1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The fundamentals of the cotton market are supportive, and cotton prices are expected to fluctuate with a slight upward trend in the short - term. The international cotton market, especially the US cotton market, is likely to continue range - bound oscillations, while the domestic cotton market's fundamentals remain strong [8][29]. - The sales progress of cotton is still fast, and the easing of Sino - US relations and the expected expansion of Xinjiang textile mills' production capacity in the new year bring certain expectations for cotton consumption, supporting the upward movement of the fundamentals. However, considering the previous reaction of bullish factors and the high internal - external price difference, and the lack of obvious bullish drivers in US cotton in the short - term, Zhengzhou cotton is expected to fluctuate slightly upward in the short - term [41]. 3. Summary by Directory 3.1 International Market Analysis - **US Cotton Market**: The fundamentals have few contradictions, and the US cotton price is expected to continue range - bound oscillations. As of January 16, 2026, the cumulative inspection volume of US upland cotton + Pima cotton accounted for 94.6% of the estimated annual US cotton production, with a year - on - year slowdown of 8%. The weekly deliverable ratio was 75.4%, and the quarterly deliverable ratio was 82.1%, 1.3 percentage points higher year - on - year. The US cotton listing inspection is nearing the end, and the production estimate was slightly lowered in January [8]. - **US Cotton Sales**: As of the week of January 8, the weekly signing volume of 2025/26 US upland cotton was 77,000 tons, a week - on - week increase of 247% and an 89% increase compared to the average of the previous four weeks. The weekly shipment volume was 35,400 tons, a week - on - week increase of 1% and an 8% increase compared to the average of the previous four weeks [8]. - **CFTC Data**: As of January 13, 2026, the net long rate of ICE cotton futures funds was - 15.17% (a week - on - week decrease of 0.03 percentage points) [8]. - **Brazil**: As of January 17, the cotton planting in the 2025/26 season in Brazil was 36.34% completed, a month - on - month increase of 4.4 percentage points, 2.8 percentage points slower year - on - year, and 13.7 percentage points slower than the average of the past three years [8]. - **India**: As of January 15, 2026, the cumulative new cotton listing volume in Pakistan in the 2025/26 season reached 851,000 tons, basically the same year - on - year. The textile mills' procurement was 750,000 tons, a 1% year - on - year decline, and the unsold new cotton was 74,000 tons, a 5% year - on - year decline [8]. - **Global Situation**: According to the latest January global cotton production and sales forecast by USDA, the changes are not significant. The global cotton production in January was 26 million tons, a month - on - month reduction of 80,000 tons; the total consumption increased by 70,000 tons to 25.89 million tons; the ending inventory decreased by 320,000 tons to 16.22 million tons [8]. 3.2 Domestic Market Logic Analysis - **Supply Side**: As of the week of January 15, the national ginning mill operating rate dropped to 36.71%, a month - on - month decrease of 11.59%. As of January 21, 2026, the cumulative public inspection of lint was 7.06 million tons, and the cumulative public inspection volume of Xinjiang cotton was 6.8 million tons. In December, the national commercial cotton inventory was 4.6598 million tons, a year - on - year increase of 99,600 tons [29]. - **Demand Side**: As of January 22, the cumulative sales of lint were 4.409 million tons, at a high level in the same period over the years, an increase of 2.41 million tons compared to the average of the past four years. As of January 15, the operating load of spinning mills in mainstream areas was 64.6%, a 0.15% decrease from the previous week. As of January 16, the gray fabric operating load increased to 48.7. As of the week of January 8, the cotton inventory of spinning mills in mainstream areas was equivalent to 24.59 days of stock [29]. - **Comprehensive Outlook**: The supply side has little change, and the expected reduction in the cotton planting area in the new year supports the market. The demand side shows a fast sales progress and increased downstream stocking willingness. However, considering the approaching Spring Festival, the short - term demand is expected to change little. Zhengzhou cotton is expected to fluctuate slightly upward in the short - term [29]. 3.3 Futures Trading Strategy - **Trading Logic**: The fast cotton sales progress, the easing of Sino - US relations, and the expected expansion of Xinjiang textile mills' production capacity in the new year support the upward movement of the fundamentals. Affected by the macro - sentiment, the cotton price has significantly corrected, and it is expected to fluctuate in the short - term [41]. - **Strategies**: - **Single - side**: It is expected that the US cotton price will likely range - bound oscillate in the short - term, and Zhengzhou cotton's fundamentals remain strong. One can consider building long positions on dips [43]. - **Arbitrage**: Hold a wait - and - see attitude [43]. - **Options**: Hold a wait - and - see attitude [42]. 3.4 Weekly Data Tracking - **Internal - External Price Difference**: Relevant data on the internal - external cotton price difference and the price difference trend between September and January are presented [46][47]. - **Cotton Inventory**: Information on national commercial cotton inventory, spinning mills' industrial cotton inventory, and reserve inventory is provided [49]. - **Spot - Futures Basis**: Data on the basis of cotton and cotton yarn are presented, including the basis of US cotton, the basis of January, May, and September contracts of cotton, and the basis between C32S cotton yarn spot and the active contract of Zhengzhou cotton yarn [52].

