Report Industry Investment Rating - Not mentioned in the provided content Core Viewpoints - Since March, the ongoing conflict in the Middle East and the closure of the Strait of Hormuz have led to significant increases and large fluctuations in energy and chemical products such as crude oil and shipping. Against this backdrop, combined with capital and the strong fundamental situation of Zhengzhou cotton, the cotton price has experienced increased intraday fluctuations but generally shown a strong upward trend. The main contract reached a new stage high of 15,725 yuan/ton this week. In the medium to long term, the cotton planting area is expected to decline in 2026, and the supply-demand situation will improve, so there is still room for cotton prices to rise. The extent of the increase depends on the new cotton planting area [3]. - The USDA report is slightly bearish. Globally, mainly due to the increase in production in Brazil and China, the global cotton production forecast has been raised by over 1.13 million bales; the consumption in multiple countries has been lowered, resulting in a month-on-month decrease of 140,000 bales in global cotton consumption; the global ending stocks forecast has been raised by 1.28 million bales. In China, the production forecast has been raised by 500,000 bales to 35.5 million bales; at the same time, the consumption has also been raised by 500,000 bales, and after offsetting each other, the ending stocks forecast remains the same as last month. As of March 10, the national cotton inspection volume was 7.5 million bales, 220,000 tons less than the USDA's March production forecast. Currently, the inspection of new cotton in China is coming to an end, and it is expected that there will be little change in the production adjustment in the later stage [3]. - In the United States, the key data of production, consumption, exports, and ending stocks remain the same as last month. As the new cotton planting season approaches, the market is concerned about the new cotton planting area, and attention should be paid to the planting intention data released by the USDA at the end of the month [4]. Summary by Relevant Catalogs Supply and Demand Data - **Global**: Beginning stocks are 7.376 billion bales, production is 12.099 billion bales, imports are 4.391 billion bales, consumption is 11.858 billion bales, exports are 4.391 billion bales, and ending stocks are 7.639 billion bales. Month-on-month, production increased by 113 million bales, imports increased by 20 million bales, consumption decreased by 14 million bales, exports increased by 20 million bales, and ending stocks increased by 128 million bales. Year-on-year, beginning stocks increased by 46 million bales, production increased by 245 million bales, imports increased by 88 million bales, consumption decreased by 36 million bales, exports increased by 150 million bales, and ending stocks increased by 263 million bales [7]. - **China**: Beginning stocks are 3.484 billion bales, production is 3.55 billion bales, imports are 560 million bales, consumption is 3.95 billion bales, exports are 8 million bales, and ending stocks are 3.636 billion bales. Month-on-month, production increased by 50 million bales, and consumption increased by 50 million bales. Year-on-year, beginning stocks decreased by 187.6 million bales, production increased by 350 million bales, imports increased by 41.5 million bales, consumption increased by 50 million bales, exports increased by 1.4 million bales, and ending stocks increased by 152.5 million bales [7]. - **United States**: Beginning stocks are 400 million bales, production is 1.392 billion bales, imports are 1 million bales, consumption is 160 million bales, exports are 1.2 billion bales, and ending stocks are 440 million bales. Month-on-month and year-on-year, all data remain unchanged [7]. - **India**: Beginning stocks are 922 million bales, production is 2.35 billion bales, imports are 400 million bales, consumption is 2.5 billion bales, exports are 140 million bales, and ending stocks are 1.032 billion bales. Month-on-month, imports increased by 80 million bales, and ending stocks increased by 80 million bales. Year-on-year, beginning stocks decreased by 8.4 million bales, production increased by 30 million bales, imports increased by 95.9 million bales, exports increased by 7.5 million bales, and ending stocks increased by 110 million bales [7]. Inventory Situation - As of the end of February, the national commercial cotton inventory was 5.477 million tons, a month-on-month decrease of 312,000 tons and a year-on-year decrease of nearly 40,000 tons. In the context of a significant increase in cotton production this year, the year-on-year decrease in commercial inventory indicates that overall cotton consumption (sales) has performed well in the past period. Regionally, the commercial cotton inventory in Xinjiang warehouses has decreased rapidly. At the end of February, the commercial cotton inventory in Xinjiang warehouses