Reserve cotton sales have remained fully subscribed for several consecutive weeks, and the latest data underscores the market's strong demand. During August 24-28, all 40,100 tons offered were sold, with an average price of 17,463 yuan/ton, equivalent to 18,172 yuan/ton on a 3128 basis, and an average premium of 1,184 yuan/ton. This price level is 199 yuan/ton higher than the cumulative average since July 20, indicating that mills are accepting current lots at higher rates and that structural tightness in quality cotton persists.
Background
Looking at the longer cycle, the reserve cotton program launched on July 20 has seen cumulative listings and transactions of 240,683.76 tons through August 28, with a 100% turnover rate. The cumulative average price is 17,264 yuan/ton, equivalent to 17,911 yuan/ton on a 3128 basis, with an average premium of 1,434 yuan/ton. Notably, the price gap between Xinjiang cotton and imported cotton widened this week: imported cotton's 3128-equivalent price was 181 yuan/ton higher than Xinjiang cotton, and its premium was also 181 yuan/ton higher. This indicates that mills still value imported cotton for its quality and spinability, willing to pay a higher premium.
Regional data provide a clearer picture. The top three provinces by volume were Shandong, Hubei, and Jiangsu, together accounting for 21,000 tons or 52.34% of the weekly total. Shandong, as a major cotton textile province, continues to rely heavily on reserve cotton; the concentrated transactions in Hubei and Jiangsu are linked to local yarn capacity expansion and rising demand for high-count yarn. This regional concentration is not coincidental; it reflects the capacity distribution and procurement habits of major cotton-consuming areas, offering a reference for spot pricing.
Industry Impact
Full turnover and high premiums have multi-layered effects on the supply chain. For mills, the steady supply of reserve cotton provides a cost cushion, but high premiums mean actual procurement costs are not low, especially for imported cotton. Based on this week's average, spinning costs have risen compared to earlier periods, which will gradually be reflected in yarn quotations over the next one to two months. For export-oriented enterprises focusing on medium-to-high count yarn, cost pressure may be more pronounced, potentially squeezing profit margins.
For cotton traders and ginners, the high turnover rate strengthens bullish expectations ahead of the new crop season. As the market transitions between old and new crops, uncertainty about new crop output remains, and the strong performance of reserve cotton provides support for spot prices. However, caution is warranted: if subsequent offerings remain high and downstream orders fail to grow in tandem, high premiums may not be sustainable, and prices could face periodic corrections.
From a sourcing perspective, the widening gap between Xinjiang and imported cotton this week suggests that enterprises need more refined resource selection. Imported cotton typically offers more stable length and strength, suitable for high-count yarn and export orders; Xinjiang cotton retains cost advantages but requires attention to batch consistency. For small and medium mills, flexible blending based on product mix is recommended, avoiding blindly chasing imported cotton.