Group 1: Report Industry Investment Rating - No relevant content Group 2: Core View of the Report - The additional issuance of 300,000 tons of import processing trade sliding duty quotas for cotton is likely to benefit US cotton and narrow the price gap between domestic and international markets The impact on the domestic cotton supply is relatively small, and the price of Zhengzhou cotton may follow the upward trend of US cotton in the long - term Recently, due to the decline in crude oil prices, cotton prices have fallen, but the decline is expected to be limited [6] - In the short - term, US cotton is expected to fluctuate strongly, and the fundamentals of Zhengzhou cotton have not changed significantly It is recommended to build long positions at low prices and avoid chasing high prices For arbitrage and options, it is recommended to wait and see [9][10][11] - The trading in the pure - cotton yarn market is okay, and the supply of medium - and high - count yarns may be tight in the future The overall situation of the all - cotton grey fabric market remains stable, with more domestic orders and few foreign orders The market is paying attention to the replenishment situation during the Tomb - sweeping Festival [11] Group 3: Summary by Relevant Catalogs 1. Market Information - **Futures Market**: The closing prices of CF01, CF05, and CF09 contracts decreased by 150, 205, and 185 respectively The trading volume of CF05 and CF09 increased by 87,881 and 57,726 respectively, while that of CF01 decreased by 2,215 The open interest of CF01 and CF09 increased by 1,166 and 11,085 respectively, while that of CF05 decreased by 56,651 For the CY series, CY01 had no trading volume, and the closing prices of CY05 and CY09 decreased by 180 and 315 respectively [2] - **Spot Market**: The price of CCIndex3128B increased by 13 to 16,897 yuan/ton, and the price of CY IndexC32S remained unchanged at 22,050 yuan/ton The price of Cot A increased by 2.3 to 78.75 cents/pound, and the price of FCY IndexC33S increased by 72 to 22,568 yuan/ton [2] - **Price Spreads**: In the cotton inter - period spreads, the spread between January and May increased by 55 to 420, the spread between May and September decreased by 20 to - 95, and the spread between September and January decreased by 35 to - 325 In the yarn inter - period spreads, the spread between January and May increased by 180 to - 21,300, the spread between May and September increased by 135 to 65, and the spread between September and January decreased by 315 to 21,235 In the cross - variety spreads, CY01 - CF01 increased by 150, CY05 - CF05 increased by 25, and CY09 - CF09 decreased by 130 The 1% tariff - based domestic - foreign cotton price spread decreased by 450 to 2,874, the sliding - duty domestic - foreign cotton price spread decreased by 87 to - 1,156, and the domestic - foreign yarn price spread decreased by 72 to - 518 [2] 2. Market News and Views - **Cotton Market News**: On March 17, 2026, the road transportation price index of Xinjiang - outbound cotton remained unchanged at 0.1566 yuan/ton·km, and it is expected to remain stable in the short - term As of February 28, 2026, the CAI's assessment of India's 2025/26 cotton balance sheet shows that production increased by 60,000 tons, domestic demand increased by 170,000 tons, imports decreased by 50,000 tons, and ending inventory decreased by 160,000 tons compared with the previous month In 2026, China imported 210,000 tons of cotton in January and 170,000 tons in February, with a cumulative import of 370,000 tons from January to February, a year - on - year increase of 41% [4][5] - **Trading Logic**: The additional issuance of 300,000 tons of import processing trade sliding duty quotas for cotton is beneficial to US cotton, and it may also drive up the price of Zhengzhou cotton, but the impact on domestic supply is relatively small The short - term decline in cotton prices is limited due to market support [6] - **Trading Strategy**: For single - side trading, it is recommended to build long positions at low prices for US cotton and Zhengzhou cotton For arbitrage and options, it is recommended to wait and see [9][10][11] - **Cotton Yarn Industry News**: The trading in the pure - cotton yarn market is okay, and the supply of medium - and high - count yarns may be tight in the future The all - cotton grey fabric market remains stable, with more domestic orders and few foreign orders The market is waiting for the improvement of foreign orders in April and paying attention to the replenishment situation during the Tomb - sweeping Festival [11] 3. Options - **Option Data**: On January 19, 2026, the closing prices of CF605C14600.CZC, CF605C14200.CZC, and CF605P13800.CZC decreased by 16.9%, 17.7%, and 34.1% respectively The 60 - day HV of cotton is 9.2812, and the implied volatilities of CF605 - C - 14600, CF605 - C - 14200, and CF605 - P - 13800 are 13.3%, 11.3%, and 11.2% respectively [13] - **Option Strategy**: The PCR of the main contract of Zhengzhou cotton yesterday was 0.8667 for open interest and 0.4688 for trading volume, and the trading volume of both call and put options decreased today It is recommended to wait and see [14][15] 4. Relevant Attachments - The report provides eight figures, including the domestic - foreign cotton price spread under 1% tariff, the basis of cotton in January, May, and September, the spread between CY05 - CF05 and CY01 - CF01, and the spreads of CF9 - 1 and CF5 - 9 [17][20][24][25]

