Report Overview - Report Title: 20251031 Cotton Monthly Report: Pay Attention to the Opportunity of First Decline and Then Rise During the Pressure Transmission Period [1] - Report Date: October 31, 2025 [2] - Research Team: Agricultural Products Team [2] Industry Investment Rating - The overall investment rating for the cotton industry is neutral [3]. Core Viewpoints - Internationally, the increasing supply of cotton from the US and other countries in the Southern Hemisphere is putting pressure on the market. Although Brazil is accelerating its exports, the continuous implementation of India's MSP provides some support for international cotton prices. The ICE market is expected to fluctuate weakly, with a reference range of [63, 67] [3]. - Domestically, new cotton is expected to be harvested in about a week. After a slight increase in imports, the commercial inventory has recovered to the same level as the previous period, and the pressure on spot circulation is gradually increasing. The price of seed cotton has stabilized and rebounded recently, raising the average cost of new-season machine-picked lint cotton. On the demand side, the volume and price of downstream demand are still weakening, the enterprise load is seasonally weakening, and enterprises maintain just-in-time replenishment under the condition of few industrial orders. Pay attention to the sales speed and price during the pressure transmission process of inland warehouses to measure the profitability of inland buyers and the relief of the hedging density of all new cotton. During this period, the futures market may show a "first decline and then rise" trend. In terms of strategy, there is some support due to a slight increase in hedging pressure, but there is significant resistance to upward movement under the weak industrial driving force. Pay attention to the opportunity of high selling and low buying in the range of [13300, 13800] [3]. Summary by Directory Macro Factors - **International Macro**: The results of the China-US economic and trade consultations in Kuala Lumpur were announced. The US will cancel the 10% so-called "fentanyl tariff" on Chinese goods, and the 24% counter - tariff on Chinese goods will continue to be suspended for one year. The US will also suspend the implementation of the 50% penetrative export control rule and the 301 investigation measures against China's maritime, logistics, and shipbuilding industries for one year. The Federal Reserve cut the federal funds rate target range by 25 basis points to between 3.75% and 4.00%. The European Central Bank kept the benchmark interest rate unchanged at 2% for the third consecutive time, believing that inflation has reached the 2% target level [3]. - **Domestic Macro**: Not mentioned in the provided content. Supply - **International Supply**: New cotton is being harvested. As of now, 530,000 tons of new cotton have been inspected. In November, precipitation in major cotton - growing areas in the US will decrease, which is conducive to harvesting. In India, the MSP is gradually being implemented in the northern and central cotton - growing areas, but due to heavy precipitation, the MSP - based procurement has started slowly, and the daily listing volume of new cotton is about 12,000 tons. As of mid - October, the listing volume of new cotton in Pakistan was 588,000 tons, a year - on - year increase of 22% [3]. - **Domestic Supply**: - The national new cotton picking is approaching the end, with a progress of 79.7%, and it is expected to reach about 90% next week. The delivery progress is 88.5%, 4.3% faster than the same period last year; the inspection volume of new cotton has reached 1.68 million tons; the sales progress is 10.5%, 5.8% faster than the same period last year. The average purchase price of national seed cotton has stabilized and rebounded, rising from 6.16 yuan/kg in the middle of the month to 6.32 yuan/kg. The average price of new - season machine - picked lint cotton has increased to around 14,500 yuan/ton, and the cost range of machine - picked lint cotton during the harvest period is 14,000 - 15,000 yuan/ton [10]. - This week, the national commercial cotton inventory increased by 408,200 tons to 1.8416 million tons, 76,600 tons lower than the same period last year; the commercial inventory in Xinjiang increased by 297,400 tons to 944,400 tons, 16,600 tons higher than the same period last year; the commercial inventory in major inland provinces decreased by 27,500 tons to 170,200 tons, 58,200 tons lower than the same period last