Reserve Cotton Auctions Keep Selling Out, Shifting Downstream Restocking Logic

Reserve cotton auctions have entered their ninth week with unabated heat. On September 3, all 8,025.97 tons listed were sold, maintaining a 100% sell-through rate for consecutive sessions. The average price stood at 17,518 yuan/ton, down only 14.74 yuan from the previous day, indicating strong price support. Notably, imported cotton averaged a premium of 900.61 yuan/ton, reflecting intensifying competition for high-grade fiber.

Auction Structure and Price Signals

As of September 3, cumulative listed and traded volumes both reached 272,717.99 tons, with a 100% transaction rate. The cumulative average price was 17,297 yuan/ton, with imported cotton averaging 17,414.78 yuan and Xinjiang cotton 16,996.85 yuan, a spread of about 418 yuan that has narrowed recently. Imported cotton's average premium of 1,471.87 yuan significantly exceeded Xinjiang cotton's 1,146.90 yuan, indicating mills value the quality premium of imports while Xinjiang cotton's cost-effectiveness is being reassessed.

The daily price range spanned from a high of 18,220 yuan to a low of 16,620 yuan, a 1,600-yuan gap reflecting batch quality differences. The cumulative high of 19,370 yuan occurred earlier, with recent peaks gradually retreating, suggesting limited acceptance of high-priced cotton and a preference for locking in supplies within reasonable ranges.

Industry Transmission and Procurement Logic Shifts

The 100% transaction rate stems from rigid restocking demand combined with the price advantage of reserve cotton. Currently, Zhengzhou cotton futures hover around 17,500 yuan/ton, roughly in line with auction prices, but reserves offer quality consistency and delivery convenience, making them attractive. However, the premium divergence between imported and Xinjiang cotton reveals structural differences among mills—those producing high-count yarns rely more on imports, while standard products turn to domestic fiber.

For upstream ginners, active reserve sales imply the pre-harvest supply gap is being filled by policy stocks, potentially delaying new-crop purchases. The cumulative average price of 17,297 yuan sits below spot levels, exerting downward pressure. If mills expect new-crop prices to open high, current stockpiling is prudent; but if a bumper harvest occurs, high transaction rates could exhaust future demand, raising downside risks.

Practical Recommendations

For Buyers - Monitor the premium gap between imported and Xinjiang cotton; if it widens, prioritize imported lots for high-grade needs; if it narrows, Xinjiang cotton becomes more cost-effective. - Use the reserve average price as a benchmark when negotiating with traders, aiming for prices close to the 3128B equivalent to avoid overpaying. - Develop phased bidding plans based on yarn types, avoiding concentrated bidding at peaks, especially near cumulative highs.

For Trading Companies - A 100% transaction rate signals tight domestic supply, supporting international prices; factor in rising raw material costs when quoting, and consider price adjustment clauses. - Track remaining reserve volumes and new-crop arrival; if releases continue through late September and imports increase, supply may ease, allowing flexible export pricing. - Watch exchange rates and import premium levels; if premiums stay high, consider substituting domestic cotton to protect margins from cost volatility.