Report Industry Investment Rating No relevant content provided. Core View of the Report - The cotton is likely to continue its oscillatory trend in the short term. The core logics are that the current Sino-US trade relations have eased, presenting a positive macro environment; there is a strong expectation of a bountiful cotton supply this year, and the subsequent hedging pressure will be significant as the cost gradually stabilizes; the downstream market shows a lukewarm performance, with enterprises' finished product inventories in a healthy state and a rigid demand for cotton [3]. Summary by Relevant Catalogs 1. Market Dynamics - On the 20th local time, the US Bureau of Labor Statistics (BLS) released an employment report. The US added 119,000 non-farm jobs in September, significantly higher than the market expectation of 50,000. The unemployment rate rose from 4.3% in August to 4.4%, the highest since October 2021. The non-farm employment data shows that the possibility of the Fed cutting interest rates in December is low, but currently, most Fed officials support a December rate cut. According to the CME "FedWatch" tool, the probability of a "25-basis-point rate cut" in December has risen to over 70% [2]. 2. Fundamental Analysis Commercial Inventory - As of November 15, the total national commercial cotton inventory was 3.6397 million tons, an increase of 709,100 tons from half a month ago. The total inventory in Xinjiang was 2.9346 million tons, an increase of 593,800 tons; the total inventory in the inland was 377,100 tons, an increase of 278,800 tons; the bonded warehouse cotton inventory was 328,000 tons, an increase of 17,000 tons. The current commercial cotton inventory is at the highest level in the same period in history, and it is expected to remain at this high level in the next few months [2]. Industrial Inventory - As of November 15, the in - stock industrial cotton inventory of textile enterprises was 931,400 tons, an increase of 59,400 tons, and an increase of 43,200 tons from the end of last month. The disposable cotton inventory of textile enterprises was 1.0875 million tons, a year - on - year decrease of 99,840 tons, and an increase of 20,800 tons from the end of last month. The yarn inventory of textile enterprises was 26.35 days, a year - on - year increase of 1.7 days and an increase of 0.23 days from the end of last month. The grey cloth inventory was 31.12 days, a year - on - year increase of 1.71 days and a decrease of 0.85 days from the end of last month. Currently, the finished product inventory of textile enterprises is in a healthy state, and the stable operating rate creates a rigid demand for cotton consumption [2]. 3. One - Week Data Overview - As of November 21, the main contract of Zhengzhou cotton closed at 13,460 yuan/ton, up 10 yuan/ton from last week, with a gain of 0.07%. The cotton spot price index was 14,796 yuan/ton, down 10 yuan/ton from last week, with a decline of 0.07%. The main contract price of ICE cotton futures was 61.85 cents/pound, down 0.65 cents/pound from last week, with a decline of 1.04%. The NYMEX crude oil price was 57.98 dollars/barrel, down 1.97 dollars/barrel from last week, with a decline of 3.29%. The Shanghai gold main contract was 926.94 yuan/gram, down 26.26 yuan/gram from last week, with a decline of 2.75% [4][6]. 4. Domestic Market Basic Situation Raw Material Price Index - On November 21, the price center of raw materials showed mixed trends compared with last week. The short - fiber main contract closed at 6,162 yuan/ton, down 76 yuan/ton from last week, with a decline of 1.22%. The cotton main contract closed at 13,460 yuan/ton, up 10 yuan/ton from last week, with a gain of 0.07%. The cotton spot 3128B market price was 14,796 yuan/ton, down 10 yuan/ton from last week, with a decline of 0.07% [10]. Domestic Cotton Yarn Price - On November 21, the price center of domestic yarns moved slightly higher compared with last week. The price of OEC10S airflow - spun yarn remained unchanged at 14,670 yuan/ton. The price of C32S carded yarn was 20,440 yuan/ton, up 120 yuan/ton from last week, with a gain of 0.59% [12]. Imported Yarn Price - On November 21, the price center of foreign yarns denominated in US dollars moved slightly lower compared with last week, and the price center of foreign yarns denominated in RMB declined. For example, the FCYIndexJC32S arrival price in US dollars was 2.64 dollars/kg, down 0.01 dollars/kg from last week, with a decline of 0.38%. The FCYIndexJC32S port pick - up price in RMB was 22,840 yuan/ton, down 60 yuan/ton from last week, with a decline of 0.26% [15][19]. Cotton Price Spread - On November 21, the spread between domestic cotton spot price index CCI3128B and FCindex sliding - duty port pick - up price was 953 yuan/ton, up 67 yuan/ton from last week, and the spread widened. The spread between Zhengzhou cotton main contract and FCindex sliding - duty port pick - up price was - 383 yuan/ton, up 87 yuan/ton from last week, and the spread narrowed. The spread between Zhengzhou cotton main contract