was 4.07 million tons, a month-on-month decrease of 386,000 tons, the highest decline rate in the same period in recent years; a year-on-year decrease of 270,000 tons, at the lowest level in the same period in recent years [5]. - As of last Friday, the total of Zhengzhou cotton warehouse receipts and valid forecasts was 12,791; the total of Zhengzhou yarn warehouse receipts and valid forecasts was 387 [64]. Price and Market Trends - The price of the active cotton contract has shown an upward trend. From March 6 to March 13, 2026, the price of the ZCE active contract increased from 15,295 yuan/ton to 15,415 yuan/ton, an increase of 120 yuan/ton; the price of the ICE active contract increased from 64.21 cents/pound to 65.8 cents/pound, an increase of 1.59 cents/pound [9]. - The prices of imported cotton and imported yarn have also increased. From March 6 to March 13, 2026, the price of US EMOT M increased from 73.80 cents/pound to 75.00 cents/pound, and the price of Brazilian M increased from 72.40 cents/pound to 73.60 cents/pound. The prices of Indian C32S, Vietnamese C32S, and Indonesian C32S imported yarns all increased by 130 - 140 yuan/ton [14][15]. - The price difference between domestic and foreign cotton has been widening. Last Friday, the price difference between the domestic 328 cotton price index and the port delivery price index of imported cotton under the sliding duty was 33 yuan/ton, a week-on-week increase of -73 yuan/ton; the price difference with the port delivery price of imported cotton under the 1% tariff was 76 yuan/ton, a week-on-week increase of -3 yuan/ton. The price difference between the C32S yarn price index and the port delivery price was 3,121 yuan/ton, a week-on-week increase of 4,230 yuan/ton [52]. - On the futures market, last Friday, the price difference between the Zhengzhou yarn main contract and the Zhengzhou cotton main contract was 6,150 yuan/ton, a week-on-week increase of 240 yuan/ton; the immediate theoretical processing profit of 32-count pure cotton yarn was -2,227 yuan/ton, and the loss increased by 155 yuan/ton week-on-week [57]. Market Activity and Consumption - As of the week ending March 5, the weekly signing volume of 2025/26 US upland cotton was 57,400 tons, a month-on-month increase of 68%, a decrease of 8% compared with the four-week average, and a year-on-year decrease of 7%. Among them, Vietnam signed 26,400 tons and Bangladesh signed 6,400 tons [26]. - The textile and clothing export volume and domestic retail sales in China show certain trends, but specific data and analysis are presented in the form of charts in the report [35]. - The production and circulation prosperity indexes of the Keqiao textile industry also show certain trends, but specific data and analysis are presented in the form of charts in the report [39].

1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - The March USDA monthly supply and demand report is neutral. Since March, the operation of the domestic downstream textile industry chain has been satisfactory. The prices of finished cotton yarn and its substitute viscose staple fiber have been gradually rising. Currently, the fundamentals are favorable. Affected by crude oil prices and the overall commodity market in the short - term, Zhengzhou cotton prices are fluctuating widely at a high level. It is recommended to try to go long on dips [9]. 3. Summary by Directory 3.1. Weekly Assessment and Strategy Recommendation - **Industry Information**: The ICAC predicts that the global cotton production in the 2026/27 season will decline by 4% to 24.8 million tons, while consumption is expected to remain stable at 25 million tons. From February 26 to March 5, the US current - year cotton export sales were 35,800 tons, with cumulative export sales of 2.0865 million tons, a year - on - year decrease of 163,900 tons. Among them, the export to China in that week was 1,800 tons, with cumulative exports of 100,300 tons, a year - on - year decrease of 90,200 tons. As of the week of March 13, the spinning mill operating rate was 76%, a 2.8 - percentage - point increase from the previous week. The national commercial cotton inventory was 5.21 million tons, a year - on - year increase of 330,000 tons. The March forecast for the 2025/26 global cotton production is 26.34 million tons, a 240,000 - ton increase from the February forecast and a 540,000 - ton increase from the previous year. The inventory - to - consumption ratio is 64.42%, a 1.15 - percentage - point increase from the February forecast and a 2.4 - percentage - point increase from the previous year. The US production forecast in March is 3.03 million tons, unchanged from the February forecast, with export estimates remaining the same and the inventory - to - consumption ratio at 30.43%, unchanged. Brazil's production forecast increases by 160,000 tons to 4.25 million tons; India's production forecast remains at 5.12 million tons; China's production is raised by 100,000 tons to 7.73 million tons. In December 