September 30 is at least two weeks earlier than most traders had anticipated. In a notice dated September 25, China Reserve Cotton Management Co. confirmed that 2026 central reserve cotton sales will cease from September 30. This means that after the National Day holiday, domestic cotton supply will enter a transitional window where new crop gradually takes over but has not yet formed effective supply.
The Timing Logic Behind the Early Close
The early end of reserve cotton auctions is primarily driven by changes in the current cotton market situation. According to industry public data, auction volumes had remained at a relatively high level in the earlier period, with textile enterprises actively participating, especially medium and low-count yarn producers who recognized the cost-effectiveness of reserve cotton.
The direct result of halting sales is that the market will lose a stable low-priced cotton source in the short term. For spinning mills with generally low raw material inventories, this means procurement rhythms need to be readjusted. Why close early? From a policy logic perspective, new cotton is about to come to market on a large scale, and continued auctions could suppress new crop purchase prices, which would not be conducive to protecting cotton farmers' interests.
The transmission to the upstream supply chain is clear: new crop opening prices are expected to receive support. Purchasing entities in Xinjiang's main production areas will have one less competitive reference point from reserve cotton when setting opening prices, narrowing the room for bargaining.
Chain Reactions Across Industrial Belts
For textile clusters such as Keqiao, Shengze, and Nantong, the impact of the reserve sales halt is not evenly distributed. Enterprises producing pure cotton grey fabric and conventional yarns feel the most direct impact, as these products are highly sensitive to raw material costs and have limited substitution flexibility.
In contrast, enterprises with a higher proportion of chemical fiber blends are less affected. When cotton prices are expected to rise, the substitution economics of polyester staple fiber and viscose staple fiber become temporarily prominent, and some orders may shift from pure cotton to blends. This substitution effect is particularly evident in the yarn segment, where blended yarn inquiries tend to rebound first during cotton price upcycles.
From the downstream apparel and home textile perspective, raw material cost transmission lags. Most procurement contracts between brands and traders have locked in prices, making it difficult for short-term cotton fluctuations to immediately reflect in end quotes. However, if new crop purchase prices continue to climb, quotes for spring/summer 2027 orders will face upward pressure.
Price Expectations and the Game Landscape
After reserve cotton sales stop, market pricing power will shift more toward the new crop purchasing end. The game between ginners and cotton farmers, and between textile enterprises and ginners, will jointly determine the cotton price range over the next two months.
A variable worth watching is the supplementary role of imported cotton. If the price spread between domestic and international cotton widens enough to cover quota costs, import purchasing willingness will rise, thereby exerting upward pressure on domestic cotton prices. However, uncertainty around quota issuance pace and sliding-scale duty policies makes the timing of this substitution path difficult to predict precisely.
For textile enterprises, the core contradiction is not whether cotton prices will rise, but by how much and how fast, and whether their inventory strategies can match. Enterprises with raw material inventories below 15 days face passive restocking risks during the supply vacuum after sales stop; those with over 45 days of inventory are relatively comfortable and can even optimize costs after new cotton comes to market in volume.