For the week of August 17, the central reserve cotton sales floor price was set at 16,763 yuan/ton, unchanged from the previous week. This seemingly flat number sends a clear policy signal: amid heightened volatility in domestic and international cotton prices, reserve sales are acting as a price stabilizer. For textile mills, an unchanged floor price means greater predictability in procurement costs, and the restocking window may have opened.
Event Background
According to the 2026 central reserve cotton sales announcement, the current release began on July 20, and the floor price for grade 3128B in the fifth week (Aug 17-21) is 16,763 yuan/ton. This price is not fixed; it is dynamically calculated based on the quality inspection results of each daily batch and the National Cotton Quality Differential Price Table issued by the China Cotton Association. Thus, within the same week, actual transaction prices for different batches may deviate from the floor price due to variations in fiber length, strength, micronaire, and other indicators.
The floor price remaining unchanged for two consecutive weeks contrasts with the recent fluctuations in Zhengzhou cotton futures. Public industry data show that in early August, the domestic-international cotton price spread narrowed to within 500 yuan/ton, reducing the competitiveness of imported cotton and prompting mills to turn to domestic reserve cotton. The stable floor price effectively guides market expectations, preventing sharp price swings that could disrupt the textile supply chain.
Industry Impact
What does a stable floor price mean for downstream spinning mills? First, uncertainty in raw material costs is reduced. For factories primarily producing 32s and 40s combed cotton yarn, cotton accounts for about 70% of production costs; a stable floor price helps lock in processing margins. Second, ample reserve supply, with daily batches meeting various quality needs, alleviates the structural shortage of high-grade cotton.
For traders, the stable floor price compresses speculative space. The old model of hoarding cotton to profit from price differentials becomes unsustainable under continuous reserve releases. Instead, mills tend to purchase on demand, which may lead to more transparent cotton yarn pricing. Internationally, prices of US and Brazilian cotton arriving at Chinese ports are influenced by exchange rates and freight costs, which fluctuate significantly; the stable reserve floor price actually provides an anchor for domestic cotton prices, indirectly affecting the bargaining power for imports.
Notably, the industry is transitioning from the off-season to the peak season. In late August, orders for autumn/winter fabrics are placed, loom utilization rates rise, and cotton demand is expected to improve month-on-month. The unchanged floor price may encourage some previously hesitant mills to accelerate restocking, thereby increasing cotton trading activity.