By August 28, six weeks of reserve cotton sales had seen cumulative volume exceed 240,000 tons with a 100% transaction rate. The average transaction price climbed to 17,263.96 yuan per ton, while the standard-grade price moved higher in tandem. This price trend is not purely demand-driven but reflects a combination of structural supply tightness and market expectations.
Signals Behind the Data
In the latest week (August 24-28), 40,142.117 tons were listed and fully sold, with an average price of 17,463.44 yuan per ton and an average premium of 1,184.16 yuan. Notably, imported cotton averaged 17,481.63 yuan per ton, about 69 yuan higher than Xinjiang cotton, and the standard-grade price gap widened to 180.88 yuan. Cumulative data show imported cotton premiums of 1,562.46 yuan per ton, significantly above Xinjiang's 1,147.35 yuan, indicating a clear preference for imported fiber.
This price structure implies that, amid concerns over domestic quality consistency, imported cotton has become the preferred choice for high-count yarn producers. For buyers, current prices are near annual highs, but the premium has narrowed compared to earlier weeks—the cumulative average premium of 1,433.72 yuan per ton is lower than previous levels, suggesting that while bidding remains active, enterprises are more rational and less inclined to chase prices.
Supply-Demand Dynamics and New Crop Expectations
Entering the sixth week, the spot supply gap is gradually narrowing, and the tight supply situation has improved. However, strong El Niño weather speculation has intensified, driving domestic and international cotton prices higher in tandem. Combined with pre-season restocking for the traditional 'golden September and silver October' period, this has supported transaction rates and prices. Yet, with less than a month before large-scale new cotton harvest, market divergence is widening: mills worry about quality instability of new cotton and prefer to lock in reserve cotton, while high prices are curbing purchases by some small and medium enterprises, which are waiting for new crop pricing.
From a supply chain perspective, high cotton prices will directly push up yarn costs, especially for mainstream counts like 32s and 40s. Profit margins in weaving and garment manufacturing are further compressed, and some export orders may face repricing or delivery delays. For upstream ginners, the expected opening price for new cotton is elevated, but if weather speculation cools or the harvest is abundant, the risk of price correction cannot be ignored.
Practical Recommendations
For Buyers - Monitor weekly average transaction prices and premium trends; if premiums continue to narrow, consider slowing bidding to avoid chasing highs. - Based on your yarn mix, prioritize imported cotton for high-count needs while evaluating Xinjiang cotton for cost efficiency, diversifying procurement risk. - Maintain a 10-15% buffer in raw material inventory to hedge against quality fluctuations or logistics delays during the early new cotton period.
For Exporters - Include price linkage clauses in forward export contracts to transfer some cotton price risk downstream. - Watch the domestic-international price spread; if it widens, consider using imported cotton to lock costs and enhance quote competitiveness. - Establish closer inventory-sharing mechanisms with upstream mills to shorten lead times and reduce default risk from material volatility.
In summary, reserve cotton sales have played a role in ensuring supply and stabilizing prices, but the window for pre-harvest jostling is narrowing. Transaction data over the next two weeks will be a key indicator for Q4 cotton price trends.