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoint of the Report - In the medium to long term, with the reduction of planting area in the new season and positive macro - expectations, cotton prices still have room to rise. However, due to the large short - term increase, it takes time to digest, so wait for a pullback and then choose the opportunity to go long [9] 3. Summary According to the Directory 3.1. Weekly Assessment and Strategy Recommendation - **Industry Information**: 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. As of the week of January 16, the spinning mill operating rate was 64.6%, a 0.1 - percentage - point decrease from the previous week and an 8.6 - percentage - point increase from the same period last year. The national commercial cotton inventory was 5.69 million tons, a year - on - year increase of 380,000 tons. In January, the forecast for the 2025/26 global cotton production was 26 million tons, an 80,000 - ton decrease from the December forecast and a 200,000 - ton increase from the previous year. The inventory - to - consumption ratio was 62.63%, a 1.42 - percentage - point decrease from the December forecast and a 0.62 - percentage - point increase from the previous year. The forecast for US production in January was 3.03 million tons, a 76,000 - ton decrease from the December forecast, with export estimates unchanged and the inventory - to - consumption ratio at 30.43%, a 2.17 - percentage - point decrease. Brazil's production estimate remained at 4.08 million tons; India's production was revised down by 110,000 tons to 5.12 million tons; China's production was revised up by 220,000 tons to 7.51 million tons. From January 8th to January 15th, US cotton export sales for the current year were 97,300 tons, with cumulative export sales of 1.72 million tons, a year - on - year decrease of 166,000 tons. Among them, exports to China that week were 3,300 tons, with cumulative exports of 88,600 tons, a year - on - year decrease of 72,100 tons [9] - **Viewpoint and Strategy**: Wait for a pullback and then choose the opportunity to go long [9] - **Fundamental Assessment**: The basis is 1,149 yuan/ton, the Zhengzhou cotton 5 - 9 spread is - 165 yuan/ton, the spinning immediate profit is - 1,494 yuan/ton, the Zhejiang - Xinjiang spread is 491 yuan/ton. The cost of FC index M 1% is 12,445 yuan/ton, and the cost of FC index M with sliding - scale duty is 13,633 yuan/ton. The long - short score for basis is +0.5, for month - spread is +0, for spinning profit is +0, for Zhejiang - Xinjiang spread is +0, and for cost is - 2. The basis is strengthening, the month - spread has little change, the profit is decreasing, the Zhejiang - Xinjiang spread has little change, and the domestic premium is high. It is recommended to wait for a pullback and then choose the opportunity to go long [10] - **Trading Strategy Recommendation**: For the unilateral strategy, it is recommended to go long on pullbacks, with the core driving logic being the reduction of planting area in the new season and positive macro - expectations [11] 3.2. Spread Trend Review - **Spot Price and Basis**: The report provides the trends of the China Cotton Price Index and the basis of the Zhengzhou cotton main contract [26][27] - **Import Profit**: It shows the trends of the 1% tariff internal - external spread and the sliding - scale duty internal - external spread [28][29] - **Zhengzhou Cotton Month - Spread**: It presents the trends of the Zhengzhou cotton 1 - 5 spread and the Zhengzhou cotton 5 - 9 spread [30][31] - **Production - Sales Area Spread and Spinning Profit**: It shows the trends of the Zhejiang - Xinjiang spread and the spinning mill's immediate profit [32][33] - **External Market Spread**: It includes the trends of the US - Brazil spread and the FCindexM1% - CotlookA Index 1% tariff spread [37][38] 3.3. Domestic Market Situation - **Domestic Cotton Production**: It shows the trends of China's cotton processing and inspection quantity and the Xinjiang seed cotton purchase price [41][42] - **Cotton Import Volume**: It presents the trends of China's monthly and annual cumulative cotton import volumes [43][44] - **US Export Contract Quantity to China**: It shows the trends of the US cumulative and weekly export contract quantities to China [46][47] - **Cotton Yarn Import Volume**: It presents the trends of China's monthly and annual cumulative cotton yarn import volumes [48][49] - **Downstream