The floor price for central reserve cotton sales in the first week of September settled at 17,228 yuan per ton (basis grade 3128B), continuing a downward trend from the previous week. This price signal is not an isolated event but a proactive policy response to the current supply-demand dynamics in the cotton market. For textile enterprises, a lower floor price means a downward shift in procurement costs, but actual profit conversion depends on how well inventory cycles align with order schedules.
Event Background
According to an announcement by China National Cotton Reserves Corporation, the 2026 central reserve cotton sales started on July 20, with the floor price for the 7th week (August 31-September 4) set at 17,228 yuan per ton. This base price is benchmarked to grade 3128B, and actual transaction prices will be calculated batch-by-batch based on notarized inspection results and the quality price difference table published by the China Cotton Association. This marks the seventh week of reserve sales, with the floor price showing a gradual weekly decline, reflecting the policy intent to stabilize cotton prices and secure supply for textile mills.
From a price level perspective, the 17,228 yuan/ton floor is lower than earlier in the season and also forms a discount to the current Zhengzhou Cotton Futures main contract. This makes reserve cotton particularly attractive in price, especially for small and medium-sized textile enterprises with tight capital and weak bargaining power. However, it should be noted that the floor price is not the transaction price; actual bidding premiums will determine the final cost.
Industry Impact
The downward adjustment of the floor price carries multiple implications for the textile supply chain. First, for cotton spinning enterprises, lower raw material costs directly ease profit pressure. For companies mainly producing pure cotton yarn, a reduction of several hundred yuan per ton translates into a 2-3 percentage point improvement in gross margin. On the other hand, weaker cotton prices may also pull down downstream cotton yarn and grey fabric prices, so buyers need to recalculate costs when taking orders to avoid the double squeeze of lower raw material costs and falling finished product prices.
Second, the pace of reserve sales influences market expectations. The weekly floor price reduction reinforces the signal of "policy support but not price pumping," prompting traders and ginners to accelerate destocking, while textile mills tend to purchase on demand and maintain low inventories. In this game, cotton prices may remain weak and volatile in the short term, but the downside is limited—reserve sales volume is finite, and supply uncertainties persist before the new crop arrives.
For export-oriented enterprises, lower cotton prices help reduce export product costs and enhance price competitiveness, but they also need to watch exchange rate fluctuations and international cotton price trends. If the domestic-international cotton price spread widens, it may trigger import substitution, affecting the activity of domestic reserve cotton transactions. Therefore, foreign trade companies should comprehensively assess raw material costs, exchange rates, and logistics lead times when accepting orders to avoid profit erosion due to raw material price volatility.