A reserve cotton auction that has achieved a 100% clearance rate for consecutive trading days is no longer a simple market digestion exercise—it is a vote of confidence from downstream textile mills backed by real money. On July 27, China National Cotton Reserves Corporation planned to sell 8,022.306 metric tons of reserve cotton, and all lots were sold. The average transaction price was 17,275.33 yuan per ton, up 58.29 yuan from the previous session. Since the start of this round of reserve sales, a cumulative 48,132.159 metric tons have been listed and fully cleared, with zero failed auctions.
Auction Structure Reveals Variety Preferences
The divergence between imported cotton and Xinjiang cotton on the day deserves close attention. Imported cotton fetched an average price of 17,407.05 yuan per ton, equivalent to 18,072.01 yuan per ton on a 3128B basis, with an average premium of 1,897.01 yuan. Xinjiang cotton averaged 16,875.89 yuan per ton, or 17,557.32 yuan per ton on a 3128B basis, with an average premium of 1,382.32 yuan. The spread between the two reached 531 yuan per ton, with a premium gap exceeding 500 yuan.
This price gap cannot be fully explained by quality differences alone. Imported cotton's advantages in fiber length, strength, and consistency are being amplified by mills producing high-count and combed yarns. For buyers, paying a premium of nearly 1,900 yuan per ton still makes sense, indicating that the market's expectation of imported cotton scarcity is hardening—especially against a backdrop of volatile international cotton prices and uncertain shipping schedules, making reserve imported cotton a reliable supply option.
Rising Average Prices: How Strong Is Demand?
Looking at price trends, the average price on July 27 rose by 58.29 yuan per ton compared with July 24. While the increase was modest, the direction was clear. The highest transaction price reached 17,970 yuan per ton, and the lowest was 16,630 yuan per ton, a spread of 1,340 yuan—reflecting divergent assessments of quality and origin among bidders.
A key judgment is that the current 100% clearance rate is not merely a policy dividend but a reflection of genuine demand. Since the second quarter, the textile industry has seen a clear recovery in orders, particularly in home textiles and apparel exports, which has boosted operating rates in spinning and weaving. As mill inventories have been consumed, restocking demand has naturally transmitted upstream. Reserve cotton, offering relatively good value, has become the preferred supplementary source.
However, it should be noted that the average transaction price of 17,275 yuan per ton is no longer significantly discounted compared with the main Zhengzhou Cotton Futures contract. This means the price advantage of reserve cotton is narrowing. If transaction prices continue to rise, it may dampen participation enthusiasm among small and medium-sized mills.
Industry Transmission and Outlook
The sustained heat of reserve sales sends different signals to upstream ginners and downstream fabric mills. For ginners, high transaction prices provide a clear price anchor, helping to manage market expectations before the new crop arrives. For fabric mills, however, rising raw material costs are squeezing processing margins, especially for small and medium-sized enterprises focused on commodity yarns, which face the classic 'flour costing more than bread' pressure.
From a broader perspective, the auction data is sending two signals: first, there is a phase-specific supply-demand gap in domestic cotton that requires reserve releases to fill; second, the market's dependence on imported cotton is unlikely to change in the short term. The stronger performance of imported cotton relative to Xinjiang cotton suggests that domestic cotton still has room for improvement in quality consistency and supply chain stability.
Going forward, key factors to watch include: whether the pace of reserve sales will accelerate, whether transaction prices will hit the policy 'ceiling', and how mills adjust their procurement strategies before the new crop arrives in September. If clearance rates remain elevated and prices continue to rise, authorities may adjust release volumes or increase the share of imported cotton to cool the market.