Report Industry Investment Rating - Not provided in the given content Core View of the Report - The global cotton supply side is experiencing a "double reduction" in exports from Brazil and the United States. The bottom characteristics of US cotton prices are clear under the dual signals of cost inversion and basis repair, and an upward channel for cotton prices is expected to open [2]. Summary by Relevant Catalogs 1. Supply - side Contraction Expectation Continues to Strengthen - **Brazil**: As the world's largest cotton exporter, it ends a 5 - year capacity expansion. The CONAB report on January 15 predicts a 6.3% year - on - year decrease in cotton production in 25/26, with continuous downward revisions since October 2025. The core producing state of Mato Grosso is expected to have a more radical production cut of 14.5% [3]. - **United States**: The latest WASDE report on January 12 significantly revises down the 25/26 cotton yield per unit by 7.8%, reduces production by 2.5%, and the inventory - to - consumption ratio drops, significantly alleviating inventory pressure [3]. 2. Hard Logic Behind the Production Cut - **Brazilian farmers' profit situation**: Brazilian cotton farmers face a loss with a cost - return rate of - 15.5%, while the competing second - season corn still has an 8.4% return, and the operating cost of corn is only one - third of that of cotton [4]. - **Sowing progress**: Brazil's current sowing rate is only 8.1% (compared to 14.2% in the same period last year). Missing the best growth period for cotton will further strengthen the production cut expectation [4]. 3. Clear Bottoming of US Cotton Prices - **Cost inversion**: The current price (~65 cents/pound) is significantly lower than the average US planting cost (~80 cents/pound) and approaches the policy mortgage interest rate (54.4 cents/pound), with very limited downward space [5]. - **Basis signal**: The basis of basic - grade cotton is at a historical low. High - quality cotton in January has shown a positive basis, which is judged as a leading signal for a medium - term upward price movement [5]. - **Investment advice**: With the implementation of the production cut expectation and the stricter traceability of clothing exports to the United States, the procurement concentration of US cotton is expected to increase. It is recommended to focus on [Bailong Eastern Co., Ltd.], and related target [Texhong International Group]. The low - cost cotton inventory held by these companies will release significant profit elasticity during the upward cycle of cotton prices, and the gross profit margin is expected to be repaired in a positive basis environment [5]. Historical US Cotton Price Analysis - The historical US cotton price has fluctuated greatly due to various factors such as events, policies, and climate. For example, in 2011, the cotton price reached a new high due to factors such as China's cotton purchase and storage policy, India's export ban, and Pakistan's floods [8]. Global Cotton Production and Export Situation - **24/25 Global Top Ten Cotton - Producing Countries**: The top four cotton - producing countries (China, India, Brazil, and the United States) account for about 73% of the total global output. China and India mainly consume their output domestically, while Brazil and the United States export their output [19]. - **24/25 Global Top Ten Cotton - Exporting Countries**: Brazil and the United States together account for nearly 60% of the global cotton export volume. The change in Brazil's supply - demand structure will have a significant impact on the trend of US cotton prices [22]. - **Production Growth of Top Ten Cotton - Exporting Countries**: From 20/21 - 24/25, the production growth rates of different countries vary. For example, Mali has a 257% growth rate, while India has a - 16% growth rate [24]. US Cotton Situation - **25/26 Production Forecast**: Despite the expected increase in the harvested area of US 25/26 cotton, the yield per unit is significantly reduced by 7.8%, resulting in a 2.5% decrease in production compared to the December forecast and a 3.4% decrease compared to 2024/25. The inventory - to - consumption ratio decreases [27]. - **Export Market Change**: In 2018, affected by the Sino - US trade friction, Vietnam became the largest importer of US cotton. In 2024, China regained the top position. It is expected that Southeast Asian countries may increase their procurement of US cotton [29]. Brazilian Cotton Situation - **25/26 Supply and Demand Forecast**: The CONAB report on January 15, 2026, predicts that Brazil's 25/26 cotton planting area will decrease by 2.8% compared to 2024/25, and the output is expected to be 3.82 million tons, a 6.3% decrease from the October 2025 forecast [31]. - **Sowing and Yield**: The sowing rate and yield of Brazilian cottonseeds in 25/26 are lower than last year. The sowing rate is 31.9%, 1.6 percentage points lower than 24/25, and the expected output of cottonseeds in 25/26 is down 6.3% year - on - year and 3.6% month - on - month [34]. - **Mato Grosso State**: The IMEA has significantly reduced the 25/26 planting area in Mato Grosso State by 7.3%, and the total lint output is expected to decrease by 14.5% due to area reduction and yield per unit returning to the average [38]. - **Profit Analysis**: Brazilian cotton planting in the 25/26 season has a cost - return rate of - 15.5%. Competing second - season corn has a better profit situation, and there is a possibility of farmers switching to corn planting. In addition, the current price of Brazilian lint is lower than the US cotton futures price, and the basis decline is widening [40].