and ICE main contract under tariff was 514 yuan/ton, up 111 yuan/ton from last week, and the spread widened. The spread between Zhengzhou cotton main contract and ICE main contract's converted disk price was 3,451 yuan/ton, up 106 yuan/ton from last week, and the spread widened [23][25]. Warehouse Receipts and Effective Forecasts - As of November 21, the total number of Zhengzhou cotton warehouse receipts and effective forecasts was 3,456, a decrease of 1,579 from last week. Among them, the total number of warehouse receipts was 2,244, a decrease of 2,157 from last week, and the total number of effective forecasts was 1,221, an increase of 578 from last week [28]. Zhengzhou Cotton Futures - Spot Price Spread - As of November 21, the spread between Zhengzhou cotton main contract and CCI3128B spot price index was - 1,336 yuan/ton, up 20 yuan/ton from last week, and the spread narrowed [30]. Cotton Inventory - As of November 15, the total national commercial cotton inventory was 3.6397 million tons, an increase of 709,100 tons from half a month ago. As of October 31, the monthly cotton import volume was 90,000 tons, a decrease of 10,000 tons from last month, with a decline of 10%, and a year - on - year decrease of 20,000 tons, with a decline of 18.18% [33][35]. Cotton Inspection Volume - As of November 20, the Xinjiang cotton inspection volume was 3.3915 million tons, the inland cotton inspection volume was 14,900 tons, and the national cotton inspection volume was 3.4064 million tons [38]. Cotton Textile Industry PMI - As of the end of October, the Purchasing Managers' Index (PMI) of China's cotton textile industry was 52.66%, up 8.37 percentage points from last month, and it returned above the boom - bust line for the first time in seven months since March this year [40]. 5. Zhengzhou Cotton Market Analysis Macroeconomic Situation - The US federal government shutdown ended, which is expected to have a negative impact on the US economy in the fourth quarter. The market is currently focused on the Fed's possible interest rate cut in December, and the decision will depend on factors such as inflation and the employment market [41]. Cotton Inventory - As of the end of October 2025, the national commercial cotton inventory was 2.9306 million tons, an increase of 1.9089 million tons from last month, with an increase rate of 186.84%, higher than the same period last year. The cotton industrial inventory of textile enterprises showed a stable - to - increasing trend [41]. Market Price and Supply - Demand - As of November 14, the CRB commodity price index declined slightly, and the ICE cotton futures main contract price fell. The latest global cotton supply - demand report was bearish. In the short term, cotton prices may be under pressure and show a weak trend [41].

Core Viewpoint - The cotton harvest in Xinjiang is nearing completion, with overall production expected to increase despite some regional shortfalls. The mechanization of cotton harvesting and processing has improved efficiency, leading to stable cotton prices and positive farmer sentiment [1][4][5]. Group 1: Cotton Production and Harvesting - The cotton picking in northern Xinjiang is almost finished, while southern Xinjiang has completed about 70% of its harvest [1]. - Some areas in southern Xinjiang, such as Xinhe County, have seen a decrease in yield by 80 kg per mu compared to last year, with actual yields around 400-420 kg per mu, below market expectations [2]. - The overall cotton production in Xinjiang is optimistic due to expanded planting areas and favorable weather conditions during the growing season [2][3]. Group 2: Cotton Quality and Pricing - The quality of cotton this year is generally good, attributed to favorable weather and the use of superior seed varieties by farmers [5][6]. - The initial purchase price for seed cotton was around 5.9 CNY/kg, with prices in northern Xinjiang currently ranging from 6.1 to 6.3 CNY/kg, and slightly higher in southern regions [5][6]. - The cotton purchasing market is stable, with no significant "holdout" behavior from farmers, and processing plants are not aggressively buying due to lower processing profits [5][6]. Group 3: Mechanization and Efficiency - The mechanization of cotton planting, harvesting, and processing has significantly increased efficiency, with nearly 100% mechanization in northern Xinjiang [4]. - Advanced technologies such as satellite navigation and drones are being utilized, improving crop management and reducing labor costs [4]. - Despite rising production costs due to increased mechanization and resource management, stable cotton prices have led to favorable overall returns for farmers [4]. Group 4: Market Dynamics - The cotton supply is expected to be relatively ample, which may exert pressure on prices, as textile companies remain cautious in their purchasing strategies [6]. - There has been a slight recovery in the cotton yarn market since October, but demand remains subdued, with most textile companies adopting a cautious approach to inventory replenishment [6].