2025, China imported 180,000 tons of cotton, a year - on - year increase of 40,000 tons. In 2025, China's cumulative cotton imports were 1.08 million tons, a year - on - year decrease of 1.56 million tons [9]. - **Viewpoints and Strategies**: The March USDA monthly supply and demand report is neutral. The domestic downstream textile industry chain has been operating well since March. The prices of finished cotton yarn and viscose staple fiber are rising. It is recommended to try to go long on dips [9]. - **Fundamental Assessment**: The basis is 1,293 yuan/ton, with a positive score of +1, indicating a strengthening basis. The Zhengzhou cotton 5 - 9 spread is - 50 yuan/ton, with a score of +0, showing little change. The spinning immediate profit is - 1,811 yuan/ton, with a score of +0, indicating a decrease in profit. The Zhejiang - Xinjiang spread is 300 yuan/ton, with a score of +0, suggesting a weakening of the producing - area price. The FC index M 1% is 12,647 yuan/ton, and the FC index M sliding - scale duty is 13,756 yuan/ton, with a score of - 0.5, indicating that the domestic valuation is higher than the international market. The strategy is to maintain buying on dips [10]. - **Trading Strategy Recommendation**: For the unilateral strategy, it is recommended to go long on dips. The core driving logic is the reduction of the new - year planting area combined with good macro - expectations [11]. 3.2. Spread Trend Review - **Spot Price and Basis**: The report shows the trends of the China Cotton Price Index and the basis of the Zhengzhou cotton main contract from 2022 to 2026 [24]. - **Import Profit**: It presents the 1% tariff and sliding - scale duty internal - external spreads from 2022 to 2026 [26]. - **Zhengzhou Cotton Monthly Spread**: It shows the trends of the Zhengzhou cotton 9 - 1 and 5 - 9 spreads [28]. - **Production - Sales Area Spread and Spinning Profit**: It shows the trends of the Zhejiang - Xinjiang spread and the spinning mill's immediate profit from 2022 to 2026 [30]. - **US Cotton Monthly Spread**: It shows the trends of the US cotton 5 - 7 and 7 - 12 contract spreads [32]. - **External Market Spread**: It shows the trends of the US - Brazil spread and the FCindexM1% - CotlookA index 1% tariff from 2022 to 2026 [34]. 3.3. Domestic Market Situation - **Domestic Cotton Production**: It shows the trends of China's cotton processing and inspection quantity and Xinjiang seed - cotton purchase price [38]. - **Cotton Import Volume**: It shows the monthly and annual cumulative import volumes of Chinese cotton from 2021 to 2026 [40]. - **US Export Contract Quantity to China**: It shows the cumulative and weekly export contract volumes of the US to China from 2021 to 2026 [43]. - **Cotton Yarn Import Volume**: It shows the monthly and annual cumulative import volumes of Chinese cotton yarn from 2021 to 2026 [45]. - **Downstream Operating Rate**: It shows the operating rates of spinning mills and weaving mills from 2022 to 2026 [48]. - **National Sales Progress**: It shows the national cotton sales progress and the daily trading volume of the Light Textile City from 2022 to 2026 [51]. - **Cotton Inventory**: It shows the weekly commercial inventory of Chinese cotton and the combined commercial and industrial monthly inventory from 2022 to 2026 [53]. - **Spinning Mill Raw Material and Finished - Product Inventory**: It shows the cotton and yarn inventories of spinning mills from 2022 to 2026 [55]. 3.4. International Market Situation - **US Planting Situation**: It shows the proportion of the US cotton - planting area without drought and the cotton good - quality rate from 2022 to 2026 [59]. - **US Production Situation**: It shows the bi - weekly and cumulative processing volumes of US cotton from 2021 to 2026 [61]. - **US Yield and Planting Area**: It shows the yield forecast and planting area of US cotton [64]. - **US Export Contract Progress**: It shows the cumulative and weekly export contract volumes of US cotton from 2021 to 2026 [68]. - **US Export Shipment Volume**: It shows the annual cumulative and weekly export shipment volumes of US cotton from 2021 to 2026 [70]. - **US Cotton Supply Surplus/Shortage and Inventory - to - Consumption Ratio**: It shows the supply surplus/shortage and inventory - to - consumption ratio of US cotton [71]. - **Brazil Yield and Planting Area**: It shows the planting area and yield of Brazilian cotton [73]. - **Brazil Export Volume**: It shows the export volume forecast and monthly export volume of Brazilian cotton [77]. - **Brazil Cotton Supply Surplus/Shortage and Inventory - to - Consumption Ratio**: It shows the supply surplus/shortage and inventory - to - consumption ratio of Brazilian cotton [80]. - **India Yield and Planting Area**: It shows the planting area and yield of Indian cotton [82]. - **India Consumption and Import - Export**: It shows the consumption, import - export volume, supply surplus/shortage, and inventory - to - consumption ratio of Indian cotton [87][88].