Core Insights - The cotton production in Xinjiang is projected to exceed 6 million tons for the first time in 2025, reaching 6.165 million tons, accounting for 92.8% of the national total [1] - The cotton industry in China is advancing towards automation and high-end development, with significant improvements in mechanization and efficiency [1][2] Group 1: Mechanization and Efficiency - The comprehensive mechanization rate for cotton farming in Shaya County has remained above 95% for five consecutive years, with 54,700 agricultural machines available [2] - Farmers are increasingly forming cooperatives to purchase advanced machinery and provide services, with 112 cooperatives currently operating in the county [2] - A single cotton harvesting machine can now harvest 5,000 acres in 12 days, compared to 12 workers taking two months for 100 acres previously [1] Group 2: Scientific Seed Selection - The seed selection process has become more scientific, with annual variety promotion meetings and comparative trial reports provided to farmers [3] - A dedicated crop testing station has been established to track the performance of cotton varieties, resulting in the identification of 12 suitable high-quality varieties for local conditions [3][4] - The average cotton yield in Shaya has increased from 285 kg per mu in 2017 to 442 kg per mu in 2025, with an average income increase of 1,000 yuan per mu [4] Group 3: Future Plans and Investments - Farmers like Ababake Li plan to expand their operations by purchasing additional harvesting machines and tractors to increase service areas [4]

Group 1 - The core viewpoint of the article highlights the current cotton planting rate in Brazil, which stands at 36.3% as of January 17, showing an increase from 31.9% the previous week, but a decrease compared to 39.1% during the same period last year [1] - The five-year average planting rate for cotton in Brazil is reported to be 28.4%, indicating a relatively strong performance this year compared to historical data [1]

Core Insights - The cotton production in Xinjiang is projected to exceed 6 million tons for the first time in 2025, reaching 6.165 million tons, which accounts for 92.8% of the national total [2] - The cotton industry in China is evolving towards automation and high-end development, with significant advancements in mechanization and data-driven agricultural practices [2][3] Group 1: Mechanization and Efficiency - The comprehensive mechanization rate for cotton farming in Shaya County has maintained over 95% for five consecutive years, with 54,700 agricultural machines available [3] - The use of advanced machinery has drastically reduced labor costs and increased efficiency, allowing one machine to harvest 5,000 acres in 12 days compared to 12 workers taking two months for 100 acres [2][3] Group 2: Scientific Seed Selection - The Shaya County Seed Development Center conducts annual variety promotion meetings and provides comparative trial reports to help farmers select the best cotton varieties based on disease resistance, heat tolerance, fiber length, and yield [4] - The introduction of scientific seed selection has led to a significant increase in cotton yield per acre, from 285 kg/acre in 2017 to 442 kg/acre in 2025, resulting in an average income increase of 1,000 yuan per acre [5] Group 3: Agricultural Cooperatives and Services - More cotton farmers are forming cooperatives to purchase advanced machinery and provide agricultural services, with 112 cooperatives currently operating in Shaya County [3] - One cooperative reported a total income of over 1.1 million yuan last year, with approximately 40% coming from machinery services [3]