1. Report Industry Investment Rating - The investment rating for cotton is "Bearish" [2] 2. Core Viewpoints of the Report - The industry has a strong consensus on a bearish outlook for the future. In the fourth quarter, with the large - scale listing of new cotton, supply pressure and market sentiment will be concentratedly released. The futures price may fall below 13,000 yuan/ton, with the low point possibly occurring in November. After the release of negative factors, downstream restocking will help stabilize the market. In the long - term, the fourth quarter may be the period with the greatest domestic pressure, and the market in the next year is generally cautiously optimistic [5][30][36] 3. Summary According to the Directory 3.1 Research Purpose - To understand the production, cost, acquisition, consumption, inventory, and industry sentiment of cotton in Xinjiang, the researcher participated in the "2025 Autumn Xinjiang Cotton 'Full - industry Chain + Full - domain' In - depth Research" from September 7th to 19th. The research objects included cotton farmers, ginning factories, textile enterprises, and warehousing and logistics enterprises, mainly through enterprise discussions and on - site field inspections [14] 3.2 Research Summary - **New cotton production increase**: The expectation of new cotton production increase is strong, and the production forecast has been raised. The estimated production of Xinjiang cotton this year is between 730 - 780 tons, with a high probability of reaching 750 tons. The planting area has increased by 300 - 400 million mu (7% - 10%), and the average yield per mu has increased by 30 - 50 kg (5% - 10%) [17][18] - **New cotton quality**: The new cotton quality is expected to improve year - on - year. Although the lint percentage in some southern Xinjiang areas may decline, the overall quality of cotton in both southern and northern Xinjiang is better than last year [19] - **Opening time**: The opening time of cotton acquisition in southern and northern Xinjiang is close, expected to be concentrated around September 25th to the end of September, later than the previous market expectation but earlier than last year [20] - **Planting cost and income**: The planting cost has increased slightly year - on - year. The cost of leased land is about 3,000 yuan/mu, and the cost of self - owned land is about 1,500 - 1,700 yuan/ton. The break - even yield per mu for leased land is 400 - 410 kg [21] - **Cottonseed price**: The cottonseed price has increased year - on - year. The pre - sale price in southern Xinjiang is 2.3 - 2.35 yuan/kg, and in northern Xinjiang is about 2.2 yuan/kg. During the peak acquisition period, the price may drop to 2.1 - 2.2 yuan/kg, still higher than last year [22] - **Ginning factory**: Ginning factories are cautious in acquisition. In northern Xinjiang, due to years of losses, they have lost the ability and impulse to rush for cotton, and the over - capacity situation has been reversed [23][24] - **Cotton farmers**: Cotton farmers have low expectations for the cotton price, with a psychological expectation of 6.3 - 6.5 yuan/kg, and their reluctance to sell has weakened [25] - **Warehousing inventory**: The inventory of old cotton in Xinjiang's warehousing enterprises is extremely low, while the industrial inventory of cotton spinning enterprises is relatively high, which can be connected to the large - scale listing of new cotton. However, some inland textile enterprises have tight inventories, and the shortage of high - quality cotton is prominent [26] - **New cotton pre - sale**: The pre - sale volume of Xinjiang cotton is large, about 150 tons. The pre - sale basis is high, but the actual execution rate is uncertain [27] - **Cotton spinning enterprises**: Xinjiang's cotton spinning enterprises have sufficient orders but shrinking profit margins. The growth of cotton spinning capacity in Xinjiang will enter a bottleneck period [28] 3.3 Market Outlook and Investment Strategy - **Short - term**: In the fourth quarter, due to the large - scale listing of new cotton, the supply pressure and market sentiment will be concentratedly released. The futures price may fall below 13,000 yuan/ton, with the low point possibly in November. It is not recommended to short after the price falls below 13,000 yuan/ton due to the poor risk - return ratio [5][35][36] - **Long - term**: After the release of negative factors, downstream restocking will help stabilize the market. The overall market in the next year is cautiously optimistic [5][36] 3.4 Research