For the week of August 3, the central reserve cotton floor price was set at 16,166 yuan per ton, a notable drop from the first week of late July. After two consecutive weeks of decline, textile mills that had been waiting on the sidelines are re-evaluating their restocking pace. For the cotton spinning chain, currently in the transition between low and peak seasons, this price signal carries more operational reference value than simple supply-demand figures.
Pricing Mechanism and Market Expectations
The reserve cotton floor price is not simply set by market movements. According to the 2026 central reserve cotton sales announcement, the weekly floor price is based on the standard grade 3128B, then adjusted batch-by-batch using the quality differential table published by the China Cotton Association. This means even when the benchmark floor price drops, actual transaction prices for different batches will diverge significantly based on length, micronaire, strength, and other indicators.
Notably, the current floor price has cumulatively fallen by several hundred yuan per ton since sales began on July 20. This adjustment pace is not accidental—the core goal of reserve releases is to cool overheated prices, not to trigger a deep slump. When the spread between market prices and reserve floor prices narrows to a certain range, mills' enthusiasm for bidding tends to reignite.
For spinning mills, a lower floor price directly reduces the anchor cost of raw material procurement. This is especially advantageous for factories whose product mix leans toward medium-count yarns and conventional fabrics. However, it's important to note that the actual floor price for daily-listed batches must be calculated with inspection results, so the final transaction price usually fluctuates by tens to a hundred yuan per ton above or below the listed floor price.
Industrial Transmission and Procurement Pace
The consecutive decline in reserve cotton prices will transmit to downstream cotton yarn and grey fabric markets with a lag. The textile industry is currently at the tail end of its traditional off-season, with weaving mills running at 60-70% capacity and holding low raw material inventories. The lower floor price offers these companies a relatively comfortable restocking window rather than forcing them to chase highs.
From a regional industrial belt perspective, ginners and traders in major cotton-producing areas such as Xinjiang, Shandong, and Henan remain cautious about reserve releases. On one hand, reserve supplies supplement market availability and curb excessive spot price rises; on the other, batches with mixed quality may drag down average transaction prices, thereby affecting pricing expectations before the new crop arrives. This tug-of-war will likely become more evident in mid-to-late August.
For export-oriented textile enterprises, raw material cost fluctuations directly affect the stability of export quotations. With the RMB exchange rate and ocean freight relatively stable at present, the lower reserve floor price effectively leaves more profit margin for export orders. But it's worth cautioning that if bidding heats up later and pushes actual transaction prices higher, this advantage could quickly narrow. Therefore, locking in supply at the current floor price range is more practical than waiting for even lower prices.