1. Report Information - Report Date: February 27, 2026 [2] - Industry: Cotton [1] - Researchers: Yu Lanlan, Lin Zhenlei, Wang Haifeng, Hong Chenliang, Liu Youran [3] 2. Investment Rating - No investment rating information provided in the report. 3. Core Views - Zhengzhou cotton is under pressure at high levels with a differentiated trend. The spot cotton price index for grade 328 has increased, and the basis difference in Xinjiang shows certain characteristics. The trading of pure - cotton yarn has not fully recovered, while the operating rate of cotton fabric factories is rising. There is an intention to increase prices, pending downstream acceptance [7][8]. - In the international market, the drought index in the main cotton - producing areas of the United States has slightly increased, and the drought is expected to continue from February to April. The U.S. grain - to - cotton price ratio is slightly lower than last year, and the cotton - planting area may increase slightly, but the high drought level could lead to a higher abandonment rate. The expansion of the domestic - foreign price difference restricts the upward space of Zhengzhou cotton. In the domestic market, the cumulative inspection volume has increased year - on - year, and the commercial inventory has started to decline. The downstream industry is still recovering after the holiday, and the short - term trend is expected to be oscillating and slightly stronger, depending on post - holiday demand, cotton - planting intention reports, and target price policies [9]. 4. Section Summaries 4.1 Market Review and Operation Suggestions - **Market Review**: Zhengzhou cotton shows a high - level pressured and differentiated trend. The latest cotton price index for grade 328 is 16,681 yuan/ton, up 352 yuan/ton from the previous trading day. The quotations of machine - picked cotton in southern and northern Xinjiang have certain basis differences. The trading of pure - cotton yarn has not recovered, and some spinning mills have increased prices by 300 - 500 yuan. The operating rate of cotton fabric factories has increased, and they have an intention to increase prices [7][8]. - **International Market**: The drought index in the main U.S. cotton - producing areas has slightly increased, and the drought is expected to last from February to April. The U.S. grain - to - cotton price ratio is 6.68, slightly lower than last year. There is a possibility of a slight increase in the cotton - planting area, but the high drought level may lead to a higher abandonment rate. The expansion of the domestic - foreign price difference after the holiday restricts the upward space of Zhengzhou cotton [9]. - **Domestic Market**: As of February 25, 2026, the national cumulative inspection volume is 747.99 million tons, a year - on - year increase of 14.7%, with Xinjiang accounting for 737.95 million tons. As of mid - February, the domestic commercial cotton inventory is 550.37 million tons, showing a downward trend with a year - on - year decrease of 17.74 million tons. The downstream industry is still recovering after the holiday, and the short - term trend is expected to be oscillating and slightly stronger [9]. 4.2 Industry News - As of February 25, 2026, in the 2025 cotton year, 1099 cotton processing enterprises in China have processed and conducted notarized inspections on cotton. The national cumulative inspection volume is 747.99 million tons, a year - on - year increase of 14.7%, with Xinjiang accounting for 737.95 million tons and the inland area accounting for 6.18 million tons [10]. 4.3 Data Overview - The report provides multiple charts related to cotton, including price indices, spot and futures prices, basis differences, inventory, and exchange rates, with data sources from Wind and the Research and Development Department of CCB Futures [17][19][20]

Report Industry Investment Rating - The investment view is that the cotton price will be volatile in the short term, with a slight upward trend, and bullish in the long term. The report does not explicitly provide a traditional investment rating such as "buy", "hold", or "sell" [3]. Core Viewpoints - The 26/27 annual cotton planting area in Xinjiang is expected to be structurally reduced, and combined with water resource constraints and food planting requirements, the supply contraction expectation is clear. Although the spinning profit has declined month-on-month, there is still cash flow profit in Xinjiang, which is conducive to maintaining the purchasing intention of yarn mills. With the large - scale listing of new cotton, commercial inventories are gradually accumulating. The new cotton basis for pre - sale before the end of January next year is 800 - 1100, and the spread between January and May contracts of Zhengzhou cotton has strengthened this week. The current absolute price is at a neutral level in the past four years. The Fed cut interest rates as expected in December 2026, and the global monetary policy tends to be loose in 2026, which boosts the risk appetite for commodities and indirectly supports cotton prices [3]. Summary by Related Catalogs Part One: Main Viewpoints and Strategy Overview - **Supply**: The 26/27 annual cotton planting area in Xinjiang is expected to be structurally reduced, and supply contraction is expected due to water resource constraints and food planting requirements [3]. - **Demand**: Although the spinning profit has declined month - on - month, there is still cash flow profit in Xinjiang, which helps maintain the purchasing intention of yarn mills [3]. - **Inventory**: As new cotton is listed in large quantities, commercial inventories are gradually accumulating [3]. - **Basis/Spread**: The basis for pre - sale of new cotton delivered before the end of January next year is 800 - 1100, and the spread between January and May contracts of Zhengzhou cotton has strengthened this week [3]. - **Profit**: Although the spinning profit has declined month - on - month, there is still cash flow profit in Xinjiang, which is conducive to maintaining the operation of yarn mills [3]. - **Valuation**: The