Reserve Cotton Price Stabilizes After Seven-Week Decline: How Should Textile Mills Time Their Stockpiling?

The base price for the 7th week (August 31-September 4) of 2026 central reserve cotton sales stands at 17,228 yuan/ton, down about 400 yuan from the opening week. After several weeks of declines, the price has now stabilized, signaling a policy floor. For textile mills hesitating on stockpiling, this may be a juncture to reassess procurement timing.

Price Trend and Policy Signals

Central reserve cotton sales began on July 20, with weekly base prices announced. This week marks the 7th round. The base price is set for standard grade 3128B, with actual transaction prices adjusted based on公证 inspection results and quality differential tables issued by the China Cotton Association. Weekly data shows the price declined gradually then stabilized, with a cumulative drop of about 2.3%. This pattern reflects both market responsiveness and a policy intention to avoid excessive price drops that could trigger widespread wait-and-see behavior across the industry chain.

Notably, the stabilization of the base price does not mean spot prices will hold steady. The base price serves as an anchor, while actual transactions include quality premiums/discounts. The latest quality differential table for August has been released, showing narrower premiums for high-grade cotton compared to last month. This implies that even if the base price remains unchanged, some batches may transact at slightly lower actual prices. For mills producing high-count yarn, marginal changes in quality premiums directly affect costs and require careful calculation.

Industry Transmission and Procurement Strategy

The pace of reserve cotton releases directly influences market sentiment in the domestic cotton spot market. Several weeks of declining base prices have prompted some traders and ginners to lower offers for old crop cotton, while textile mills generally adopt a hand-to-mouth procurement strategy, keeping raw material inventories low. This destocking behavior may shift after the base price stabilizes—when the policy floor is clear, downstream buyers will reassess the opportunity cost of waiting for lower prices, especially those with stable orders.

From the demand side, we are approaching the pre-season stocking period for 'golden September and silver October,' where some weaving and garment companies begin purchasing raw materials for autumn/winter orders. If cotton prices continue to stabilize, yarn prices may find support, potentially triggering a wave of restocking. However, caution is needed as the new cotton harvest approaches; favorable weather in Xinjiang suggests a good crop, which could limit price rebounds. Thus, the restocking window may be short, and companies must weigh inventory costs against supply disruption risks.

Practical Recommendations

For Procurement Managers - Monitor weekly base price changes and quality differential tables; stay sensitive to shifts in premiums for high-grade cotton and lock in cost-effective batches timely. - If orders are stable and cash flow allows, build safety stock covering 2-3 weeks of usage in batches at the current stable base price range, avoiding concentrated purchases that could drive up prices. - Familiarize with the bidding rules and quality indicators of different batches in advance; prepare multiple bidding plans to prevent disruption from failed auctions.

For Textile Mills - Use the reserve base price as a reference anchor in negotiations with traders, requiring spot quotes to align reasonably, compressing intermediary premiums. - Evaluate the impact of quality differential changes based on product mix: high-count yarn mills may increase purchases of high-grade cotton, while low-count mills can focus on cost-effective mid-to-low grade batches. - Monitor weather and yield forecasts before the new harvest; if a bumper crop is expected, consider deferring some purchases, but leave time for logistics and inspection to avoid queues from concentrated buying.