Operating Rate**: It shows the trends of the spinning mill and weaving mill operating rates [51][52] - **National Sales Progress**: It presents the trends of the national cotton sales progress and the daily trading volume of the Light Textile City [54][55] - **Cotton Inventory**: It shows the trends of China's weekly commercial cotton inventory and the monthly inventory of commercial and industrial cotton [56][57] - **Spinning Mill's Raw Material and Finished Product Inventory**: It presents the trends of the spinning mill's cotton inventory and yarn inventory in days [58][59] 3.4. International Market Situation - **US Planting Situation**: It shows the trends of the proportion of US cotton - planting areas without drought and the US cotton good - quality rate [62][63] - **US Production Situation**: It presents the trends of the US cotton bi - weekly processing volume and the cumulative processing volume [64][65] - **US Yield and Planting Area**: It shows the trends of the US cotton yield forecast and the planting area [66] - **US Export Contract Progress**: It presents the trends of the US current - year cumulative and weekly export contract quantities [67][68] - **US Export Shipment Volume**: It shows the trends of the US annual cumulative and weekly export shipment volumes [69][70] - **US Supply Surplus/Shortage and Inventory - to - Consumption Ratio**: It presents the trends of the US cotton supply surplus/shortage and the inventory - to - consumption ratio [71] - **Brazilian Yield and Planting Area**: It shows the trends of the Brazilian cotton planting area and yield [72][73] - **Brazilian Export Volume**: It presents the trends of the Brazilian cotton export volume forecast and the monthly export volume [75] - **Brazilian Supply Surplus/Shortage and Inventory - to - Consumption Ratio**: It presents the trends of the Brazilian cotton supply surplus/shortage and the inventory - to - consumption ratio [76] - **Indian Yield and Planting Area**: It shows the trends of the Indian cotton planting area and yield [77][78] - **Indian Consumption and Import - Export**: It presents the trends of the Indian cotton consumption, import, and export volumes [79][80] - **Indian Supply Surplus/Shortage and Inventory - to - Consumption Ratio**: It presents the trends of the Indian cotton supply surplus/shortage and the inventory - to - consumption ratio [81]

Report Title - Cotton Weekly Report: Fundamental Support, Cotton Prices to Fluctuate Mainly [1] Report's Core View - The fundamentals of the cotton market are relatively strong, but recent performance of commodities has been mediocre. Cotton prices are expected to fluctuate around current levels in the short term. The sales progress of cotton remains rapid, and downstream stocking willingness has increased. Supported by market bullish factors, the cotton fundamentals are still strong. Affected by macro - sentiment, cotton prices have significantly corrected recently, and are expected to fluctuate slightly in a strong range in the short term [29] Group 1: International Market Analysis Market Trend - The US cotton market has few fundamental contradictions, and its price is expected to continue to fluctuate within a range [8] Growth Situation - As of the week ending January 9, 2026, the cumulative inspection volume of US upland cotton + Pima cotton was 2.7756 million tons, accounting for 89.2% of the estimated annual US cotton production, 9% slower than the same period last year. The inspection progress of upland cotton was 89.37%, down 9% year - on - year; the inspection progress of Pima cotton was 88.6%, 20% slower year - on - year. The weekly deliverable ratio was 76.8%, and the quarterly deliverable ratio was 82.3%, 1.4 percentage points higher than the same period last year [8] Sales Situation - As of the week ending January 8, 2026, the weekly signing volume of 2025/26 US upland cotton was 77,000 tons, a weekly increase of 247% and an 89% increase compared to the average of the previous four weeks. Among them, Vietnam signed 28,900 tons and China signed 13,000 tons. The weekly signing volume of 2026/27 US upland cotton was 2,300 tons. The weekly shipment volume of 2025/26 US upland cotton was 35,400 tons, a weekly increase of 1% and an 8% increase compared to the average of the previous four weeks [8] CFTC Data - As of January 6, 2026, the net long - position ratio of ICE cotton futures funds was - 15.14% (a week - on - week