current absolute price is at a neutral level in the past four years [3]. - **Macro and Policy**: The Fed cut interest rates as expected in December 2026, and the global monetary policy tends to be loose in 2026, which boosts the risk appetite for commodities and indirectly supports cotton prices [3]. - **Investment View**: The short - term cotton price is volatile with a slight upward trend, and bullish in the long term. The reduction of cotton planting area in Xinjiang in the 26/27 year is the core theme, and attention should be paid to the extrusion of cotton yarn imports and the implementation rhythm of policies [3]. - **Trading Strategy**: For single - side trading, adopt a wait - and - see approach; for arbitrage, also wait and see. Pay attention to domestic macro - policies, Sino - US trade policies, and downstream consumption [3]. Part Two: Cotton Fundamental Data - **US Textile and Apparel Imports**: The import structure is being re - configured. The report presents the monthly import volume data of US clothing and accessories from multiple countries including the world, Bangladesh, Vietnam, Pakistan, India, and China from 2020 - 2025 [5][6][8]. - **EU Textile and Apparel Imports**: Mainly from China and Bangladesh, with a slight year - on - year increase [12]. - **Upstream Supply**: The inspection progress is faster than the same period [20]. - **Imports**: Cotton imports are restricted, while cotton yarn imports are increasing [27]. - **Upstream Inventory**: Seasonally rising [34]. - **Mid - stream Inventory**: Finished products are seasonally destocking [42]. - **Mid - stream Factory Load**: The resumption of operation is slow [51]. - **Mid - stream Yarn Mill Profit**: Overall, losses are narrowing, and Xinjiang is profitable [56]. - **Terminal Consumption**: Exports are deteriorating [62]. - **US Cotton Market**: The annual processing volume data from 2020 - 2025 is presented. US cotton exports (signing and shipping) are slightly increasing year - on - year, and exports to China are sporadic. The US textile and apparel inventory is at a high level, and retail sales are increasing year - on - year [80][82][89][94]. - **Brazilian Supply**: The total export volume is increasing, but the proportion of exports to China is decreasing [97]. - **Indian Supply**: The window for importing Indian cotton yarn is open [100]. - **Australian Supply**: Exports to China remain at a high level [104]. Part Three: Cotton Capital - related Data - **Zhengzhou Cotton Basis**: Fluctuating at a high level [110]. - **Zhengzhou Cotton Position**: The position of the 05 contract is relatively high year - on - year [120]. - **Managed Fund's Net Long Position in US Cotton Futures**: Data from 2018 - 2026 is presented, including net long positions and long - position ratios [129]. - **US Cotton 03 - 05 Spread**: Data from 2021 - 2026 is presented [130].

Summary of Conference Call on Cotton Market Outlook Industry Overview - The conference call primarily discusses the cotton industry, focusing on the Chinese cotton market and its dynamics with the U.S. market, including tariffs and production levels [1][3][6]. Key Points and Arguments Tariff Impact - China's tariff level remains high at approximately 20%, creating uncertainty in demand [1][3]. - In 2025, China's share of the U.S. apparel market decreased by about 5 percentage points, from 20% to 15.5%, indicating significant effects from tariffs [1][3]. Supply Chain Dynamics - Xinjiang's cotton production is a critical supply factor, with current public inspection volumes reaching 7.06 million tons and continuing to increase [1][3]. - Despite an expected record high production of 7.4 million tons in 2026, the lack of increased import quotas and stockpiling in 2025 has led to tight market supply and low ending inventories, supporting domestic cotton prices [1][7][8]. Downstream Business Conditions - Downstream enterprises, particularly cotton spinning companies, are facing poor operating conditions, contrasting sharply with rising upstream raw material prices [4][13]. - Weak terminal consumption is exerting pressure on both domestic demand and exports [4][6]. Global Cotton Market Trends - The global cotton market is experiencing a historical high in holding volumes, indicating that recent price increases are largely driven by capital involvement rather than just fundamental or policy support [23]. - Major cotton-producing countries like China, the U.S., and Brazil may reduce planting areas, leading to a decrease in global supply [12][15][17]. Future Demand and Consumption - Domestic cotton consumption in China is projected to be around 8.5 million tons in 2026, with an increase to 8.68 million tons in 2027, marking one of the highest levels in the past decade [27]. - However, the growth in consumption is heavily reliant on export increases rather than domestic demand, which remains low [27]. Price Dynamics - The external cotton market, particularly SE7 cotton prices, has been weak due to overall global supply being loose and increased competition from Brazilian cotton [11][12]. - The price gap between domestic and international cotton is currently around 3,000 yuan, the highest in recent years, which may lead to a substitution effect against domestic cotton consumption [22][32]. Macroeconomic and Policy Environment - The macroeconomic environment is expected to be more favorable compared to 2025, with a trend towards loosening that could positively impact commodity prices [24]. - Future policies regarding planting areas and target price subsidies will be crucial in determining the domestic market's supply-demand relationship [24][26]. Uncertainties in Production - Cotton production uncertainties stem from planting areas and weather conditions, which can significantly impact final yields [18]. Conclusion - The cotton market is navigating through a complex landscape of high tariffs, changing supply dynamics, and uncertain demand. The focus on domestic consumption growth and the impact of global economic conditions will be critical for future market stability and pricing strategies [1][6][20][24].

