Liu Miao, manager of research and investment of Grand Flow Resources, delivered her report of Cotton supply and demand analysis and outlook.

The report mainly covers the annual supply and demand pattern overview for cotton, year-end inventory, new year's production and future imports, demand (domestic and export), and summary.

From an annual supply and demand perspective, over the past year, USDA's adjustments to the China balance sheet showed no changes in consumption, with inventory adjustments based on import patterns. The current forecast for the coming year predicts an increase in production and a decrease in demand, with an estimated production of around 6.3 million tons in China, including about 5.9 million tons from Xinjiang, and a rise in the stock-to-use ratio. For inventory, the analysis should focus on commercial inventory as it is subject to more fluctuations, while industrial inventory remains relatively stable, forecasted to be around 800,000 tons by the end of the year.

Regarding new year's production and future imports and demand, Xinjiang's weather has been favorable, but the pre-sale basis is extremely weak, and profits in yarn processing are recovering, leading to seasonal inventory accumulation downstream. In terms of demand, domestic sales are down year-on-year and weaker than retail sales, but inventory has been mostly cleared. Export structure changes persist, but exports to the US, Europe, and Japan have weakened due to sanctions.

Ms. Liu Miao believes that overall, this year's cotton supply is more relaxed compared to last year, and the new year's supply will be even more relaxed compared to this year. Year-end carryover stocks are relatively ample compared to last year, but the issuance of quotas remains a variable, creating uncertainty for next year's imports. Currently, both China and global supply pressures are prominent, with future variables depending on weather outside China. The interest rate cut cycle in Europe and the US has just begun, and the long-awaited replenishment cycle is yet to be seen, with significant market disagreements over demand. The macroeconomic impact on commodities is intensifying, and next year's trading trends and space will be magnified by the conflict between fundamentals and macroeconomic factors.