increase of 0.99 percentage points, and an increase of 0.41 percentage points last week) [8] Other Countries' Situations - As of January 10, Brazil's 2025/26 cotton planting was 31.9% complete, a 0.7 - percentage - point increase from the previous month, 1.6 percentage points slower than the same period last year, and 3.6 percentage points slower than the average of the past three years. The India Cotton Association (CAI) increased its estimated production by 130,000 tons, domestic demand by 170,000 tons, and decreased exports by 50,000 tons in its December 31, 2025 report, resulting in a 10,000 - ton increase in ending stocks [8] Global Situation - According to the latest USDA January global cotton production and sales forecast, there were few changes. In December, the global total cotton production was 26 million tons, a month - on - month decrease of 80,000 tons; the total consumption increased by 70,000 tons to 25.89 million tons; the ending stocks decreased by 320,000 tons to 16.22 million tons [8] Group 2: Domestic Market Analysis Market Trend - The fundamentals of the domestic cotton market are still strong, but due to the general performance of commodities recently, cotton prices are expected to fluctuate around current levels in the short term [29] Supply Side - As of the week ending January 15, the national ginning mill operating rate continued to decline to 36.71%, a month - on - month decline of 11.59%. As of January 14, 2026, the cumulative public inspection was 30,477,135 bales, totaling 6,879,745 tons, a year - on - year increase of 13.03%. The cumulative public inspection volume of Xinjiang cotton was 6,649,109 tons, a year - on - year increase of 14.36%. In December, the national commercial cotton inventory was 4.6598 million tons, a year - on - year increase of 99,600 tons [29] Demand Side - As of January 9, the cumulative sales volume of lint cotton was 4.093 million tons, at a high level in the same period over the years, an increase of 2.318 million tons compared to the average of the past four years. As of January 15, the operating load of spinning mills in mainstream areas was 64.6%, a 0.15% decrease from the previous week. As of the week ending January 8, the inventory days of cotton in spinning mills in mainstream areas was 24.59 days [29] Group 3: Futures and Option Trading Strategies Futures - Unilateral trading: It is expected that the US cotton price will likely fluctuate within a range in the short term, while the fundamentals of Zhengzhou cotton are still strong. Consider building long positions on dips. Arbitrage trading: Hold off [43] Options - Hold off [42] Group 4: Weekly Data Tracking Price Difference - The report presents data and trends of the price difference between domestic and international cotton, as well as the price difference trend between September and January contracts [46][47] Mid - stream Situation - It shows the operating load of pure - cotton yarn mills, the load of all - cotton grey fabric mills, and the inventory days of yarn and grey fabric [50] Cotton Inventory - It includes the commercial inventory of cotton, the industrial inventory of cotton in spinning mills, and the reserve inventory [52] Basis - It shows the basis of cotton in January, May, and September, as well as the basis of US seven - major - market upland cotton and the spot - futures basis of cotton yarn C32S [55]

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 is evolving towards mechanization and smart technology, enhancing efficiency and stability in production [2][3] Mechanization and Efficiency - The transition to mechanized farming has significantly reduced labor costs and increased efficiency, with a single machine now able to harvest 5,000 acres in just 12 days compared to 100 acres requiring 12 workers for two months previously [2] - 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] Scientific Seed Selection - The seed selection process has become more data-driven, with farmers now relying on scientific reports and trials to choose varieties based on disease resistance and yield potential [4][5] - The coverage rate of quality cotton seeds in Xinjiang has increased to over 98%, with significant improvements in yield per acre from 285 kg in 2017 to 442 kg in 2025 [6] Extended Industry Chain - The cotton industry chain has been extended, allowing for local processing of cotton, which reduces transportation costs and time, enhancing profitability for farmers [7] - The textile industry in Xinjiang has developed a comprehensive value chain, contributing to job creation and increased income for local communities [7]