year. In terms of finished products, the inventory days of pure cotton yarn decreased by 0.23 days to 31.02 days, the inventory days of terminal grey cloth decreased by 1.07 days to 23.01 days, and the inventory days of polyester - cotton yarn in the factory decreased by 0.15 days to 27.81 days [12]. - In September 2025, China imported about 100,000 tons of cotton, a year - on - year decrease of about 18.7%; from January to September 2025, China imported about 680,000 tons of cotton, a year - on - year decrease of about 69.8%. In September 2025, China imported about 127,700 tons of cotton yarn, a month - on - month decrease of 3.21% and a year - on - year increase of 15.02%. From January to September, the total import volume of cotton yarn in China was about 1.0366 million tons, a year - on - year decrease of 7.44% [16]. - There are few cotton warehouse receipts left in Xinjiang, and the effective forecast volume far exceeds that of the same period last year [17]. Inventory - The national cotton commercial inventory continues to rise, basically converging the previous year - on - year difference and approaching the same - period level. The inventory in Xinjiang has exceeded the same - period level, while the change in inland inventory is not obvious. Attention should be paid to the pressure of passive inventory replenishment in inland areas. The inventory of downstream finished products has decreased slightly, and the overall inventory level is still relatively neutral. Most of the Xinjiang warehouse receipts have flowed out, and the remaining warehouse receipts are concentrated in inland cotton - growing areas. The forecast volume of new - cotton warehouse receipts in Xinjiang exceeds that of the same period [3]. Demand - **International Demand**: In the US, clothing retail and wholesale sales continued to grow strongly in August, but consumer confidence declined slightly in September. In September, Vietnam's textile and clothing exports decreased seasonally but were still higher year - on - year. The consumer confidence index in the EU showed signs of stabilizing and recovering in September. In August, the growth rate of clothing import volume decreased significantly, and the import amount decreased, showing an increase in volume and a decrease in price [3]. - **Domestic Demand**: - This week, the operating rates of spinning mills and weaving mills decreased slightly. Due to the recent increase in cotton prices and the difficulty of downstream yarn price support, the immediate profits of representative yarns have declined to varying degrees. The cumulative difference in the overall industry profit has been expanding this year. As of September, the cumulative year - on - year profit has rebounded to - 18.5% [20]. - This week, the total cotton cloth sales volume in the Light Textile City increased slightly, and the 5 - day moving average of cotton cloth sales volume increased from 386,000 meters to 390,000 meters, 74,000 meters higher than the same period. In Keqiao, the fabric price index decreased by 0.16 to 110.79, and the auxiliary material price index decreased by 1.45 to 110.98 [22]. - In September, the PMI of the cotton textile industry increased by 1.57% to 44.29%, 12.29% lower than the same period and below the boom - bust line for five consecutive months. In terms of demand, the new order PMI increased by 1.98% to 48.72%, 9.44% lower than the same period; the operating rate PMI increased by 4.07% to 41.03%, 17.13% lower than the same period. In terms of inventory, the cotton yarn inventory PMI increased by 7.5% to 56.41%, 3.79% higher than the same period; the cotton inventory increased by 1.75% to 41.3%, 3.79% higher than the same period [24]. - In September, the total retail sales of enterprises above the designated size in clothing, footwear, hats, and knitted textiles reached 123.1 billion yuan, a year - on - year increase of 4.7%, further increasing from the 3.1% year - on - year growth rate in August; from January to September, the cumulative total retail sales of enterprises above the designated size in clothing, footwear, hats, and knitted textiles were 1.0613 trillion yuan, a year - on - year increase of 3.1% [26]. - In September, the "rush - to - export" effect continued to decline, and the year - on - year performance further weakened. The export of textile and clothing continued to be under pressure, and the export unit prices of clothing and yarn showed a slight divergence, but the export situation was still serious both year - on - year and month - on - month [3].

