In the 7th week of 2026 (August 31 - September 4), the floor price for central reserve cotton sales was set at 17,228 yuan per ton (based on standard grade 3128B), marking another stage low since the sales program began on July 20. The consecutive decline in the floor price sends an unmistakable signal to textile mills entering their traditional restocking cycle: policymakers are using price tools to cool down cotton procurement costs.
Background
The reserve cotton sales program, initiated on July 20 and executed by China National Cotton Reserves Corporation, publishes a weekly floor price based on standard grade 3128B. Actual transaction prices for each batch are calculated according to公证 inspection results and the quality differential table issued by the China Cotton Association. This means that within the same week, batches with different quality grades will deviate reasonably from the floor price.
The 7th week's floor price of 17,228 yuan per ton shows a clear decline from previous weeks. Although weekly comparisons are not fully disclosed, the drop aligns with looser supply in the spot market and growing expectations of the new cotton harvest. For textile mills, a lower floor price directly reduces the cost threshold for participating in auctions, but securing "cheap cotton" still depends on quality premiums or discounts of specific batches.
Notably, the sales program started earlier than usual and has been releasing cotton at a relatively intense pace. This arrangement is clearly not just about destocking; it aims to smooth price volatility ahead of the new harvest and ensure stable supply for mills. The floor price's anchoring effect will gradually transmit to spot markets, futures, and downstream yarn quotes, ultimately influencing fabric and garment cost structures.
Industry Impact
The impact of a lower floor price is uneven across the chain. For upstream ginners and traders, falling reserve prices compress their ability to hold prices, forcing adjustments in sales strategies. For midstream textile mills, it is a tangible benefit that lowers raw material costs, especially for spinners using standard-grade cotton, potentially improving profit margins.
However, there are concerns. Domestic cotton supply is ample, the new harvest is approaching, and continuous reserve releases have fueled bearish sentiment. If mills over-rely on reserve cotton without aligning with actual orders, they risk accumulating inventory during a price trough. Therefore, procurement decisions should not focus solely on the floor price but also consider order cycles and cash flow.
From a regional perspective, processing enterprises in Xinjiang, Shandong, and Henan, as well as textile clusters in Jiangsu and Zhejiang, are most sensitive to this reserve sales program. Small and medium-sized enterprises, lacking stable raw material channels, often depend on reserve auctions to lock in costs. The lower floor price offers a rare restocking window, but competition may push actual transaction prices higher, so budget planning is essential.
For export-oriented companies, a lower reserve floor price helps reduce production costs for yarn and fabric, providing some flexibility in export quotes. Yet, the complex international trade environment, currency fluctuations, and uncertain overseas demand mean cost advantages may not automatically translate into orders; market acceptance remains key.