A 99.25% clearance rate is the headline number from China's 2026 central reserve cotton sale. According to public data from China Reserve Cotton Management Co., 412,148.7311 tonnes were offered between July 20 and September 29, with 409,041.7651 tonnes actually sold. That is not simply a story of strong demand. It reflects mills' rigid restocking needs before new-crop cotton arrived. For buyers, the more important signal is the average transaction price of 17,191.30 yuan per tonne, which now anchors the market's price centre, and whether that level can hold once new cotton floods in.
Timing and Price Trajectory
The launch date was carefully chosen. Before new-crop cotton was concentrated in the market, domestic supply was tight, demand was improving at the margin, and international cotton prices were rising. Zhengzhou cotton futures climbed from around 14,500 yuan per tonne at the start of the year to a peak near 17,350 yuan, a gain of nearly 20%. By releasing reserve cotton on July 20, authorities injected liquidity during the supply gap and secured raw material for the "Golden September and Silver October" peak season.
For the first eight weeks, the auction clearance rate held at 100%, showing mills were genuinely short of cotton and saw reserve supplies as the most cost-effective channel. But in weeks eight and nine, both the clearance rate and average price weakened, with Zhengzhou cotton falling to around 15,750 yuan. This turn was not a sudden disappearance of demand. Three factors converged: cumulative reserve sales kept adding to circulating supply, the Xinjiang new-crop window was approaching, and peak-season consumption fell short of expectations, weakening mill confidence.
Weekly data for September 28-29 showed 10,456.986 tonnes offered and fully sold, with an average price of 17,393.30 yuan per tonne, a standard-grade 3128 equivalent of 18,064.51 yuan, an average premium of 1,723.51 yuan, a top price of 18,010 yuan and a low of 16,880 yuan. All were imported cotton. This suggests imported cotton remained acceptable near the end of the sale, but premiums had narrowed notably.
Industrial Transmission and Price Expectations
The structural features of this sale deserve attention. Of total sales, Xinjiang cotton accounted for 76,934.4340 tonnes offered and sold, while imported cotton accounted for 335,214.2971 tonnes offered and 332,107.3311 tonnes sold. Imported cotton made up over 80% of the total, meaning the reserve sale effectively regulated imported cotton inventories and narrowed the domestic-international price gap. Xinjiang cotton averaged 16,997.17 yuan per tonne with an average premium of 1,145.45 yuan; imported cotton averaged 17,236.27 yuan with a premium of 1,165.93 yuan. The spread between them was less than 250 yuan, indicating highly converged prices.
For upstream ginners, the end of reserve sales means policy support is withdrawn, and new-crop purchase prices will be driven more by market supply and demand. If Xinjiang cotton arrives in a concentrated wave while downstream yarn orders fail to keep pace, seed cotton purchase prices could face temporary pressure. For midstream spinners, raw material locked in through earlier auctions at low prices will become a cost advantage after new cotton arrives, but if cotton prices keep falling, that inventory could face impairment pressure.
For downstream fabric and garment exporters, falling cotton prices should theoretically lower raw material costs. But the risk is that price declines often deepen order观望, or wait-and-see sentiment. If buyers expect cotton to fall further, they may delay orders, causing mills to accumulate finished goods. This "buy on the way up, not on the way down" psychology is especially pronounced in years when the peak season underperforms.