Core Viewpoint - The cotton industry in Xinjiang is experiencing significant advancements in mechanization, scientific seed selection, and an extended industrial chain, leading to increased efficiency, higher yields, and improved income for farmers [1][2][3][4][5][6][7]. Group 1: Mechanization and Efficiency - The mechanization of cotton farming has transformed the industry, with farmers now using advanced machinery for planting, pest control, and harvesting, resulting in a dramatic reduction in labor costs and time [2][3]. - 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][3]. - Farmers are transitioning from manual labor to technology-driven practices, enhancing productivity and operational efficiency [2][3]. Group 2: Scientific Seed Selection - The process of seed selection has become more scientific, with farmers now relying on data and research rather than traditional methods, leading to better crop resilience and yields [4][5][6]. - Xinjiang has achieved a cotton seed coverage rate of over 98%, with significant improvements in cotton yield per acre, increasing from 285 kg/acre in 2017 to 442 kg/acre in 2025 [6]. Group 3: Extended Industrial Chain - The cotton industry in Shaya County has developed a complete industrial chain, allowing for local processing of cotton, which reduces transportation costs and time, and increases profitability for farmers [7]. - Local textile enterprises are now able to process cotton into various products, significantly increasing the added value compared to selling raw cotton [7]. - The development of the textile and garment industry in Xinjiang is creating job opportunities and contributing to the economic well-being of local communities [7].

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].

Report Industry Investment Rating No information provided in the report. Core Viewpoints of the Report - In the 2025/26 season, the global cotton supply - demand is basically balanced but shows an overall pattern of oversupply, with main supply growth points in China and Brazil, a decline in Australian output, and a significant reduction in Chinese consumption. The inventory - to - consumption ratio remains the same as last year [1]. - The U.S. cotton has had two consecutive years of bumper harvests, leading to a loose supply - demand situation in the international cotton market and putting downward pressure on ICE cotton prices. Vietnam has become the largest importer of U.S. cotton this year, and U.S. cotton faces great export pressure due to the deteriorating global trade environment [1]. - In the 2025/26 season, China's cotton market continues to have a loose supply - demand pattern. Benefiting from the release of Xinjiang's production capacity, the surplus cotton inventory in the market has been digested, but downstream orders have not improved substantially, squeezing textile enterprises' profits. The situation is unlikely to change in 2026, and attention should be paid to policies to boost consumption and their impact on commodity prices [1]. - China's cotton imports have shifted to Brazil and Australia. Brazil's cotton output has been hitting new highs, while Australia's output has been on a declining trend in recent years. The similar weather conditions in the two southern - hemisphere countries have increased supply uncertainty [2]. - In 2026, as the gap in planting income between cotton and corn/soybeans widens and China's cotton target - price subsidy policy is to be adjusted, the planting area may be adjusted, which will support cotton prices in the long - term. The price upward drive may be stronger than the downward pressure, and attention should be paid to supply - side changes in the first half of the year and policy price regulation [3]. Summary of Each Section 1. Market Review - In 2025, the Zhengzhou cotton futures showed a bottom - oscillating trend. From January to April, the price oscillated downward due to factors such as the market's over - heating correction, low inventory levels, consumption off - season, and Sino - U.S. trade frictions [10]. - From May to August, the cotton price rose as Sino - U.S. trade talks led to a reduction in tariff rates, and China's textile and clothing exports increased, along with a decline in industrial and commercial inventories [10]. - From September to October, the cotton price peaked and declined because of issues such as high delivery premiums and a high - opening - low - going new - cotton purchase price [11]. - From November to December, the cotton price rose again as Sino - U.S. trade negotiations made progress, tariffs were cancelled or postponed, and there were positive expectations for supply and demand [11]. 