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Views of the Report - The supply factor has an upward impact on cotton prices. USDA's August report shows a reduction in the US cotton planting area by 8% to 9.3 million acres and a 15% cut in the harvest area to 7.4 million acres. The national cotton abandonment rate rose from 14% to 21% due to drought in the Southwest. The US cotton output decreased by 302,000 tons to 2.877 million tons compared to last month, while China's cotton output increased by 108,000 tons to 6.858 million tons. The global cotton output decreased by 391,000 tons month - on - month. The cotton market was volatile this week. Spinning mills' willingness to stock up remained weak during the off - season, and the pressure of finished product inventory eased. Weaving mills' weekly stocking willingness increased slightly, and inventory pressure also decreased [6]. - The demand factor has a downward impact on cotton prices. Spinning profit expanded slightly, and the loss in the inland area decreased [6]. - The inventory factor has an upward impact on cotton prices. BCO announced that the cotton social inventory at the end of July was 2.1898 million tons, a decrease of 640,000 tons from the end of June and a 21% year - on - year decline. The de - stocking speed continued to accelerate, reaching the fastest rate of the year. The spinning mills' industrial cotton inventory maintained a downward trend. The operation rate of inland yarn mills remained weak. In the industrial chain inventory, the finished products still had high inventory, while the raw material inventory decreased [6]. - The warehouse receipt factor has a neutral impact on cotton prices. As of August 29, the registered warehouse receipts of Zhengzhou cotton were 6,514, with 0 valid forecasts. The total of warehouse receipts and valid forecasts was 260,500 tons, compared with 290,400 tons on August 22 [6]. - The basis factor has a neutral impact on cotton prices. The basis quotation for sales in Xinjiang remained firm, and the spot transaction price fluctuated with the futures price. The basis transaction price of machine - picked cotton grade 31, double 29, with less than 2.9% impurity in the Aksu area of southern Xinjiang for the 09 contract was between 1,200 - 1,350 yuan/ton [6]. - The cost factor has a neutral impact on cotton prices. The overall average cost of ginning factories this year, converted to the official standard, is 14,700 - 14,800 yuan. In the new year, with the withdrawal of some ginning factory capacities in northern Xinjiang and the poor overall demand outlook, the opening price is not expected to be high [6]. - The macro factor has a neutral impact on cotton prices. The market believes that China will continue to avoid excessive competition. With the recent weak economic data in China, the market is considering whether China will introduce more stimulus policies in the fourth quarter. The economic data in July were generally lower than expected, and the three major indicators declined simultaneously, showing a weak recovery pattern of "stable production, lower - than - expected consumption, and intensified investment differentiation", which is consistent with the seasonal decline of the manufacturing PMI in July and the negative growth of new credit in July, indicating insufficient domestic effective demand. The US entering the interest - rate cut channel was supported after Powell's speech at the Jackson Hole meeting on August 22. Powell said that the inflation risk increased in the short term, but the impact of tariffs on prices might be one - time, and there was a downward risk in the employment market. The policy interest rate is in the restrictive range, and the Fed may adjust its policy according to the changing risk balance. After the speech, the market again bet on an interest - rate cut in September, and the probability of a rate cut increased from less than 80% to around 90% [6]. - The trading strategy is that there may still be a decline in the single - side market. In the medium - term, it is advisable to build long positions at low prices. In early September, if the US non - farm and inflation data are not conducive to the US Fed's interest - rate cut channel, it will be difficult for the overall commodities, including cotton, to rise significantly under the weak reality. After the new cotton is concentrated on the market, the selling hedging pressure in the market will lead to a callback. The upward space in January is limited. In the short term, it is advisable to wait and see until the market price drops before buying the far - month contracts [6] Group 3: Summary According to the Directory 01 Week - ly Core Points and Strategies - The report analyzes the supply, demand, inventory, warehouse receipts, basis, cost, and macro factors of cotton, and provides corresponding trading strategies [6] 02 Weekly Data Charts - **Global Supply - Demand Balance Sheet**: From 2020/21 to 2025/26 (August), the global cotton supply and demand situation has changed. The initial inventory, production, import, total supply, export, consumption, total consumption, and ending inventory have different trends. The inventory - to - consumption ratio has decreased from 58.54% to 62.65% [11]. - **Global Main Producing Countries' Production Changes**: The cotton production of main producing countries such as China, the US, India, Pakistan, Australia, and Brazil has changed over the years. From 2020/21 to 2025/26, the global cotton production decreased by 2.75% year - on - year [12]. - **Global Main Producing Countries' Demand Changes**: The cotton consumption of main consuming countries such as China, India, Pakistan, Bangladesh, Turkey, and Vietnam has changed over the years. From 2020/21 to 2025/26, the global cotton consumption increased by 0.02% year - on - year [13]. - **US Cotton Situation**: The US cotton weather has little impact on production. The US overall inventory cycle is transitioning from passive de - stocking to active restocking. The clothing inventory of US wholesalers and retailers is changing from continuous de - stocking in the past three years to appropriate active restocking. However, due to the Geneva Economic and Trade Talks Joint Statement in May and the two rounds of import - rushing in the first half of the year, the retailer inventory has risen to a high level again, weakening the continuous restocking behavior to some extent [18][19] - **Domestic New - Year Cotton Situation**: The domestic new - year cotton planting area has expanded, maintaining a pattern of loose supply. The cotton import volume is low, and spinning mills are looking forward to import quotas. The de - stocking speed of China's cotton commercial inventory is fast. The industrial inventory of spinning mills is decreasing, the operation rate of inland yarn mills is still weak, the finished products in the industrial chain inventory remain highly stocked, and the raw material inventory is decreasing [23][25][40]