A notable signal has emerged in China's cotton textile value chain: the floor price for the 8th week (September 7-11) of central reserve cotton sales is set at 17,303 yuan per ton (for grade 3128B), down from the previous week. This level not only directly affects the procurement cost for textile mills participating in auctions but may also serve as a reference anchor for cotton price trends in the second half of the year. For cotton spinning enterprises, where raw materials account for over 60% of costs, what does this price cut mean, and how should procurement strategies adjust?
Event Background
According to the 2026 central reserve cotton sales announcement, reserve cotton has been released gradually since July 20, with a weekly floor price update. The 8th week's price drop aligns with recent loose supply-demand dynamics in the domestic spot market and the approaching new cotton harvest. Historically, the floor price tends to track spot price fluctuations, and its adjustment direction often signals policy views on market supply-demand balance. This cut may be a direct response to increased short-term supply pressure.
Notably, the floor price is not static. For each daily batch, the actual floor price is calculated based on the standard grade floor price, adjusted by quality differentials from cotton inspection results and the quality differential table published by the China Cotton Association. This means that even with the same standard grade floor price, different batches may see divergent transaction prices due to variations in length, breaking strength, and micronaire. For buyers, the quality differential table is a "pricing dictionary," and understanding it is essential to avoid overpaying for cotton that does not meet quality expectations.
Industry Impact
The reduction in the reserve floor price directly lowers raw material costs for textile mills. At 17,303 yuan per ton, auction-winning mills will secure cotton below current spot prices, offering breathing room for small and medium-sized spinning mills with thin margins. However, the flip side is that lower costs may signal bearish market sentiment. If downstream orders do not recover, cheaper cotton could drag yarn prices down, creating a chain reaction of falling raw material and product prices.
From a domestic-international price spread perspective, international cotton prices remain low due to bumper crop expectations in major producing countries. Despite the reserve floor price providing some support to domestic prices, the spread remains wide. This means export-oriented enterprises using imported cotton still enjoy a cost advantage, while purely domestic-focused mills must balance inventory and procurement more carefully. For factories relying on reserve cotton, this window of lower prices may not last long—once the new crop hits the market, supply will loosen further, and the price advantage of reserve cotton may narrow.