The average transaction price last week reached 17,463.44 yuan per ton, with the standard-grade equivalent at 18,172.16 yuan and a premium of 1,184.16 yuan. This is the sixth week of reserve cotton sales, and the 100% turnover rate for six consecutive weeks reflects spinners' efforts to secure raw materials ahead of the 'golden September and silver October' orders, as well as the supply-demand tug-of-war during the transition to the new crop. With less than a month before large-scale new cotton harvest, prices have climbed to yearly highs, and sentiment across the supply chain is shifting.
Background
Data from China National Cotton Reserves Corporation shows a clear supply supplement trajectory: from July 20 to August 28, cumulative listings and transactions both reached 240,683.755 tons, with a 100% turnover rate. The average price was 17,263.96 yuan per ton, equivalent to 17,911.18 yuan for standard grade, with an average premium of 1,433.72 yuan. This price level has risen notably since the initial auctions, indicating that while the tight supply situation is improving, the price center continues to move upward week by week.
Weekly data from August 24-28 offers more insight: all 40,142.117 tons listed were transacted, with an average price of 17,463.44 yuan per ton, continuing the upward trend. Xinjiang cotton averaged 17,412.67 yuan per ton (standard-grade equivalent 18,038.97 yuan) with a premium of 1,050.97 yuan; imported cotton averaged 17,481.63 yuan per ton (equivalent 18,219.85 yuan) with a premium of 1,231.85 yuan. The premium for imported cotton exceeded that of Xinjiang cotton by nearly 181 yuan, indicating spinners' strong willingness to pay for quality.
Notably, the number of bidding companies increased significantly week-on-week. This means participation is no longer limited to large mills; some small and medium factories are also entering the market to secure supplies. For buyers, this signal warrants caution: when market sentiment becomes one-sided, the risk of a price pullback after a short-term surge increases.
Industry Impact
The super El Niño weather speculation is a major driver of current cotton prices. Domestic and international cotton prices have strengthened in tandem, making reserve cotton a 'safety cushion' for spinners to hedge against raw material volatility. However, the 100% turnover rate for six consecutive weeks also indicates that high-grade cotton in the spot market is not abundant, and the supplementary role of reserve cotton is being fully priced in.
From a downstream perspective, the 'golden nine, silver ten' restocking demand is a key support for auction activity. Weaving mills have to accept current prices to meet order delivery. But the divergence in premiums reveals a deeper signal: spinners' tolerance for raw material costs is nearing a tipping point. The premium for Xinjiang cotton (1,050.97 yuan) is lower than the cumulative average (1,433.72 yuan), suggesting some companies are compressing profit margins to maintain production.
For the last month before new cotton harvest, the bull-bear battle will intensify. Bulls argue that weather risks persist and new crop output and quality are uncertain; bears point out that as reserve sales continue, the spot supply gap has narrowed significantly, and once new cotton hits the market faster, high prices are unsustainable. This battle is directly reflected in the price range—the highest transaction price last week was 18,300 yuan per ton, while the lowest was 17,090 yuan, a spread of 1,210 yuan, indicating growing market divergence.