Report Industry Investment Rating No information provided Core Viewpoints - In 2026, the decline in cotton area in Xinjiang is a certain event, but the market doubts the actual decline, and it is difficult to confirm in the short term. Based on the area expectation and the domestic lint sales progress, there is strong support below the Zhengzhou cotton price. Meanwhile, the downstream demand is average, and factors such as the stable - to - decreasing spinning mill operation rate and poor profitability restrict the price increase. In the short term, it is expected to fluctuate widely, and it is advisable to go long on dips. Attention should be paid to the macro - environment and downstream restocking [4]. - The USDA increased the domestic cotton production forecast in the 2025/26 season by 1 million bales to 34.5 million bales, a year - on - year increase of 7.8%. As of January 11, the national cotton inspection volume was 6.7838 million tons, a year - on - year increase of 12.62%, and the increase has narrowed compared with the initial stage. If the gap with the USDA's 7.8% production increase does not continue to narrow, there is still a possibility of further production adjustment, but the adjustment volume is expected to be limited. In January, the USDA slightly increased the US cotton production forecast by 350,000 bales, which is in line with the conclusion of "limited adjustment space" in the previous report [4]. Summary by Related Catalogs New Cotton Area and Sales - In late December, the Xinjiang Cotton Association announced that the cotton area would decline, but did not specify the decline rate. The market expects a reduction in the cotton target price in 2026, which will affect the cotton planting willingness in Xinjiang and is bullish for cotton prices in the medium - to - long term [5]. - As of January 8, 2026, the national lint sales rate was 55.6%, 24.1 percentage points higher than the same period last year and 27.6 percentage points higher than the average of the past four years. As of the end of December, the domestic commercial cotton inventory was 5.7843 million tons, a month - on - month increase of 1 million tons, with the increase rate basically the same as that of the same period last year and a year - on - year increase of 100,000 tons. Despite the significant increase in cotton production this year, there is no obvious increase in commercial inventory, and the overall inventory pressure is temporarily not large [5]. Price and Spread - Domestic Zhengzhou cotton shows a relatively strong trend due to the resonance of supply expectation tightening and market sentiment, while US cotton fluctuates narrowly due to weak continuous signing. The domestic - foreign cotton price spread has widened to a stage high. Geopolitical turmoil and uncertainties in trade policies in the international market may affect cotton demand [6]. - As of Tuesday this week, the price spread between the domestic 328 cotton price index and the port delivery price index of imported cotton under the sliding - scale duty increased by a certain amount week - on - week; the price spread with the port delivery price of imported cotton under the 1% tariff also increased week - on - week. The price spread between the C32S cotton yarn price index and the port delivery price increased week - on - week [52]. Market Transaction and Inventory - According to the USDA weekly export report, as of the week ending January 1, the weekly signing volume of 2025/26 US upland cotton was 22,200 tons, a 27% decrease from the previous week, a 49% decrease from the four - week average, and a 24% decrease year - on - year [21]. - As of January 12, the cotton inspection volume in the 2025/26 season was 6.819 million tons, a year - on - year increase of 12.42% [36]. - As of Tuesday this week, the sum of Zhengzhou cotton warehouse receipts and valid forecasts was 10,117 sheets; the sum of Zhengzhou cotton yarn warehouse receipts and valid forecasts was 77 sheets [61]. Downstream Situation - The downstream demand is average. Spinning mill operation rates are stable - to - decreasing, and profitability is poor, which restricts the increase of cotton prices [4]. - Information on downstream raw material inventories (such as cotton in yarn mills and cotton yarn in weaving mills), finished - product inventories, and operating loads is presented in relevant charts, but specific numerical summaries are not clearly given in the text [41][44][46].

