The reserve cotton auction on August 3 closed with a 100% transaction rate again, with an average price of 16,861.97 yuan/ton, down 95.86 yuan from the previous session, yet market enthusiasm did not cool accordingly. The price converted to 3128B grade was 17,553.17 yuan/ton, and the spread with the spot market remained within a reasonable range, indicating mills' high reliance on and acceptance of policy-driven supply.
Background
The planned listing was 8,014.638 tons, all transacted, with a maximum price of 17,540 yuan/ton and a minimum of 16,200 yuan/ton. The wide price range suggests clear demand differentiation among cotton grades. Imported cotton averaged 17,088.68 yuan/ton (17,775.11 yuan/ton for 3128B), with an average premium of 1,609.11 yuan/ton; Xinjiang cotton averaged 16,582.69 yuan/ton (17,279.77 yuan/ton for 3128B), with an average premium of 1,113.77 yuan/ton. The price gap between imported and Xinjiang cotton widened to about 506 yuan/ton, signaling stronger preference for imported fiber, possibly due to strict quality requirements from certain orders.
Cumulatively, as of August 3, total listed reserve cotton reached 88,208.582 tons, with a 100% transaction rate, an average price of 17,217.26 yuan/ton (17,841.97 yuan/ton for 3128B). Imported cotton averaged 17,399.27 yuan/ton with an average premium of 1,774.79 yuan/ton; Xinjiang cotton averaged 16,782.45 yuan/ton with an average premium of 1,233.38 yuan/ton. The persistently higher premium for imported cotton reflects structural shortage of high-grade fiber.
Industry Impact
The sustained 100% transaction rate is not merely market sentiment; it is backed by rigid restocking demand from mills. Downstream yarn inventories are at mid-to-low levels, and expectations for the 'golden September and silver October' orders are rising, prompting mills to lock in raw material costs during a relatively stable price window. However, the average transaction price has declined from earlier highs, and the gap between maximum and minimum prices has widened, suggesting some enterprises are becoming cautious about high-priced cotton and prefer demand-based purchasing over hoarding.
For upstream ginners, the continued high transaction rate indicates market recognition of policy reserves, but it also suppresses spot price upside before the new cotton season. The changing price gap between Xinjiang and imported cotton may prompt traders to adjust procurement structures and use import quotas more efficiently. For foreign trade enterprises, RMB exchange rate fluctuations and international cotton prices remain variables, and reserve auction data can serve as a short-term pricing reference.