2. Supply - Demand Structure Analysis (1) Global - In the 2025/26 season, global cotton output increased slightly, consumption decreased slightly, and the supply - demand structure remained basically balanced. The main supply growth points were in China and Brazil, with a decline in Australian output, and the main consumption growth point was in Pakistan, but it could not offset the significant reduction in Chinese consumption [14]. - According to the USDA's December supply - demand report, the global cotton output in 2025/26 was 26.1142 million tons, a year - on - year increase of 0.43%. Consumption was 25.857 million tons, a year - on - year decrease of 0.27%. The ending inventory was 16.1615 million tons, a year - on - year increase of 1.82%, and the inventory - to - consumption ratio remained the same as last year [14]. - The gap in planting income between cotton and corn/soybeans has been widening, and the substitution effect may continue, so global cotton output may be adjusted in the future [15]. (2) U.S. Cotton - In the 2025/26 season, U.S. cotton had a bumper harvest for the second consecutive year, leading to a loose international supply - demand situation and putting downward pressure on ICE cotton prices. The output was 3.1109 million tons, a year - on - year decrease of 1%, and the export was estimated to be 2.659 million tons, a year - on - year increase of 2.52% [21]. - Affected by Sino - U.S. trade tensions, China's imports of U.S. cotton continued to decline. Vietnam became the largest importer of U.S. cotton this year. As of December 11, 2025, China had signed contracts for 60,000 tons of U.S. cotton, less than half of last year, while Vietnam had signed contracts for 430,000 tons [23]. - As of December 12, the U.S. cotton export and signing progress was slightly slower than last year, but the shipment - to - signing ratio increased by 9.46 percentage points to 41.16% [23]. (3) Brazil and Australia - In the 2025/26 season, Brazil's cotton output was expected to be 4.0875 million tons, a year - on - year increase of 10.29%, with an export of 3.161 million tons, a year - on - year increase of 11.36%. Australia's output was expected to be 981,000 tons, a year - on - year decrease of 19.64%, and the export was expected to be 1.1118 million tons, a year - on - year decrease of 2.39% [28]. - Brazil's increasing output has increased supply liquidity and pressured import prices. Australia's output has been fluctuating and declining in recent years. The similar weather in the two southern - hemisphere countries has increased supply uncertainty [28]. (4) China - In the 2025/26 season, China's cotton output was expected to reach a record high of 7.303 million tons, a year - on - year increase of 4.69%, consumption was expected to be 8.393 million tons, a year - on - year decrease of 1.28%, and imports were expected to be 1.1772 million tons, a year - on - year increase of 4.15% [32]. - China's state reserve has not carried out cotton rotation this year, and the domestic cotton inventory in the state reserve is estimated to be only 201,000 tons, at a relatively low level [32]. - China's cotton textile industry's PMI index has been hovering around the boom - bust line, indicating poor industry prosperity. The textile enterprises' operating rate is low, and the industry's profit is poor throughout the year [32]. - China's cotton market continued to have a loose supply - demand pattern in 2025/26. Although Xinjiang's production capacity has digested the surplus inventory, downstream orders have not improved, and it is difficult to change the situation in 2026 [33]. 