Market Overview - The Brazil CEPEA/ESALQ cotton price index reported at 65.72 cents per pound, an increase of 0.81% from the previous day and 3.81% from the same period last month [1] - As of January 3, Brazil's cotton planting rate reached 31.2%, up from 25.1% the previous week and slightly above last year's 30.5%, with a five-year average of 20.9% [1] Cost Analysis - The total cost of planting machine-harvested cotton in Northern Xinjiang for 2025 is projected to be 2962 yuan per mu, a decrease of 40 yuan per mu year-on-year, representing a reduction of 1.3% [1] Institutional Insights - According to Wenkang Futures, the reduction in cotton planting area in Xinjiang was anticipated by the market, and the recent rise in Zheng cotton prices may lead to increased price volatility. The supply-demand relationship is currently balanced, with increased downstream operating rates and limited imports, suggesting a favorable outlook for potential buying opportunities [3] - Micron Futures noted that the cotton market is maintaining a strong oscillating trend, influenced by surrounding commodity markets. There is optimism regarding textile exports and domestic sales, but breaking through the current price range will require validation of consumption in the new year and confirmation of supply conditions [4]

Recent Price Movement - Most cotton benchmarks remained stable over the past month [1] Supply, Demand & Trade - USDA estimates show a slight reduction in global production by 292,000 bales to 119.8 million and mill use by 275,000 bales to 118.6 million for 2025/26. World beginning stocks were slightly increased by 127,000 bales to 74.6 million, resulting in a minor net effect on ending stocks, which increased by 42,000 bales to 76.0 million [2] - The largest changes in production figures were for Mali, reduced by 280,000 bales to 820,000, and the U.S., increased by 153,000 bales to 14.3 million. For mill use, Brazil saw a reduction of 100,000 bales to 3.4 million, and the U.S. also decreased by 100,000 bales to 1.6 million [3] - Global trade figures were reduced by 275,000 bales to 43.7 million. The largest import changes were for Bangladesh, down by 100,000 bales to 8.0 million, and Vietnam, down by 100,000 bales to 8.1 million. Mali's exports were reduced by 150,000 bales to 900,000 [4] Price Outlook - Following the reopening of the U.S. government, previously disrupted data streams have resumed. During the 43-day government shutdown, cotton prices decreased, with the NY/ICE contract dropping from over 67 cents/lb to near 63 cents [5] - The shutdown is not seen as a significant factor in price movement; however, the release of government data during this period highlighted other factors, such as increased production estimates for China, Brazil, and the U.S., indicating ample exportable supply relative to import demand [6] - By late November, the NY/ICE March contract tested levels near 65 cents/lb but retreated to around 63 cents. The A Index decreased from 76 to 74 cents/lb. The Chinese Cotton Index (CC Index 3128B) was steady, moving slightly higher from 94 to 96 cents/lb, with domestic values between 14,750 and 15,000 RMB/ton. The RMB strengthened slightly against the dollar from 7.12 to 7.07 RMB/USD. Indian spot prices remained near 74 cents/lb or approximately 52,000 INR/candy, with the INR trading around 89 INR/USD. Pakistani spot prices were steady near 66 cents/lb or 15,300 PKR/maund, with the PKR around 281 PKR/USD [7]

Report Industry Investment Rating The report does not mention the industry investment rating. Core Views - In Q4 2025, the cotton market faces significant pressure, but the long - term outlook is not pessimistic. The international market will remain weak in the short - term, while the domestic market, Zhengzhou cotton, will face seasonal supply pressure. However, in the long - run, the prospects for both markets are more positive [1][105]. - For the international market, short - term supply pressure is high due to harvests and slow US cotton export sign - ups. But long - term, cost support and potential changes in trade policies are favorable. For the domestic market, the large expected Xinjiang cotton production in Q4 2025 will test downstream demand, and there is a risk of the price breaking below 13,000 yuan/ton, but there are also factors supporting a rebound [105][106]. Summary by Relevant Catalogs 1. Q3 2025 Cotton Market Review - **Domestic Market**: Cotton prices first rose and then fell, shifting from trading the "tight reality" to the "loose expectation". In July, prices rose due to low commercial inventories and market sentiment. From late July to August, prices fluctuated due to hedging pressure. In September, prices declined as the expectation of increased Xinjiang cotton production grew [4]. - **International Market**: It remained weak in the low - level range of 65 - 70 cents/pound. Normal weather during the US cotton growing season and slow export sign - ups due to trade policies led to limited upward movement [5]. 2. Domestic Fundamental Analysis - **Inventory Situation**: As of the end of August, national commercial cotton inventories were 1.4817 million tons, a significant decrease. Xinjiang and inland commercial inventories were at multi - year lows. However, cotton textile enterprises had relatively high industrial inventories, which could meet needs until mid - October when new cotton is expected to be available in large quantities. There were reports of inventory shortages in some inland textile enterprises and a prominent shortage of high - quality cotton [12]. - **New Cotton Yield Estimation**: Domestic institutions expect significant increases in Xinjiang and national cotton production in the 2025/2026 season. The report estimates that Xinjiang's cotton production is likely to reach around 7.5 million tons. If so, the supply of about 8.4 million tons (including import quotas) can