Reserve Cotton Floor Price Keeps Falling, Opening a Window for Spinners to Restock

17,303 yuan per ton—that is the floor price for central reserve cotton sales in the 8th week of 2026 (September 7-11), based on grade 3128B. The number itself is not shocking, but placed on a multi-week downward curve, it sends a clear signal: the reserve cotton floor price is loosening, and spinners may get a temporary window to ease raw material cost pressure.

Background

The floor price is not arbitrarily set. According to official announcements, the weekly floor price is based on standard grade 3128B, with adjustments calculated using the quality differential table published by the China Cotton Association. The 8th-week floor price of 17,303 yuan per ton indicates that the state intends to keep reserve cotton competitive after assessing current market supply and demand.

Timeline-wise, the 2026 reserve cotton sales started on July 20, and by early September, the program entered its 8th week. This period coincides with the prelude to the traditional peak season of 'Golden September and Silver October,' when downstream orders typically begin to recover. The lower floor price can be interpreted as a concession to cotton-using enterprises, encouraging them to restock before the peak season.

However, the price cut also reflects that the market is not short of cotton. Domestic production expectations in Xinjiang remain high, imported cotton arrivals stay elevated, and continuous reserve releases have kept supply ample. The price decline is not solely policy-driven; it is a natural mapping of supply-demand fundamentals onto prices.

Industry Impact

For spinners, what does the 17,303 yuan floor price mean? A quick calculation: if purchased at the standard grade, adding quality premiums and transportation costs, the actual mill-delivered price may still hover around 18,000 yuan per ton. Compared with earlier highs, this saves a few hundred yuan per ton—no small amount for yarn mills operating on razor-thin margins.

But there is an easily overlooked transmission logic: a lower reserve floor price directly caps the ceiling for domestic spot prices. If Xinjiang cotton or local cotton quotes are significantly higher than reserve cotton, buyers will shift to reserve auctions, forcing spot prices to follow downward. For traders still holding high-priced inventory, this adjustment could expand paper losses and increase destocking pressure.

For downstream fabric mills and garment manufacturers, yarn costs will not immediately follow raw material declines. There is usually a 2-4 week transmission delay due to spinning margins and inventory cycles. Buyers who lock prices now may secure relatively low yarn costs before the peak season, but they also bear the risk of further price declines.

It is important to note that the cost advantage of reserve cotton is not absolute. Auction quantities are limited, and quality grades vary. High-count yarn producers requiring long-staple or high-grade fine cotton may not fully meet their needs through reserve cotton. Imported cotton (e.g., US, Brazilian) price trends and exchange rate fluctuations remain key variables affecting actual cotton costs.

Practical Recommendations

For Procurement Managers - Monitor the weekly reserve cotton floor price announcements every Thursday. If the floor price remains stable or falls for two consecutive weeks, consider building positions in batches; if it rebounds, pause chasing highs. - Carefully check batch quality indicators before bidding, and use the quality differential table to estimate actual mill-delivered costs—do not focus solely on the floor price while ignoring quality discounts. - Compare reserve cotton with imported and Xinjiang cotton quotes, and prioritize sources with the lowest comprehensive cost after premiums/discounts; do not rely solely on reserve cotton.

For Foreign Trade Companies - During raw material price downturns, export order quotes can be moderately reduced to enhance competitiveness, but include clauses allowing price renegotiation if raw material prices fluctuate beyond a certain range to hedge against rebound risks. - Closely track international cotton prices (ICE futures) and RMB exchange rates. If imported cotton converted to RMB is cheaper than reserve cotton, consider using imported cotton for cost hedging. - Use the current window to lock a batch of low-cost yarn with long-term partner mills to secure profit margins for peak-season export orders, but limit locked volume to 70% of order quantity.