The floor price for the seventh week of central reserve cotton sales has been set at 17,228 yuan per ton, marking another decrease from the previous week. This marks a continued downward trend in the reserve price, signaling that policymakers are using a more market-aligned price to guide expectations. For textile mills, this directly lowers raw material costs and provides a key signal for future procurement decisions.
Background
China National Cotton Reserves Corporation began the 2026 reserve cotton sales on July 20, announcing a weekly floor price. The seventh week (Aug 31–Sep 4) is based on the standard grade 3128B, with actual transaction prices calculated according to inspection results and the quality differential table issued by the China Cotton Association. This mechanism has been refined over the years to make reserve sales a market reference rather than a simple dumping operation.
The decline to 17,228 yuan per ton is not an isolated event. It reflects a combination of global price trends, expectations of the new cotton crop, and weak downstream demand. For spinning mills, particularly small and medium enterprises with tight cash flows, the lower floor price acts as a policy-backed cost relief.
Industry Impact
The transmission of the lower floor price is clear: spot market quotes will gravitate toward the reserve price, compressing trader margins. Meanwhile, lower cotton costs improve yarn profitability, but whether this translates into competitive orders depends on end-user demand. The industry is in a seasonal transition, with fabric and grey cloth mills reporting insufficient orders. A moderate decline in raw material prices may trigger some early restocking.
Moreover, the continuous release of reserve cotton has changed supply expectations. In previous years, supply tightness often drove prices higher, but this year the market faces ample supply from imports, Xinjiang cotton, and reserves. In this context, each adjustment in the floor price becomes a focal point for bulls and bears. For buyers, rather than betting on future price movements, it is wiser to use the stable supply of reserve cotton to lock in costs at current levels.
Regionally, cotton processing and textile hubs in Shandong, Henan, and Jiangsu rely heavily on reserve cotton. The lower floor price directly eases raw material pressure for these enterprises, especially those producing 32s and 40s pure cotton yarns. Xinjiang cotton remains competitive due to transport subsidies, and the price gap between reserve and Xinjiang cotton will influence mills' fiber mix decisions.