Content 3.4.1 September 8th - Kashgar Region, Shache County - **Kashgar Youmian Experimental Base**: It promotes the modernization of the cotton industry. The expected yield per mu of the "Kashgar Youmian" demonstration field in 2025 is 630 kg, a year - on - year increase of more than 50% [41] - **Color Cotton Planting and Research Base**: It uses intelligent agriculture to increase yield. The current yield per mu is about 480 kg, and the lint percentage is 35% - 36% [41] - **Shache County Cotton Industry Company**: The planting area has increased from 800,000 mu last year to 1.1 million mu this year, and the yield per mu is expected to be higher than last year. The pre - sale price of cottonseed is 2.3 yuan/kg, and the expected acquisition price of hand - picked cotton for spinning is below 7 yuan/kg [40][43] - **DW Group Xinjiang Shache Industrial Park Enterprise**: It has a total planned capacity of 4 - 5 million spindles. It only produces one variety, 32s, with high production efficiency. It uses cotton with double 29 indicators, mainly from southern Xinjiang, and has a good profit [45][46][48] 3.4.2 September 9th - Bachu → Tumushuke - **Bachu County Industrial Park Cotton - related Enterprise Symposium**: Bachu's cotton - spinning industry has developed rapidly. The planting area in 2025 is 1.66 million mu, and the yield per mu is expected to increase to 410 - 420 kg. The total inventory of three warehouses is only 160,000 tons. The current cottonseed price is about 2.4 yuan/kg, and the expected acquisition price is 6.1 - 6.3 yuan/kg [52][61] - **Bachu County Delivery Warehouse**: Some factories in Kashgar are purchasing hand - picked cotton for wadding. The expected production in Kashgar this year is 200,000 tons more than last year, but the lint percentage may be one point lower. The current inventory is 38,000 tons, much lower than last year [62][63] - **A Division's Enterprise Group Symposium**: The cotton planting area this year is 1.08 million mu, slightly increasing. The expected yield per mu has a small increase. The lint percentage may be 1 - 2 points lower, but the quality indicators are better than last year. The expected acquisition price of hand - picked cotton for wadding is 16,200 - 16,500 yuan/ton [67][68] 3.4.3 September 10th - Tumushuke → Alar - **A State - owned Textile Enterprise under a Division**: It has a current spinning capacity of 400,000 spindles, producing 24S and high - end yarns. The inventory of cotton yarn is about 1,000 tons, mainly sold in Xinjiang. The processing cost of 60s yarn is about 7,200 yuan, and the production profit is negative after including depreciation and financial costs [72][74][76] - **A Division's Enterprise Group**: The cotton planting area in the division is stable at 2 million mu, and the expected yield per mu is 460 - 470 kg. The expected acquisition price of seed cotton is about 6 yuan/kg. The enterprise is conservative in acquisition and uses hedging strategies. It is optimistic about the market next year [78][82][85] 3.4.4 September 11th - Alar → Shaya → Xinhe - **Alar Economic Development Zone Symposium**: The surrounding textile mills in Alar are operating well, but the "Golden September and Silver October" peak season is not obvious. The current textile capacity in Xinjiang is about 34 million spindles. The "Bing 9 Articles" policy provides subsidies for building factories and equipment in southern Xinjiang's four divisions [86][89] - **Shaya Cotton Industry Company**: The planting area in Shaya is 1.85 million mu, and the yield per mu is expected to be over 500 kg. The current price of cottonseed is 2.4 yuan/kg, and the pre - sale price is 2.3 yuan/kg. The enterprise is cautious in acquisition and follows large factories [95][96][98] - **Xinhe Cotton Industry Group Symposium**: The enterprise is a leading enterprise in Aksu. It believes that the acquisition price of seed cotton above 6.5 yuan/kg is risky, and it may fall below 6 yuan/kg in November [100][103] 3.4.5 September 12th - Tiemenguan → Korla - **Tiemenguan Textile Enterprise**: It will form a complete industrial chain from cotton to clothing. The current order volume is about 2,100 tons, and the inventory is about 560 tons. The enterprise uses more southern Xinjiang cotton, and the acquisition price may be slightly higher this year. The yarn market has limited downward space but lacks upward momentum [112][114][122]

