A full clearance of 8,016.649 tonnes of reserve cotton at a 100% sell-off ratio would normally be a headline in itself. Yet the average transaction price slipped 80.96 yuan per tonne from the previous session to 16,997.87 yuan, equivalent to 17,719.99 yuan for grade 3128B. This divergence between volume and price suggests the market is not experiencing a broad demand recovery. Rather, textile mills are racing to lock in cost-effective resources before new crop cotton floods the market, and that window is narrowing.
What the Transaction Structure Reveals
Cumulative data through September 14 shows 328,771.0017 tonnes offered and 328,511.7267 tonnes sold, a 99.92% clearance rate. The cumulative average price stood at 17,294.99 yuan per tonne, or 17,944.30 yuan for grade 3128B, with an average premium of 1,262.33 yuan. These figures indicate the reserve cotton rotation has essentially met its planned release target. Remaining available resources are limited, and the downward pressure on spot prices will gradually ease.
The structural split deserves closer attention. Imported cotton averaged 17,386.06 yuan per tonne cumulatively, equivalent to 18,040.84 yuan for 3128B, with an average premium of 1,298.07 yuan. Xinjiang cotton averaged 16,997.17 yuan, or 17,628.62 yuan for 3128B, with an average premium of 1,145.45 yuan. Imported cotton still commands a premium of about 412 yuan per tonne over Xinjiang cotton on a 3128B basis, yet attracts larger bidding premiums. This suggests some mills have a rigid preference for high-grade, consistent imported cotton and are willing to pay up.
On the day, imported cotton averaged 16,997.87 yuan per tonne, or 17,719.99 yuan for 3128B, with an average premium of 705.99 yuan. That is notably narrower than the cumulative average premium. The compression in bidding premiums reflects cooling competition in the auction room. Mills are bidding more rationally, and some have likely already secured enough raw material inventory for the near term.
Transmission Through the Supply Chain
For upstream ginners and traders, the near-total depletion of reserve cotton means new crop cotton will face more direct pricing competition once ginning begins. The current 3128B equivalent range of 17,600 to 18,000 yuan per tonne is likely to serve as an anchor for early new crop purchase prices. If opening prices exceed this range, mill buying interest will be dampened, prompting a wait-and-see approach or expectations of further reserve sales.
For midstream spinners, cost-side uncertainty is rising. With reserve cotton resources nearly exhausted, mills will rely more on new crop and import quota supplies, and blending costs could rise structurally. Mills producing medium-to-high count yarns have rigid demand for high-grade cotton. If new crop quality falls short of expectations, the premium for imported cotton could widen further, squeezing yarn margins.
For downstream fabric and garment exporters, a sharp cotton price swing is unlikely in the short term, but the mismatch between new crop arrival and downstream order recovery warrants vigilance. If new crop hits the market in volume while end-user demand remains soft, cotton prices could come under temporary pressure, favoring buyers who lock in costs. Conversely, if weather disrupts new crop quality, tight high-grade supply will push up cotton costs.