The policy direction of the cotton market has been reaffirmed this week: the reserve cotton sales floor price has remained unchanged at 16,175 yuan/ton for two consecutive weeks. Behind this figure lies the 2026 central reserve cotton release plan launched by China Reserve Cotton Management Co., Ltd. on July 20. For the textile industry, this is not a simple price anchor, but a delicate balance between supply and demand by policymakers.
Policy Signal Behind the Flat Floor Price
The floor price of 16,175 yuan/ton corresponds to standard grade 3128B cotton. According to the announcement, the actual price of each daily batch will be calculated based on inspection results and the Domestic Cotton Quality Differential Table. The fact that the price is exactly the same as the first week indicates that the decision-makers see sufficient market support at this level and have no intention of stimulating procurement through significant price cuts.
This 'wait-and-see' pricing strategy sends a clear signal to the market: the current price is considered a reasonable range by policymakers, neither excessively suppressing cotton farmers' interests nor over-inflating raw material costs for textile mills. For buyers who have been waiting, this may suggest that the price floor has been established in the short term.
Industrial Cluster Reactions: Procurement Logic Diverges
From Keqiao, Shengze to Nantong's home textile clusters, cotton procurement decisions are showing clear stratification. Demand for raw materials for high-count yarns and combed yarns remains strong, with mills willing to pay a premium for high-grade cotton. However, the inventory clearance of low-grade cotton has notably slowed, with some small and medium-sized mills seeing their raw material inventory turnover days extend from 30 to over 45 days.
This divergence is driven by downstream demand transmission. In export orders, European and American brands continue to upgrade environmental and quality requirements for cotton products, increasing reliance on high-quality cotton. Meanwhile, the domestic market is affected by consumption downgrades, squeezing profit margins for low-end cotton yarn and discouraging mills from stocking low-grade cotton.
Release Pace and Quality Distribution: Key Variables for H2
The 2026 reserve cotton sales special topic has been launched, but the market is more concerned about the total release volume and daily listing volume. Based on past experience, July to September is the traditional transition period between off-season and peak season for the textile industry. If the reserve release pace is too tight, it may trigger a panic buying spree in late August; if too concentrated, it will suppress spot prices, leaving companies that purchased at higher prices earlier facing inventory devaluation risks.
Quality distribution is equally critical. The current domestic cotton quality differential table shows that differences in length, micronaire, and breaking tenacity significantly impact the final settlement price. When bidding, mills must not only look at the floor price but must calculate the actual procurement cost based on the specific indicators of each batch.