Core Viewpoint - The global cotton market is expected to experience a significant increase in production, with major producing regions such as China, Brazil, and Australia anticipating higher yields. However, the cotton price may face downward pressure as new crops are harvested in October [1][2]. Group 1: Cotton Supply and Demand Dynamics - Domestic cotton basis remains strong, reflecting structural supply-demand contradictions, particularly a shortage of high-grade cotton. The increase in domestic cotton usage is driven by tariff hikes that have forced some enterprises to switch to local cotton [3][4]. - The current cotton inventory is continuously depleting, leading to a marginal improvement in the cotton market fundamentals. However, the demand remains weak, particularly during the textile off-season from June to September, which could put pressure on the cotton basis [3][4]. Group 2: Industry Challenges and Profitability - The cotton textile industry is facing significant challenges, including persistently low average profit margins and insufficient effective demand. This has led to an accelerated industry reshuffle, with the scale of cotton textile revenue expected to shrink to below one trillion yuan, marking a significant decline from previous years [5][6]. - The profit margin for large-scale cotton textile enterprises has decreased from 3.09% in 2022 to 1.82% in the first four months of 2025, indicating a continuous downward trend and the highest loss ratio in the industry [6][7]. Group 3: Future Outlook and Development Initiatives - Despite the current challenges, the cotton textile industry has a solid foundation and potential for long-term growth. The industry is encouraged to optimize its structure, enhance technological innovation, and focus on green development to maintain confidence and improve its image [7]. - The industry is expected to further align with macro policies, develop new productive forces, and deepen industrial transformation to promote high-quality development while preventing unhealthy competition [7].

Core Viewpoint - The global cotton market is expected to experience a significant increase in production, with major producing regions such as China, Brazil, and Australia anticipating higher yields [1]. Domestic Market - Currently, the domestic cotton basis remains strong, with high-grade cotton in short supply. The increase in tariffs has forced some companies to switch to domestic cotton, leading to a continuous reduction in cotton inventory and a marginal improvement in the fundamentals. Experts believe that with the new crop coming in October, the cotton basis is likely to return, putting pressure on cotton prices [2][4]. - The cotton textile industry is facing severe challenges due to the dual pressures of raw material supply shocks and insufficient end demand. The first half of the year has seen significant pressure on the industry, leading to increased polarization among companies [3][8]. Global Cotton Production - The global cotton production is set to increase significantly, with new crop prices and basis expected to be lower than last year. The USDA balance sheet indicates a slight oversupply compared to demand, with external prices lower than U.S. planting costs but higher than Brazilian costs. Macro uncertainties such as tariffs and dollar credit will be major disruptive factors [6][8]. Industry Challenges - The cotton spinning industry is currently facing a prolonged low average profit margin, insufficient end demand, and complex international conditions, leading to an accelerated industry reshuffle. The revenue of large-scale cotton spinning enterprises is expected to shrink to below one trillion yuan, with their share of the textile industry dropping below 20%, a significant decline from the peak period in 2016 [8][9]. - The operating profit margin of large-scale cotton spinning enterprises has been continuously declining, with projections showing a drop from 3.09% in 2022 to 1.82% in early 2025, marking a new low [9][10]. - The loss ratio among large-scale cotton spinning enterprises has further expanded, reaching 28.1% in early 2025, up from 22.5% in 2024, indicating a record high for industry losses [10]. Future Outlook - Despite the various external risks and challenges, the cotton spinning industry still possesses a solid foundation, numerous advantages, and significant potential for growth. The long-term positive trend of the industry is expected to remain unchanged. The industry aims to leverage macro policies, develop new productive forces, deepen industrial transformation, and promote high-quality development while enhancing self-discipline to prevent vicious competition [10].