The floor price for central reserve cotton sales in the fourth week stood at 16,480 yuan per tonne, equivalent to standard grade 3128B. This marks the fourth consecutive weekly decline since the 2026 sales program began, with a cumulative drop of more than 400 yuan per tonne. For textile mills waiting to restock, the price signal is shifting from 'wait-and-see' to 'actionable,' but how long the window remains open depends on the true alignment between supply pace and downstream demand.
Background
The current reserve cotton release started on July 20, coordinated by relevant state departments and executed by China National Cotton Reserves Corporation. The weekly floor price is not simply carried over; it is dynamically calculated based on the standard grade 3128B, incorporating results from cotton inspection and the quality differential table issued by the China Cotton Association. This means actual transaction prices may include a quality premium or discount relative to the listed floor price, so mills cannot base procurement decisions solely on the floor price.
Timing is critical: we are in the transition period between old and new cotton crop years. Commercial inventories of the 2025/26 crop are gradually being depleted, while new crop arrivals are still months away. The reserve release fills this supply gap. The consecutive decline in the floor price reflects both a relatively loose supply-demand balance in the domestic market and a policy signal to guide smooth market transition. For mills with low inventories, this price range offers some appeal.
Industry Impact
The direct beneficiaries of the falling floor price are small and medium-sized spinning mills. These enterprises often lack long-term contract locking capabilities and rely on spot purchases. The continuous reserve release provides a 'price anchor.' At the floor price of 16,480 yuan per tonne, the cost of lint cotton is about 2-3% lower than the spot market price. If quality premiums are controlled well, mills can save 300-500 yuan per tonne in raw material costs, which is crucial for low-count yarn varieties with thin profit margins.
However, a lower floor price does not necessarily mean actual transaction prices fall correspondingly. According to the rules, the floor price for each daily batch is adjusted based on the quality differential table, with higher-grade cotton commanding a significant premium. If companies pursue low prices while ignoring quality indicators, they may fall into a 'low price, low quality' trap, ultimately affecting yarn quality and selling price. Therefore, buyers should compare inspection indicators with their own product mix rather than looking only at the absolute price.
For upstream ginners, the continuous decline in the reserve floor price will suppress expectations for new crop purchases. Weather in the Xinjiang cotton region is generally normal, and the probability of a good new crop harvest is high. If the reserve release price continues to decline later, it may force the new crop opening price lower, affecting cotton farmers' income and next year's planting intentions. The redistribution of profits along the industry chain is transmitting from downstream to upstream.
Practical Recommendations
For Procurement Teams - Build positions in batches: Given the consecutive decline in the floor price, it is advisable to purchase in weekly batches to avoid heavy one-time positions and to hedge against further price fluctuations. - Pay attention to quality differentials: Carefully verify the inspection indicators of each batch before purchasing, and prioritize grades that match your spinning count to prevent quality premiums from eroding the floor price advantage.
For Foreign Trade Companies - Lock in forward orders: If export orders are confirmed, use the current low reserve cotton price to lock in raw material costs, hedging against profit erosion from RMB exchange rate fluctuations. - Monitor new crop policies: Closely watch the release arrangements before the new crop arrives in September and any potential reserve increase policies, avoiding blind stockpiling during policy vacuums.
Overall, the fourth-week floor price of 16,480 yuan per tonne is the result of policy-market interplay. For textile enterprises, this is both a restocking window and a test of supply chain management capability. Under transparent price signals and quality rules, rational decision-making holds more long-term value than chasing trends.