3. Industry Operation Status (1) Seed - Cotton Cost, Production Enthusiasm, and Imports - In 2025, the cost of seed - cotton converted to lint was around 14,800 yuan/ton. China's cotton imports were only 900,000 tons this year, mainly from Brazil and Australia, and the proportion of U.S. cotton imports further decreased [37]. - Due to poor industry profits, the production enthusiasm of yarn and fabric enterprises was low, but the new production capacity in Xinjiang prevented a sharp increase in inventory [37]. - The current situation of low industry profits, high inventory, and low operating rates may continue [38]. (2) Domestic Demand and Export Trade - In 2025, domestic consumption was strong, with the cumulative retail sales of clothing and textile products increasing year - on - year, but export trade deteriorated, with the export of clothing and textile products decreasing year - on - year [41]. - In 2026, the international trade environment is more complex. Although the Sino - U.S. agreement to cancel a 24% tariff provides a short - term calm period, textile and clothing exports still face many difficulties [41]. 4. Future Outlook - In recent years, global cotton supply - demand has been stable but lackluster. In 2025, the supply - demand was basically balanced, and cotton prices were at a low level. In 2026, the planting area may be adjusted, which will support cotton prices in the long - term, and the market's long - short game may intensify from January to April [45]. - China's cotton textile industry has been shifting to Xinjiang, and the new production capacity in Xinjiang in 2026 will help stabilize cotton demand. Although the export of textile and clothing products will still face pressure, the short - term tariff suspension between China and the U.S. is conducive to the recovery of foreign trade [45]. - Overall, cotton prices are at a historical low, increasing price volatility. In 2026, the upward price drive may be stronger than the downward pressure, and attention should be paid to supply - side changes in the first half of the year and policy price regulation [46].

Report Industry Investment Rating - Not provided in the content Core Viewpoint - Affected by the expected reduction in cotton planting area in Xinjiang and the better - than - expected downstream operation in the off - season, the price of Zhengzhou cotton has risen significantly. After reaching a high level, the short - term price volatility may increase. It is recommended to wait for a callback and then go long [9] Summary by Directory 1. Weekly Assessment and Strategy Recommendation - **Market Review**: The price of US cotton futures continued to fluctuate. As of Friday, the closing price of the March contract was 64.48 cents/pound, up 0.47 cents/pound from the previous week, a 0.73% increase. The US cotton 3 - 5 spread was - 1.48 cents/pound, down 0.14 cents/pound from the previous week. Domestically, the price of Zhengzhou cotton rose first and then fell. The closing price of the May contract was 14,675 yuan/ton, up 90 yuan/ton from the previous week, a 0.62% increase. The China Cotton Price Index (CCIndex) 3128B was 15,930 yuan/ton, up 374 yuan/ton from the previous week. The basis was 1,234 yuan/ton, up 277 yuan/ton from the previous week. The Zhengzhou cotton 5 - 9 spread was - 185 yuan/ton, down 10 yuan/ton from the previous week [9] - **Industry Information**: Brazil exported 450,000 tons of raw cotton in December, an increase of 100,000 tons year - on - year and 50,000 tons month - on - month. Among them, exports to China were 146,000 tons, an increase of 60,000 tons year - on - year and 40,000 tons month - on - month. As of the week ending January 1, the US current - year cotton export sales were 23,200 tons, with cumulative export sales of 1.5425 million tons, a year - on - year decrease of 239,100 tons. Among them, exports to China were 3,200 tons that week, with cumulative exports of 71,700 tons, a year - on - year decrease of 83,900 tons. As of the week ending January 9, the spinning mill operating rate was 64.7%, unchanged from the previous week and 7.1 percentage points higher than the same period last year. The national commercial cotton inventory was 5.57 million tons, an increase of 290,000 tons year - on - year [9] - **Viewpoint and Strategy**: Wait for a callback and then go long [9][10][11] 2. Spread Trend Review - **Spot Price and Basis**: The report presents the trends of the China Cotton Price Index and the basis of the Zhengzhou cotton main contract through charts [25][26] - **Import Profit**: The report shows the trends of the 1% tariff internal - external price difference and the sliding - scale tariff internal - external price difference through charts [27][28] - **Zhengzhou Cotton Spread**: The report displays the trends of the Zhengzhou cotton 1 - 5 spread and the Zhengzhou cotton 5 - 9 spread