The first week of reserve cotton sales achieved a 100% transaction rate, a figure that reveals not only the urgency of restocking but also the industry's search for a new equilibrium in price negotiations.
Full Analysis of First-Week Data
China National Cotton Reserves Corporation data shows that from July 20 to 24, a total of 40,109.853 tons of reserve cotton were listed, all sold, with an average price of 17,404.58 yuan/ton. The price converted to standard grade 3128B was 18,003.56 yuan/ton, with an average premium of 1,712.56 yuan/ton. The highest transaction price reached 19,000 yuan/ton, the lowest 16,660 yuan/ton.
Notably, the price gap between Xinjiang cotton and imported cotton was significant: Xinjiang cotton averaged 16,993.61 yuan/ton with a premium of 1,385.78 yuan/ton; imported cotton averaged 17,515.72 yuan/ton with a premium of 1,800.93 yuan/ton. The premium for imported cotton was nearly 30% higher, indicating spinners' preference for high-quality fiber, aligning with rising demand for high-count yarn and value-added products.
Market Impact of Reserve Sales
The high transaction rate reflects changes in spinners' inventory strategies. Previously, spot market price expectations were rising, and traders were hoarding. After sales started, spinners shifted focus to bidding, while traders accelerated inventory turnover, increasing discounts. This role shift effectively supplemented market supply and cooled spot price pressures.
However, Zhengzhou cotton futures hovered around 16,000 yuan/ton, indicating cautious sentiment. The market remains in a tight balance—the sales ease short-term pressure but don't change overall supply-demand dynamics. For spinners, raw material costs remain uncertain, especially with the persistent price gap between imported and Xinjiang cotton, affecting blending decisions and profit margins.
Practical Impact on Industry Chain
For cotton mills, first-week data offers key signals: first, quality differences are clear, with imported cotton commanding higher premiums; second, premiums are manageable, suggesting rational restocking rather than panic buying.
For downstream fabric and apparel buyers, stable cotton prices help secure order expectations. However, if subsequent sales volumes are insufficient or orders surge, prices may rise again. Buyers are advised to lock in some forward costs during this window.
Outlook and Risk Points
The 100% transaction rate is likely to continue, but premiums may narrow as supply increases. Key variables include: weather impact on new crop yields, sustainability of downstream textile export orders, and the combined effect of imported cotton arrivals and reserve sales.
For traders, short-term speculation space narrows, but basis trading opportunities merit attention—if futures-spot spreads widen, hedging to lock profits is viable. For spinners, the sales period is a window to optimize inventory structure; phased bidding is recommended to avoid chasing highs.