Fundamental analysis involves comparing major supply and demand variables like production, consumption, and ending stocks.  This is usually based on organized tables, the prime example of which are published by USDA, and reproduced below:

Updated World cotton supply/demand.  USDA’s month-over-month adjustments in the September WASDE report reflected modest tightening for the 2025/26 world cotton balance sheet.  Supply side adjustments included a million fewer bales of beginning stocks, mainly in China, compared to August.  On the other hand, world production was raised by roughly a million bales, month over month, as increases in India, China, and Australia outweighed decreases in Turkey, Mexico, and West Africa.  World imports were 130,000 bales greater compared to the previous month, as reductions in India and China were outweighed by increases in Turkey, Mexico, and Vietnam.  On the demand side, world consumption was raised 831,000 bales compared to August, mostly in China. World exports were raised 110,000 bales to somewhat balance the increase in world imports. The bottom line was that the larger positive demand changes dominated the small supply-side increases, giving a modest 770,000 bale cut in world ending stocks, month over month.  Such an adjustment would normally be neutral according to theory and history.

Updated U.S. cotton supply/demand.  USDA’s September WASDE report showed minor supply-side adjustments to the U.S. new crop balance sheet, compared to the previous month’s numbers.  U.S. beginning stocks were unchanged.  Slightly higher U.S. planted acreage (+20,000 acres), essentially the same abandonment, and a one pound reduction in yield per harvested acre all combined to increase U.S. production by 10,000 bales to 13.22 million.  There were no changes on the demand side of the U.S. balance sheet, and the small increase in production was offset in the “Unaccounted” fudge factor category.  The bottom line of all this was no change in U.S. ending stocks, which is an obviously neutral adjustment as well as a price neutral year over year level level.

Fundamental analysis is fairly straightforward in its application.  However, there are a lot of moving parts and uncertainty in balancing supply and demand variables.  The price outlook can also be influenced by non-fundamental factors, particularly in the short run.