1. Report Industry Investment Rating - Not provided in the content 2. Core View of the Report - The additional issuance of 300,000 tons of import processing trade sliding tariff quotas for cotton is likely to be beneficial to US cotton, narrowing the price difference between domestic and international cotton. The impact on domestic cotton supply is relatively small, and the price of Zhengzhou cotton may follow the upward trend of US cotton [6]. - In the short - term, US cotton is expected to fluctuate and strengthen. Zhengzhou cotton shows a strong technical performance. It is advisable to build long positions on dips rather than chase highs. For arbitrage and options, it is recommended to wait and see [7][8][9] 3. Summary by Directory 3.1 Market Information - **Futures Market**: The closing prices of CF01, CF05, and CF09 contracts decreased by 100, 65, and 65 respectively. The CY01 contract had no trading. The closing price of CY05 decreased by 5, and CY09 increased by 75. There were changes in trading volume and open interest for each contract [2]. - **Spot Market**: The price of CCIndex3128B decreased by 56 yuan/ton, IndexC32S CY increased by 50 yuan, and there were price changes in other spot varieties [2]. - **Spread**: There were changes in cotton and yarn inter - period spreads, cross - variety spreads, and domestic - foreign spreads [2] 3.2 Market News and Views - **Cotton Market News** - According to CONAB's March 2026 forecast, the total cotton output in Brazil in the 2025/26 season is expected to be 3.795 million tons, a decrease of 8,000 tons from the previous month. The planting area is reduced to 2.0136 million hectares, and the yield per unit area remains stable. Consumption and exports are increased, leading to a reduction in ending stocks [4]. - The CAI's report shows that as of February 28, 2026, the cotton output in India in the 2025/26 season increased by 60,000 tons, domestic demand increased by 170,000 tons, imports decreased by 50,000 tons, and ending stocks decreased by 160,000 tons compared with the previous month [4]. - In 2026, the total amount of sliding tariff processing trade quotas for cotton imports is 300,000 tons, issued on a contract - based application basis [5]. - **Trading Logic** - The additional issuance of 300,000 tons of sliding tariff quotas is beneficial to US cotton. The large profit margin between domestic and international cotton prices under the sliding tariff system is conducive to imports. Considering the possible visit of Trump to China, China's purchase of US agricultural products may be a topic of negotiation [6]. - The impact of the additional issuance of quotas on Zhengzhou cotton is complex. In the past, additional quotas either had little impact on the domestic market or led to an increase in Zhengzhou cotton prices following the rise of US cotton. This time, the additional 300,000 - ton quota is only 100,000 tons more than last year, with a relatively small impact on domestic supply. However, the early issuance leaves room for future policies [6]. - **Trading Strategy** - **Unilateral**: It is expected that US cotton will fluctuate and strengthen in the short - term. Zhengzhou cotton shows a strong technical performance. It is advisable to build long positions on dips rather than chase highs [7]. - **Arbitrage**: Wait and see [8]. - **Options**: Wait and see [9]. - **Cotton Yarn Industry News** - In the pure - cotton yarn market, the trading is differentiated. The sales of medium - and high - count yarns are tight, and the price of high - tight C40S in some areas has increased by 200 - 300 yuan. The sales of medium - and low - count yarns and rotor - spun yarns are still weak. Downstream fabric mills maintain a high operating rate, but there are not many long - term orders. Spinning mills in the inland and Xinjiang maintain a high operating rate, but due to rising raw material prices, they have a certain psychology of hoarding goods, and inventory depletion has slowed down. Attention should be paid to the trend of international crude oil and the sustainability of downstream orders [9]. - In the all - cotton grey fabric market, the market situation has not changed much, and the sales are acceptable. Weaving mills' in - progress orders continue, mainly for domestic sales. Weaving mills are observing the continuation of orders after the Tomb - sweeping Festival. The grey fabric price is stable, and weaving mills are trying to reduce inventory to ensure cash flow [9] 3.3 Options - **Option Data**: The report provides data on option contracts such as CF605C14600.CZC, CF605C14200.CZC, and CF605P13800.CZC, including closing prices, price changes, implied volatility, etc. [11] - **Volatility**: The 60 - day HV of cotton is 9.2812, with a slight increase in volatility compared to the previous day. The implied volatility of CF605 - C - 14600 is 13.3%, CF605 - C - 14200 is 11.3%, and CF605 - P - 13800 is 11.2% [11] - **Option Strategy**: Wait and see [13] 3.4 Related Attachments - The report provides multiple charts, including the price difference between domestic and international cotton under 1% tariff, cotton basis for different months, the spread between CY and CF, and the spread between different cotton futures contracts [15][18][22][23]