Reserve Cotton Sales Hit 100% Again: What's Behind Spinners' Urgent Restocking?

On August 31, reserve cotton sales closed with a 100% transaction rate again, with an average price of 17,569 yuan/ton, down 19 yuan from the previous day. Behind the seemingly flat fluctuation is a month-long high-density restocking by textile enterprises—since the start of this sales round on July 20, cumulative transactions have reached 248,685 tons, with daily transaction rates consistently at 100%. Such a near-zero failure rate is rare in recent reserve cotton auctions.

Market Signals

From the price structure, Xinjiang cotton and imported cotton showed divergent trends: Xinjiang cotton averaged 17,653 yuan/ton, up 128 yuan, with a premium of 1,088 yuan; imported cotton averaged 17,556 yuan/ton, down 51 yuan, with a premium of 971 yuan. The price gap widened from about 50 yuan to nearly 100 yuan, indicating stronger demand for Xinjiang cotton.

This divergence is telling. The decline in imported cotton prices may reflect looser international supply or exchange rate fluctuations, but domestic spinners are still willing to pay a higher premium for Xinjiang cotton, suggesting growing trust in domestic quality and supply continuity. For buyers, this means Xinjiang cotton's cost-performance advantage is being reassessed.

Industry Impact

The 100% transaction rate reflects low raw material inventories among textile mills. After volatile cotton prices in the first half, most mills adopted a hand-to-mouth purchasing strategy, compressing inventory to 15-20 days. As autumn/winter orders arrive and operating rates recover, rigid demand has been released, making reserve cotton the preferred channel for restocking.

Deeper, persistent bidding premiums suggest that enterprises are not bearish on future prices. Although new cotton will soon hit the market, expectations of reduced planting area and weather uncertainties, coupled with overcapacity in ginning plants, point to a high opening price. Locking in supplies at relatively low prices is a rational choice.

However, continuous high turnover also brings concerns. Nearly 250,000 tons of cumulative sales have eased short-term supply-demand tensions, but if new cotton is delayed or quality disappoints, rapid destocking may deplete policy space. For foreign trade firms, stable raw material costs help with order taking, but they should be wary of Q4 price surges due to supply disruptions.

Practical Advice

For Buyers - Monitor the Xinjiang-imported price gap; if it exceeds 150 yuan/ton, consider imported cotton to cut costs. - Plan bidding rhythm based on order cycles to avoid concentrated purchases at high prices. - Use real-time market data to track premiums and set upper limits to prevent irrational bidding.

For Foreign Trade Firms - Use reserve cotton average prices as a cost anchor when signing forward export contracts, leaving room for price fluctuations. - Consider basis procurement contracts with suppliers to lock in part of raw materials if new cotton prices are expected to open high. - Closely track remaining reserve sales volumes and new cotton opening price expectations to adjust order-taking strategies.