On July 29, China National Reserve Cotton Management Co. sold all 8,021 tons of reserve cotton offered, with an average price of 17,077 yuan/ton, down 110 yuan from the previous day. This marks consecutive days of 100% turnover since the latest release program began.
Transaction Structure Divergence: Imported Cotton Premium Holds Firm, Xinjiang Cotton Struggles to Keep Up
Data from the day shows imported cotton averaging 17,256 yuan/ton, equivalent to 17,967 yuan/ton for Grade 3128B, with an average premium of 1,792 yuan. Xinjiang cotton averaged 16,785 yuan/ton, equivalent to 17,419 yuan/ton for Grade 3128B, with an average premium of 1,244 yuan. The price gap between the two categories stands at about 471 yuan/ton, with imported cotton commanding a significantly higher premium.
This divergence indicates that mills strongly prefer imported cotton over Xinjiang cotton. The reasons lie in the superior quality consistency of imported cotton and its better adaptability for high-end downstream orders. Although Xinjiang cotton offers advantages in output and cost-effectiveness, under the current tightening traceability requirements in export markets, some enterprises tend to purchase imported cotton to mitigate trade risks.
Price Dip Not a Bearish Signal, but Normal Range Fluctuation
The average price fell 110 yuan from July 28, yet the highest transaction price reached 17,850 yuan/ton, while the lowest was 16,560 yuan/ton—a spread of nearly 1,300 yuan. This suggests the market is not unilaterally bearish; rather, different companies have offered differentiated bids based on their own orders and inventory positions.
For textile mills, the current reserve cotton price remains lower than comparable quality cotton in the spot market, offering clear arbitrage opportunities. This is the core driver behind the sustained 100% turnover rate. However, the slight decline in average price also reflects growing caution among some enterprises—downstream fabric and gray cloth inventories are high, and terminal orders have not shown significant volume growth, leaving cotton prices without demand support for further increases.
Cumulative Volume Reaches 64,160 Tons; Policy Release Pace Shapes Market Expectations
As of July 29, the cumulative volume of reserve cotton sold in this round totals 64,160 tons, with a 100% turnover rate. At this pace, August may see even larger volumes released. The reserve cotton release not only provides low-cost raw materials for enterprises but also serves as a key tool for the state to regulate market supply-demand balance and curb excessive cotton price increases.
Currently, the cotton market is in a tug-of-war between high-cost inventory and low-profit orders. Continued reserve cotton releases will effectively cap upward price momentum, but may also intensify downstream buyers' wait-and-see attitudes. For spinning mills, if cotton prices remain high and volatile while yarn prices fail to keep pace, profit margins will be further squeezed.