As reserve cotton sales entered their sixth week, a seemingly contradictory picture emerged: the spot supply gap continued to narrow, yet the average transaction price kept climbing. In the week of August 24-28, China National Cotton Reserves Corporation listed 40,100 tons, with a 100% transaction rate and an average price of 17,463 yuan per ton, notably higher than in previous weeks. This price trend suggests that the improvement in short-term supply has not dispelled concerns about future availability; instead, weather speculation and restocking demand have shifted the battleground to the final window before new cotton arrives.
Price and structural signals
Cumulative data from July 20 to August 28 show total transactions of 240,700 tons, a 100% transaction rate, an average price of 17,264 yuan per ton, and a grade-adjusted price (3128) of 17,911 yuan per ton, with an average premium of 1,434 yuan. Notably, the weekly high reached 18,300 yuan and the low 17,090 yuan, a spread of 1,210 yuan, indicating divergent bidding among mills, some willing to pay high prices to secure supply.
More telling is the price gap between Xinjiang cotton and imported cotton. Weekly averages were 17,413 yuan and 17,482 yuan respectively, a gap of only 69 yuan. However, on a grade-adjusted basis, imported cotton was priced at 18,220 yuan, 181 yuan higher than Xinjiang cotton, with a similar premium in average bidding. This suggests that imported cotton retains advantages in quality premiums and supply stability, while the cost-effectiveness of Xinjiang cotton is being reassessed.
Industry transmission and bargaining logic
With sales running for nearly six weeks, cumulative volume has significantly eased the spot supply crunch. Yet mills' "golden nine, silver ten" order expectations and urgent restocking needs have kept bidding active. Meanwhile, intense El Niño weather speculation has driven domestic and international cotton prices higher, pricing in expectations of reduced new-crop output.
The core of this bargaining is that downstream mills cannot afford supply disruptions, while traders bet on further price gains before new cotton hits the market. For buyers, chasing prices at current highs offers diminishing returns, but waiting for new cotton brings risks of quality uncertainty and delayed listing. This dilemma explains why the transaction rate remains 100%—no one wants to fall behind during a critical window.
Deeper impact on the supply chain
The continuous rise in average prices does not transmit linearly through the chain. First, higher raw material costs squeeze mill margins, especially for small and medium mills with weak pricing power. Second, the strengthening linkage between domestic and international prices may boost imported cotton demand, but quota limits and shipping schedules remain constraints. Third, elevated prices before new cotton listing will influence seed cotton purchase pricing for the new season, affecting farmers' planting decisions.
Regionally, the price gap between Xinjiang and imported cotton will guide mills in adjusting their cotton mix. Imported cotton's clear premium advantage is limited by quota availability, while domestic mills continue to weigh transport subsidies and quality consistency of Xinjiang cotton, with imported cotton used mainly for high-count yarns and premium products.