At 17,303 yuan per ton, the floor price for the eighth week of 2026 central reserve cotton sales (Sep 7-11) may not look remarkable, but against the backdrop of three consecutive weekly declines, the stabilization matters more than the number itself. For textile mills, it signals that the strategy of 'wait and see, then push for lower prices' may need a rethink.
Supply-Demand Tug-of-War Behind the Stabilization
Since reserve sales began on July 20, the floor price has followed a clear pattern of rising first, then falling, and now leveling off. The eighth-week price matched the previous week, ending a downward streak that started in mid-August. This shift is not accidental but reflects a complex interplay of bullish and bearish factors in the domestic cotton market.
On one hand, the traditional 'golden September and silver October' order season is approaching, creating rigid restocking demand from some mills, which lends support to cotton prices. On the other hand, expectations of the new crop are clear, with purchase price forecasts for hand-picked cotton in northern Xinjiang and machine-picked cotton in southern Xinjiang generally lower than last year, capping upside potential. The stabilized floor price precisely mirrors the policy balance between ensuring supply and stabilizing prices.
For textile enterprises, a non-declining floor price means the lower limit of procurement costs is temporarily locked. However, it is crucial to recognize that the floor price is only a 'base price.' Actual transaction prices will fluctuate based on cotton inspection results and the quality differential table published by the China Cotton Association. This implies that cotton purchased on the same day may have actual costs differing by hundreds of yuan per ton due to variations in grade, length, breaking strength, and other indicators.
Industrial Transmission: From Auction to Inventory Strategy
The pace of reserve cotton releases directly influences domestic spot price expectations. After the eighth-week floor price stabilized, the Zhengzhou Cotton Futures contract oscillated around 17,300 yuan per ton, and the spot market saw reduced wait-and-see sentiment. Some traders began testing price increases, but trading volumes did not expand significantly—downstream weaving mills are still digesting earlier inventories.
A noteworthy detail is that the September 2026 Domestic Cotton Quality Differential Table has been released. Adjustments to quality differentials before the new crop arrives often hint at the strictness of purchasing standards for the new season. If differentials narrow, the premium for high-grade cotton shrinks, forcing mills spinning fine yarns to recalculate their blending costs.
From a regional perspective, spinning mills in major cotton-consuming provinces such as Shandong, Henan, and Jiangsu have increased inquiry frequency recently, but actual participation in auctions remains lower than the same period last year. The reason is that some enterprises worry about even lower prices after the new crop arrives, preferring to buy as needed rather than tie up capital in inventories. This mentality is particularly common among small and medium-sized weaving mills.
But the risk lies precisely here. If the new crop is delayed by weather or logistics issues while 'golden September and silver October' orders materialize on schedule, short-term supply-demand mismatches could trigger a rapid spot price rebound. By then, enterprises that held back would be forced to accept higher procurement costs.