曹阳（右）给同事讲解棉花的生长习性（资料图片）。申玲 摄 由于业绩突出，荣誉也接踵而至：2021年三农科技服务金桥奖先进个人、2022年兵团最美科技工作者、 2023年"兵团有突出贡献优秀专家"……但曹阳最珍视的，始终是棉田里的反馈。 "农业科技工作者，必须把脚踩进泥土里。"这是曹阳对团队的要求。每年，他和团队要选派300余人次 下沉到田间地头，面对面解决职工群众遇到的生产难题。 培训课堂更是开到了连队、庭院。在九十一团的文化活动室里，曹阳讲解水肥一体化技术，投影仪上是 精心制作的示意图。台下，几十位种植户听得专注，不时有人举手提问。"曹所长讲得实在，我们听得 懂、用得上。"种植户李胜利说。他按照学到的化控技术管理棉田，2025年亩产提高了50公斤。 ●兵团日报常驻记者 郭晓维 通讯员 朱波 五师农业科学研究所所长曹阳的名字，是与"棉花"紧密联结在一起的。今年54岁的他，已在农业科研与 技术推广的广阔天地中深耕细作30余载。 曹阳最常去的地方，是五师农业科学研究所的种质资源库，柜架上整齐排列着数千个牛皮纸袋，每个袋 子上都标注着编号和特性。 这里，是曹阳和他的团队精心守护的"基因宝库"——4700份棉花种质资 ...

Core Viewpoint - The article highlights the efforts of Wan Sumei, a prominent figure in cotton research, who emphasizes the importance of integrating high-level scientific independence and enhancing agricultural production capacity in line with the spirit of the 20th National Congress of the Communist Party of China [3] Group 1: Research and Development - Wan Sumei leads over 10 national-level research projects focusing on addressing industry pain points, optimizing cotton planting systems, and innovating crop rotation and "multiple harvests" planting models to enhance agricultural productivity [3] - The research outcomes have been effectively transformed into practical production capabilities, demonstrating a commitment to applying scientific findings directly to the field [3] Group 2: Education and Talent Development - To meet the urgent demand for skilled professionals in the cotton industry, Wan Sumei has revised talent training programs and established China's first Cotton Science College in collaboration with the Chinese Academy of Agricultural Sciences [5] - A unique "three-stage, three-combination" talent cultivation model has been developed, integrating practical experience with academic learning to foster a new generation of agricultural experts [5] Group 3: Community Engagement and Impact - Wan Sumei has trained over 3,000 technical personnel and more than 40,000 farmers, promoting advanced planting techniques directly in cotton-producing areas [4] - Many students, under her guidance, have chosen to remain in southern Xinjiang after graduation, becoming key figures in agricultural technology promotion and contributing to the local cotton industry's development [5]

"最近，在选定我们所未来5年至10年的育种方向，所以每天要处理的事情比较多。"对于姚炎帝而言， 这件事不仅关系着整个棉花所未来的研究方向，更关系着广大棉农的切身利益。 自从入职石河子农业科学研究院棉花所以来，姚炎帝始终专注于棉花育种及栽培技术工作。"棉花生产 中的一些问题，仅凭现有农技手段难以彻底解决，从品种源头上寻求突破是重要途径之一。"姚炎帝举 例说，"每年6月至7月，新疆多地会迎来高温天气，此时正值棉花开花和成铃关键期。高温会带来棉花 蕾铃大量脱落、干蕾等问题，造成棉花减产15%以上，棉花品质也会下降。" 面对这种天气，培育耐高温棉花品种才是破题的关键。为此，姚炎帝带领团队成员开展棉花优异种质资 源研究工作，建立优异种质数据库，构建核心种质，创新亲本材料。 姚炎帝（右）在石河子农业科学研究院棉花所的试验地里进行棉花单株选择工作(摄于2025年9月20 日)。郭景红 摄 ●兵团日报全媒体记者 翟薇 岁末年初，石河子农业科学研究院棉花所副所长姚炎帝格外忙碌。项目申报资料、文献参考书籍等堆满 了姚炎帝的办公桌，将他伏在桌前工作的身影遮去了大半。 "优良品种是基础，但配套技术的普及推广同样重要。"2024年7月 ...

Group 1 - The core viewpoint of the article highlights a significant decline in Tajikistan's cotton exports due to a sharp drop in global cotton prices, with exports expected to decrease by 77,000 tons in 2025 compared to 2024, totaling over 93,000 tons [1] - The textile industry in Tajikistan is projected to achieve a production value of 4.8 billion somoni (approximately 520 million USD) in 2025, reflecting a growth of 14.4% [1] - Tajikistan produces approximately 130,000 tons of raw cotton annually, but only 28% of this is processed domestically [1]

