Report Industry Investment Rating - Not provided in the content Core Viewpoints - The cotton fundamentals have some support, and it is advisable to consider building long positions on dips. The US cotton is expected to move in a range in the short - term, while the technical performance of Zhengzhou cotton is strong. It is advisable to build long positions on dips rather than chase the highs. For arbitrage and options, the recommendation is to wait and see [7][8][9] Summary by Directory First Part: Market Information - **Futures Market**: The closing prices, price changes, trading volumes, and open interest of various cotton (CF) and cotton yarn (CY) contracts are presented. For example, the CF01 contract closed at 15640 with a price increase of 10, and the trading volume decreased by 1164 to 3,324 lots [2] - **Spot Market**: The prices and price changes of various cotton and cotton yarn spot products are provided. For instance, the CCIndex3128B was 16591 yuan/ton with a decrease of 40, and the CY IndexC32S was 21920 with no change [2] - **Spreads**: Different types of spreads are listed, including cotton and cotton - yarn inter - month spreads and cross - variety spreads. The 1 - 5 month spread of cotton was 385 with a decrease of 20 [2] Second Part: Market News and Views Cotton Market News - **Inventory in Zhangjiagang**: As of March 2, 2026, the total cotton inventory in Zhangjiagang Free Trade Zone was 4.70 million tons, a year - on - year decrease of 0.16%. The inventory increased significantly due to more in - bound and less out - bound shipments before the Spring Festival, mainly with Brazilian cotton [5] - **US Cotton Inspection**: As of February 27, 2026, the cumulative inspection volume of US upland cotton + Pima cotton was 3.0387 billion tons, accounting for 100.3% of the annual US cotton production forecast, a year - on - year decrease of 4%. The final inspection volume is expected to be around 3.05 - 3.07 billion tons [6] - **CFTC Data**: As of February 24, 2026, the net long position ratio of ICE cotton futures funds was - 20.66% (a week - on - week increase of 3.2 percentage points) [6] Trading Logic - The global cotton production has decreased by 3% according to the previous USDA annual report. The overall supply is expected to be 2525, while consumption is 2614, showing a relatively tight balance. If consumption continues to increase, a tight - balance situation may occur [7] Trading Strategy - **Single - side**: It is expected that the US cotton will move in a range in the short - term, and Zhengzhou cotton shows strong technical performance. It is advisable to build long positions on dips and not chase the highs [8] - **Arbitrage**: Wait and see [9] - **Options**: Wait and see [10] Cotton Yarn Industry News - **Cotton Yarn Market**: The trading in the pure cotton yarn market is light, and downstream orders are unclear. The inventory has decreased, and manufacturers are cautious and waiting [12] - **Cotton Grey Cloth Market**: The overall trading atmosphere of all - cotton grey cloth is still insufficient, with few new orders for weavers. Some thin fabric re - orders have been confirmed, while others have not improved much [12] Third Part: Options - **Option Contract Data**: The data of several cotton option contracts are presented, including the closing price, price change rate, implied volatility, and other indicators. For example, the CF605C14600.CZC contract closed at 334.00, with a price change rate of - 16.9% and an implied volatility of 13.3% [14] - **Volatility**: The 60 - day HV of cotton is 9.2812, with a slight increase compared to the previous day [14] - **Option Strategy**: The PCR of the main contract's open interest of Zhengzhou cotton was 0.8667, and the PCR of the main contract's trading volume was 0.4688. The trading volumes of both call and put options decreased. The recommendation is to wait and see [15][16] Fourth Part: Related Attachments - Multiple charts are provided, including the 1% tariff - based domestic and international cotton price difference, cotton 1 - month, 5 - month, and 9 - month basis, CY - CF spreads, and CF inter - month spreads [17][21][26]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - The fundamentals of cotton remain strong due to supportive market factors, and the recent sharp correction in cotton prices is expected to result in short - term oscillations with a slightly upward bias [6]. - It is recommended to consider buying on dips for Zhengzhou cotton, while maintaining a wait - and - see approach for both arbitrage and options strategies [8][9][10]. 3. Summary by Directory First Part: Market Information - **Futures Market**: The closing prices of CF01, CF05, and CF09 contracts increased by 50, 50, and 15 respectively, while the CY01 contract decreased by 395. The trading volumes of most contracts decreased, and the open interest of some contracts changed. For example, the trading volume of the CF05 contract decreased by 207,513, and its open interest increased by 5,210 [2]. - **Spot Market**: The CCIndex3128B price increased by 113 to 15,970 yuan/ton, and the Cot A price was 75.00 cents/pound. The prices of some other spot products also had corresponding changes [2]. - **Spreads**: In the cotton and棉纱 markets, there were various spread changes. For instance, the 1 - 5 month spread of cotton was 40 with no change, and the 1 - 5 month spread of 棉纱 was - 1,020, a decrease of 440 [2]. Second Part: Market News and Views - **Cotton Market News** - In Xinjiang, the number of ginned cotton factories that ended processing increased last week, and the processing volume continued to decline. The domestic lint market price has been rising during the acquisition and processing period this year, and processing enterprises generally made profits through the "buy - and - sell" model. The average purchase price of inland seed cotton last week was 6.78 yuan/kg, a decrease of 0.17 yuan/kg from the previous week. As of January 11, 1,096 cotton processing enterprises had conducted notarized inspections, with a total inspection weight of 6.784 million tons [4]. - The average temperature in the main cotton - producing areas of the US decreased, and the precipitation remained low. The drought in the main cotton - producing areas of the US is expected to intensify in the first quarter [5]. - In December 2025, Vietnam's textile and clothing imports and exports performed well, with a 47% month - on - month increase in cotton imports [5]. - **Trading Logic**: The cotton sales progress is fast, and the downstream stocking willingness has increased. The fundamentals of cotton remain strong, and the short - term trend is expected to be slightly upward [6]. - **Trading Strategies** - For the single - side strategy, it is expected that the US cotton will oscillate within a range in the short term, and it is advisable to consider buying Zhengzhou cotton on dips [8]. - For the arbitrage and options strategies, a wait - and - see approach is recommended [9][10]. - **Cotton Yarn Industry News** - The overall price of pure cotton yarn is stable with a slight decline. The high - count combed yarn price is firm, but the overall market trading atmosphere is still light. The prices of some yarn products are provided, such as the OEC21S at about 16,600 yuan/ton [10]. - The all - cotton grey fabric market has partial stocking. Most manufacturers believe that there will be no significant improvement this year. The prices of regular varieties are stable, and the dyeing factories plan to start their holidays at the end of January, while some weaving factories will start their holidays in mid - January [11]. Third Part: Options - **Volatility**: The 10 - day HV of cotton increased slightly yesterday. The implied volatilities of CF601 - C - 13400, CF601 - P - 13000, and CF601 - P - 12400 were 6.7%, 11.4%, and 17.8% respectively [13]. - **Options Strategy**: The PCR of the main contract of Zhengzhou cotton decreased, and a wait - and - see approach is recommended for options [14][15]. Fourth Part: Related Attachments - The report provides multiple charts, including the 1% tariff - based price difference between domestic and international cotton markets, cotton basis for different months, and the price difference between cotton yarn and cotton for different contracts [17][20][24][25].