Reserve cotton sales have entered their final sprint, and the transaction data is sending strong market signals. By September 8, cumulative listings and transactions both reached 296,735 tons, with the clearance rate maintaining 100% and the average price stabilizing at 17,304 yuan/ton. This 'full clearance' phenomenon is not accidental; it results from the combined effect of rigid restocking demand from downstream textile mills and a structural shortage of high-grade resources.
Data Behind the Transactions
On September 8, the planned listing of 8,009.78 tons was fully cleared at an average price of 17,339.91 yuan/ton, down slightly by 62.64 yuan/ton from the previous day, but the price converted to 3128B standard still reached 17,939.98 yuan/ton. Notably, the gap between the highest (18,320 yuan/ton) and lowest (16,810 yuan/ton) transaction prices widened to 1,510 yuan/ton, indicating growing divergence in market recognition of different cotton grades.
Cumulative data show that imported cotton averaged 17,411.46 yuan/ton (18,064.14 yuan/ton converted to 3128B) with an average premium of 1,391.20 yuan/ton, while Xinjiang cotton averaged 16,996.85 yuan/ton (17,627.77 yuan/ton converted) with a premium of 1,146.90 yuan/ton. The price gap has expanded to approximately 436 yuan/ton, with imported cotton maintaining a clear premium, reflecting textile mills' strong preference for high-grade, high-consistency foreign cotton.
This structural divergence has direct implications for procurement decisions. For enterprises producing medium-to-high-end yarns, imported cotton remains cost-effective despite higher premiums, as its contribution to yarn quality and stability outweighs the price difference. Conversely, cost-sensitive enterprises with lower product requirements may find Xinjiang cotton more attractive in terms of value.
Industry Impact: Restocking and Price Expectations
The continuous full clearance rate implies that textile mills' raw material inventories are at relatively low levels, and restocking demand is strong. As the traditional peak season approaches, recovering orders and earlier destocking have prompted enterprises to actively secure supplies. Reserve cotton, as a policy tool, provides stable supply at relatively reasonable prices, serving as an important basis for building safety stocks.
However, high clearance rates coupled with high premiums also hint at market concerns about future supply. New cotton has yet to hit the market, and import quotas are limited; in the short term, reserve cotton is almost the main channel to fill the gap. This 'grab-buying' situation supports cotton prices temporarily but may also exhaust upward momentum. Once new cotton is listed in volume or macroeconomic demand falls short, prices could face correction risks.
For upstream ginners, the high clearance rate and imported cotton premiums provide a reference anchor for new-season seed cotton pricing. If the spot-futures spread remains high, opening prices for seed cotton may start high, pushing up processing costs and creating price transmission along the chain. Downstream fabric mills and garment enterprises need to monitor the impact of rising raw material costs on margins and adjust procurement rhythms and product mixes accordingly.
Practical Recommendations
For Procurement Teams - Monitor the daily spread between transaction price and 3128B converted price; if it narrows to within 500 yuan/ton, consider increasing high-grade cotton purchases appropriately. - Utilize reserve cotton auction rules, set reasonable premium caps, and avoid chasing high prices; flexibly switch between imported and Xinjiang cotton based on their price gap dynamics.
For Foreign Trade Enterprises - When locking in forward orders, use the reserve cotton average transaction price as a cost benchmark and reserve a buffer of 200-300 yuan/ton for price fluctuations. - Watch imported cotton premium trends; if premiums continue to expand, consider negotiating long-term agreements with overseas suppliers early to avoid higher procurement costs later.
Reserve cotton sales are nearing their end, but market gamesmanship is just beginning. Whether seizing the window for restocking or adjusting product structures to cope with cost pressures, decisions should be grounded in calm analysis of supply-demand data and price spread structures. The Textile Circle will continue to track rotation dynamics to provide timely, objective reference for the industry.