Core Insights - The cotton production in Xinjiang has surpassed 6 million tons for the first time, reaching 6.165 million tons, accounting for 92.8% of the national total [1] - The cotton industry in China is evolving towards mechanization, intelligence, and a complete industrial chain, enhancing efficiency and stability in production [1][2] Mechanization and Efficiency - The use of machinery in cotton farming has significantly increased, with a comprehensive mechanization rate of over 95% in cotton planting and harvesting in Shaya County [2] - Farmers have transitioned from manual labor to technology-driven practices, with advanced machinery reducing labor costs and increasing productivity [2][3] - The agricultural cooperative in Shaya County has serviced over 7,000 acres, generating significant income from machinery services [3] Scientific Seed Selection - The seed selection process has become more scientific, with farmers now relying on data and expert recommendations rather than traditional methods [4][5] - The introduction of a comprehensive testing station has allowed for the evaluation of cotton varieties, leading to the identification of 12 high-quality strains suitable for local conditions [5][6] - The average cotton yield in Shaya County has increased from 285 kg per mu in 2017 to 442 kg per mu in 2025, resulting in an average income increase of 1,000 yuan per mu [6] Extended Industrial Chain - The cotton processing industry has become more localized, reducing transportation costs and time, with cotton being processed within 20 kilometers of the farms [7] - The local textile industry has expanded, allowing for higher value-added products to be produced locally, significantly increasing profitability for farmers [7] - The establishment of a complete industrial chain from cotton production to textile manufacturing has created more job opportunities and enhanced income for local communities [7]

