One of the highlights of this year's international cotton market is the rapid rebound in cotton consumption. In terms of cotton prices, cotton prices this year have been greatly supported by consumer demand. Cotton inventories in 18/19 were reduced from the initial 85 million packages to 77 million 800 thousand packages, which is due to a sharp rise in cotton consumption worldwide.

Looking back over the past 19 years, we see that consumption grew by 5.5% in 2017, which is a very prominent growth. And we estimate that this year's growth rate is 3.9%, compared with the previous 5 years only 1.5% of the average level, this figure is also very prominent.

Although the planting area will increase worldwide this year, it is expected that the cotton harvest will be reduced by 1 million 500 thousand acres. This is largely related to the expected reduction in West Texas because of the severe drought there. It is expected that there will be a shortfall of nearly 7 million packages this year. That is why the cotton price we see today is 80+ cents instead of 60-70 cents. We had never faced such a large demand before, so we could only meet the demand by planting more cotton.

In terms of consumption, we see that global growth is very strong - Bangladesh, China, India and Vietnam account for 83% of the growth. Bangladesh is the second largest exporter of clothing and will continue to be a big consumer of cotton and a big importer of cotton. India's demand for cotton is also growing rapidly, but Vietnam's growth rate is the fastest. The rate of economic growth in Vietnam has lasted for several years, which largely depends on the result of a large increase in the consumption of cotton in China and South Korea, so the two countries have opened cotton mills in Vietnam to sell their domestic markets.

At present, the only difficulty in forecasting is the Chinese market, because no one knows how the tariff conflict will develop. The US Department of agriculture has adjusted China's consumption data for three years. We all agree that China's figures have been underestimated in the past few years. The adjustment of the US Department of agriculture is reasonable, so the uncertainty of the 18/19 season is whether the current Sino US tariff conflict will affect China's consumption capacity this year. Over the past few years, we have seen that demand in the Far East has continued to grow and is expected to continue to grow this year. China has accumulated a lot of cotton stock in recent years, and has been trying to digest these stocks over the past four or five years, and the global inventory has fallen sharply, although it is still in high position, and it has become more and more consistent with historical data.

According to past us data, market prices began to soar when inventories reached below 20% of estimated consumption. If we pay attention to those years that have experienced really strong price increases, they all correspond to low levels of inventory. We are not far away from this goal - we expect to have 4 million packages of final inventory. The credibility of data in another region outside China's cotton stocks is questionable. Many industry insiders believe that the US Department of agriculture is still exaggerating India's stock, and India is the world's largest cotton producer. Of course, the business feeling of the industry may not be consistent with the information from the Department of agriculture, because the United States depends on the export of cotton, and when we continue to see the very strong export, we often have the illusion that the stock of other exporters is not as much as the data is shown.