Reserve Cotton Sales Stay Fully Subscribed, Reshaping Pricing Logic in the Cotton Textile Chain

On September 8, reserve cotton sales again closed with a 100% transaction rate, with 8,009.78 tons sold at an average price of 17,339.91 yuan/ton, down 62.64 yuan from the prior session. Behind these seemingly flat numbers lies a subtle psychological game between supply and demand in the textile raw material market—mills are determined to restock, yet their bids have turned cautious.

Signals Behind the Transaction Data

The spread between the highest and lowest accepted prices narrowed to 1,510 yuan/ton, indicating more rational bidding. Cumulatively through September 8, reserve cotton sales reached 296,734.90 tons, with an average price of 17,304.26 yuan/ton and an average premium of 1,328.04 yuan/ton. Imported cotton carried a higher premium (1,391.20 yuan/ton) than Xinjiang cotton (1,146.90 yuan/ton), reflecting a structural preference for higher-grade foreign cotton, which is reshaping the pricing benchmark for domestic cotton.

Notably, the daily average price was about 600 yuan/ton below the 3128B index, indicating reserve cotton remains cost-effective. For small and medium mills, reserve cotton is a ballast for cost stability; large enterprises, meanwhile, monitor the import-Xinjiang spread to adjust their cotton blending mix.

Market Sentiment and Chain Transmission

The 100% transaction rate has persisted for days, but premiums have not expanded—they are shrinking. This combination suggests downstream yarn orders have not surged; purchases are largely need-driven. If orders stay flat, reserve cotton enthusiasm may cool, pulling prices toward the spot market.

Along the chain, high cotton prices are squeezing spinners' margins. 32-count carded yarn prices are struggling to follow cotton upward, while fabric mills have turned cautious, creating a gradient pressure of "cotton up, yarn stable, fabric down." In this structure, mills with cotton inventory advantages gain greater pricing flexibility in quoting.

Outlook and Operational Strategy

In the short term, the pace of reserve releases remains the biggest variable. With daily offerings around 8,000 tons, cumulative sales could exceed 400,000 tons by late September if the pace holds, gradually increasing supply pressure. Yet, with the new crop not yet available, dependence on reserves will persist.

The medium-term logic hinges on new-crop opening prices and downstream consumption recovery. If the new crop opens high but falls, reserve prices will lose support; conversely, if consumption picks up and destocks yarn, cotton prices may stay firm. Enterprises are advised to track daily release volumes and premium changes as a guide for purchasing rhythm.

For Buyers - Purchase in batches based on need; avoid chasing highs; increase buying when premiums narrow. - Prioritize imported cotton, which offers better value than Xinjiang cotton based on 3128B-equivalent prices and premiums. - When signing forward orders with spinners, use reserve release volumes as a reference for price adjustments.

For Foreign Trade Companies - When quoting export orders, use the spread between reserve cotton average prices and the 3128B index to lock in raw material costs and hedge against price volatility. - Monitor the import-Xinjiang spread to optimize cotton blending for different market quality requirements. - Leverage the high transaction rate signal to negotiate flexible pricing mechanisms with clients, sharing raw material cost pressures.