Report Title - The title of the report is "South China Futures Cotton and Cotton Yarn Weekly Report - Oscillatory Adjustment", dated January 16, 2026 [1] Report Industry Investment Rating - The provided content does not mention the industry investment rating Core Views - **Near - term**: Under the pressure of downstream profit squeeze and a significant increase in the internal - external price difference, there is an upper limit on cotton prices. However, the current load of yarn mills remains stable, and the expansion of spinning capacity supports cotton consumption. With relatively low overall downstream inventory pressure, short - term cotton prices may oscillate within a narrow range. Attention should be paid to downstream imports and order situations [9] - **Long - term**: In recent years, the domestic downstream textile production capacity has expanded significantly, and Xinjiang yarn mills have maintained high - load operations, increasing the rigid consumption of cotton raw materials. Although China's cotton production has increased significantly, it still needs to import foreign cotton to fill the gap. The probability of further issuing additional cotton import quotas is low, so the supply - demand of domestic cotton in the new year may still be tight. Attention should be paid to the demand side affected by policy changes in the new year, as well as the adjustment of the Xinjiang cotton target price subsidy policy and its impact on farmers' enthusiasm for cotton planting [18][19] Summary by Directory Chapter 1: Core Contradictions and Strategy Recommendations 1.1 Core Contradictions - The USDA's January global supply - demand forecast report slightly increased the price with a 7.7 - ton month - on - month decrease in US cotton production to 3.4% year - on - year. As of January 15, 2026, the cumulative national new - year cotton notarized inspection volume reached 691.88 tons, a year - on - year increase of 76.03 tons. The daily average notarized inspection volume has recently dropped to around 3 tons, and the new - cotton notarization work is nearing completion. The domestic cotton industrial and commercial inventory has significantly rebounded to a peak in recent years. However, restricted by import quotas, the overall supply increase in the new year has narrowed. With the expansion of cotton yarn production capacity, the rigid consumption of cotton has increased, and the market expects a potential supply - demand shortage at the end of this year. There is also an expected reduction in the cotton - planting area in Xinjiang in the 26/27 season. But after the strengthening of domestic cotton prices, downstream spinning profits have been squeezed, the internal - external cotton price difference has widened significantly, and the inflow of imported yarn may increase periodically, pressuring the upper limit of cotton prices [2] 1.2 Transaction - Type Strategy Recommendations - The price range of CF2605 is predicted to be between 14,000 and 15,000. It is recommended to lay out long positions on CF2605 during pull - backs [21][23] 1.3 Industrial Customer Operation Recommendations - **Inventory Management**: For enterprises with high inventory worried about price drops, they can short Zhengzhou cotton futures (CF2605) to lock in profits and sell call options (CF2605C15200) to collect premiums and reduce costs [21] - **Procurement Management**: For enterprises with low regular procurement inventory, they can buy Zhengzhou cotton futures (CF2605) to lock in procurement costs and sell put options (CF2605P14000) to collect premiums and reduce costs [21] 1.4 Basic Data Overview - **Futures Data**: The closing prices of Zhengzhou cotton futures contracts (01, 05, 09) decreased last week, with respective decreases of 0.37%, 0.58%, and 0.77% [22] - **Spot Data**: The CC Index 3128B increased by 0.01%, while the CC Index 2227B and CC Index 2129B decreased by 0.01% and 0.03% respectively [22] - **Spread Data**: The CF1 - 5 spread increased by 30, the CF5 - 9 spread increased by 30, and the CF9 - 1 spread decreased by 60 [22] - **Import Price**: The FC Index M increased by 0.41%, and the FCY Index C32s increased by 0.2% [24] - **Cotton Yarn Data**: The futures price of cotton yarn decreased by 0.75%, and the spot price remained unchanged [24] Chapter 2: Core Contradictions and Strategy Recommendations 2.1 This Week's Important Information - **Positive News**: As of January 8, the national new - cotton picking progress was 99.9%, the selling rate was 99.5%, the processing rate was 94.5%, and the sales rate was 55.6%. In November, the retail sales of clothing, footwear, and knitted textiles increased by 4.84% month - on - month and 4.19% year - on - year. In November 2025, the export volume of cotton products increased by 6.32% month - on - month and 9.84% year - on - year [25] - **Negative News**: In December 2025, the export of textiles and clothing decreased by 7.35% year - on - year. As of January 8, 2026, the cumulative net contracted export volume of US cotton decreased by 13.99% year - on - year [27] 2.2 Next Week's Important Events to Watch - Attention should be paid to the release of domestic textile and clothing consumption data in China, flower and yarn import - export data, and US cotton weekly export data [28] Chapter 3: Disk Interpretation 3.1 Price - Volume and Capital Interpretation - **Unilateral Trend and Capital Movement**: At the beginning of last week, Zhengzhou cotton prices further declined under the influence of profit - taking. Both long and short positions significantly reduced, and the short - term trading enthusiasm in the market cooled. The RSI index fell to the neutral range, and prices entered an oscillatory adjustment phase [34] - **Monthly Spread Structure**: Currently, Zhengzhou cotton 1 - 5 shows a slight back structure supported by industrial end - taking, while contracts 05 and subsequent ones maintain a contango structure. The far - month contracts maintain the expectation of supply - demand tightness at the end of the year and have a stronger trend [37] - **Basis Structure**: This week, the cotton basis weakened slightly and then rebounded, remaining generally stable. The mainstream basis of machine - picked 31 - grade double 29/cotton with less than 3.5% impurity in Kashgar, southern Xinjiang, is mostly above CF05 + 850, and in northern Xinjiang, it is mostly above 1000 [40] Chapter 4: Valuation and Profit Analysis 4.1 Downstream Spinning Profit Tracking - Supported by policies and technological innovation, Xinjiang yarn mills have a cost advantage over those in the inland. Since September last year, domestic cotton prices have declined under the hedging pressure of ginning factories and the supply pressure of new - cotton listing, while yarn prices have remained relatively stable, and domestic yarn mill profits have recovered. However, since December, domestic cotton prices have oscillated upwards, and yarn prices have remained stable, squeezing yarn mill profits again. This week, cotton prices oscillated slightly upwards, yarn prices remained basically stable, and yarn mill profits continued to weaken slightly on a weekly basis [43] 4.2 Import Profit Tracking - Affected by the Xinjiang cotton ban and tariff policies, the internal and external cotton prices have shown relatively independent trends. This year, China's cotton import profit has been considerable, but the import quota is low, and the import volume has remained at a low level. In November 2025, China imported 12 tons of cotton, a month - on - month increase of 3 tons and a year - on - year increase of 1 ton. The cumulative import volume in the 25/26 season is 31 tons, a year - on - year decrease of 3 tons. This week, the internal and external cotton prices fluctuated within a narrow range, and the import profit remained basically stable compared to last week [46] Chapter 5: Supply and Inventory Deduction 5.1 Supply - Demand Balance Sheet Deduction - A bumper harvest of Xinjiang cotton is expected in the new year. With the additional 20 - ton sliding - scale tariff quota issued by the National Development and Reform Commission and the 89.4 - ton 1% tariff quota issued in 2026, the expected new - year cotton import volume is 110 tons. The probability of further issuing additional sliding - scale tariff quotas is low. Downstream, domestic demand may maintain a mild recovery supported by domestic macro - policies, and the easing of Sino - US trade relations is conducive to the recovery of China's textile and clothing exports, supporting the expected domestic cotton consumption [48][49]