basically cover demand. The high - yield expectation has already led to a significant decline in the futures price, and attention should be paid to the actual yield [17][18][19]. - **New Cotton Purchase Expectations**: Ginning mills are cautious about new cotton purchases, with most expecting an opening price below 6.3 yuan/kg. Cotton farmers' psychological price is around 6.3 - 6.5 yuan/kg, and their reluctance to sell has weakened. The pre - sale price of cottonseed is expected to decline to 2.1 - 2.2 yuan/kg during the peak purchase period, still higher than last year. The large pre - sale volume of Xinjiang cotton and high pre - sale basis still exist. There is a possibility of a negative feedback loop between the futures price and the seed cotton purchase price, with the purchase price potentially dropping below 6 yuan/kg, corresponding to the futures price possibly breaking below 13,000 yuan/ton [25][26]. - **Import Situation**: In the 2024/2025 season, cotton imports were 1.05 million tons, a 68% year - on - year decrease.棉纱 imports were 1.41 million tons, a 15.6% year - on - year decrease. In the 2025/2026 season, the import volume of cotton and棉纱 is uncertain, depending on trade negotiations. If the current tariff level between China and the US remains, it will continue to suppress imports [29]. - **Downstream Market**: The downstream textile industry had a lackluster peak season, with low profits for spinning enterprises. Although the profit margin improved in September, it remained low overall. Orders improved seasonally in August but were still weaker than in previous years. The inventory structure of downstream棉纱 was healthy, with continued inventory reduction in September. The load of downstream textile enterprises increased seasonally but was still lower than in previous years [33][40]. - **Terminal Textile and Apparel Market**: In August, textile and apparel exports declined year - on - year and month - on - month. From January to August, cumulative exports decreased slightly. However, China's textile and apparel exports showed resilience, with exports to the Belt and Road countries and the European Union playing important roles. Exports to the US declined significantly. Domestic demand for textile and apparel showed mild growth in the first eight months of 2025, but the growth rate was still relatively low, and the recovery of domestic demand was slow [50][52][66]. - **Supply - Demand Balance**: The 2024/2025 season had a supply - demand gap of about 600,000 - 700,000 tons. The 2025/2026 season may be a balanced or inventory - accumulating year. The large expected production will test downstream demand in Q4 2025, but the pressure may ease later [69]. - **Future Xinjiang Cotton Production**: There is uncertainty about whether Xinjiang's cotton planting area and production will continue to increase next year. Policy adjustments may occur, and the report believes that production may slightly decline next year due to factors such as possible reduced farmer income and government regulation [73]. 3. International Market Analysis - **US Cotton Situation**: The USDA September report maintained the previous forecast for US cotton supply and demand in the 2025/2026 season, with a tight - balance situation. As of September 21, the US cotton boll opening and harvesting progress was slightly behind last year but in line with the five - year average. Hurricane threats were low, and the weather was favorable for later growth and harvest. US cotton new - crop export sign - ups were slow, and the export demand may remain weak due to trade policy uncertainties [80][84][91]. - **Global Supply - Demand**: The 2025/2026 global cotton supply - demand pattern is relatively balanced. The USDA September report adjusted the supply and demand estimates, narrowing the supply - demand gap. The global market is facing seasonal supply pressure, and future focus will be on trade policies and demand prospects [95]. 4. Market Outlook - **International Market**: In Q4 2025, the international market will remain weak, with the price likely to test the 65 - cent support level. However, in the long - term, the outlook is not pessimistic, as there is cost support and potential positive changes in trade policies [105]. - **Domestic Market**: In Q4 2025, Zhengzhou cotton faces seasonal supply pressure, with a risk of breaking below 13,000 yuan/ton. But after the release of negative factors, downstream restocking may support the price. The long - term outlook is cautiously optimistic [106]. 5. Strategy - Short - and medium - term, it is advisable to sell on rebounds. In the long - term, wait for opportunities to buy at low levels below 13,000 yuan/ton, while closely monitoring macro - level and industrial drivers [108].

Group 1 - Cotton futures are experiencing low volatility, with the main contract reported at 13,980.00 CNY/ton, reflecting a decline of 1.96% [1] - As of the end of July, China's cotton commercial inventory stands at 2.19 million tons, a year-on-year decrease of 588,000 tons and a month-on-month decrease of 640,000 tons, indicating a low level compared to recent years [2] - The average price of 3128 cotton arriving at factories was 15,590 CNY/ton, an increase of 170.00 CNY/ton, while the price of 32s pure cotton yarn remained stable at 21,555 CNY/ton [2] Group 2 - From a fundamental perspective, the speed of cotton inventory reduction and the operating rates of yarn and weaving factories have not shown significant improvement, indicating weak terminal demand [3] - The domestic cotton market is facing tight supply, with the cash basis remaining strong despite recent increases in sliding tax quota issuance, while the textile market is still in the off-season with insufficient new orders [3] - Short-term expectations for Zheng cotton indicate a potential slight decline next week, with a focus on the range of 14,000 to 14,500 CNY/ton [3]