in the new season after a severe cold spell delayed sowing and hurt yields in Xinjiang, the top-producing region. The government could announce a plan to sell cotton from reserves as soon as the week of June 27, with volumes likely to be as much as a few hundred thousand tons, said the people, who asked not to be identified as the information is private.

China is the world’s biggest textile producer and one of the largest importers of cotton. While it could boost purchases of foreign cotton to meet any production shortfalls, that may be countered by a weak outlook for demand as exporters of textile products grapple with a slowing global economy.

China imported just 490,000 tons of cotton during the first five months of 2023, half the amount compared to the same period in 2022. That has contributed to the weakness in benchmark U.S. cotton prices, which are near a three-month low.

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China’s top economic planner, the National Development and Reform Commission, didn’t respond to a faxed request for comment.

The crop in Xinjiang, which accounts for about 90% of China’s cotton, is currently at risk due to high temperatures and hailstorms, just a few months after cold weather disrupted sowing. Mysteel, a commodity consultancy in China, forecasts a 10% drop in cotton acreage as farmers have also switched to growing grains under a nationwide drive to bolster food security.

“It’s a recognized fact in the market that Xinjiang’s cotton inventory is tight,” broker SHZQ Futures said. “Prices are likely to stay volatile in the short term.”

China manages its cotton supply through state reserves. It’s hard to ascertain how the sale will influence Chinese imports since the move could either curb demand for overseas supplies or increase the need to replenish stockpiles. The government limits imports through a tariff-rate quota system.