through charts [29][30] - **Production - Sales Area Spread and Spinning Profit**: The report presents the trends of the Zhejiang - Xinjiang spread and the spinning mill's immediate profit through charts [31][32] - **Foreign Market Spread**: The report shows the trends of the US - Brazil spread and the FCindexM1% - CotlookA Index 1% tariff through charts [36][37] 3. Domestic Market Situation - **Domestic Cotton Production**: The report shows the trends of China's cotton processing and inspection quantity and Xinjiang's seed cotton purchase price through charts [40][41] - **Cotton Import Volume**: The report presents the trends of China's monthly and annual cumulative cotton import volumes through charts [42][43] - **US Export Contract Quantity to China**: The report shows the trends of the US cumulative and weekly export contract quantities to China through charts [44][45] - **Cotton Yarn Import Volume**: The report presents the trends of China's monthly and annual cumulative cotton yarn import volumes through charts [46][47] - **Downstream Operating Rate**: The report shows the trends of the spinning mill and weaving mill operating rates through charts [49][50] - **National Sales Progress**: The report presents the trends of the national cotton sales progress and the daily trading volume of the Light Textile City through charts [52][53] - **Cotton Inventory**: The report shows the trends of China's weekly commercial cotton inventory and the monthly inventory of commercial + industrial through charts [54][55] - **Spinning Mill's Raw Material and Finished - Product Inventory**: The report presents the trends of the spinning mill's cotton inventory and yarn inventory through charts [56][57] 4. International Market Situation - **US Planting Situation**: The report shows the trends of the proportion of US cotton planting areas without drought and the US cotton good - quality rate through charts [60][61] - **US Production Situation**: The report presents the trends of the US cotton bi - weekly processing volume and cumulative processing volume through charts [62][63] - **US Yield and Planting Area**: The report shows the trends of the US cotton yield forecast and planting area through charts [64][66] - **US Export Contract Progress**: The report presents the trends of the US current - year cumulative and weekly export contract quantities through charts [68][69] - **US Export Shipment Volume**: The report shows the trends of the US annual cumulative and weekly export shipment volumes through charts [70][71] - **US Supply and Inventory - Consumption Ratio**: The report presents the trends of the US cotton supply surplus/shortage and inventory - consumption ratio through charts [72] - **Brazil Yield and Planting Area**: The report shows the trends of Brazil's cotton planting area and yield through charts [73][74] - **Brazil Export Volume**: The report presents the trends of Brazil's cotton export volume forecast and monthly export volume through charts [76][77] - **Brazil Supply and Inventory - Consumption Ratio**: The report shows the trends of Brazil's cotton supply surplus/shortage and inventory - consumption ratio through charts [79] - **India Yield and Planting Area**: The report presents the trends of India's cotton planting area and yield through charts [81][82] - **India Consumption and Import - Export**: The report shows the trends of India's cotton consumption, import and export volumes through charts [84][85] - **India Supply and Inventory - Consumption Ratio**: The report presents the trends of India's cotton supply surplus/shortage and inventory - consumption ratio through charts [87]

Report Summary - **Report Title**: Zheng Cotton Soars and Then Declines, Planting Area Reduction Confirmed - Guoxin Futures Cotton Weekly Report - **Report Date**: January 9, 2026 1. Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - **Domestic Market**: This week, Zheng Cotton soared and then declined. After the market's digestion of the reduced planting area reached its peak, the price of Zheng Cotton exceeded 15,000 yuan/ton. However, as the price rose, the pressure for long - position holders to take profits increased. After the policy expectations were realized, the market is expected to cool down and return to fundamentals. Due to the actual contraction in supply, the adjustment space for Zheng Cotton is expected to be limited, with an overall operating range of 14,400 - 15,200 yuan/ton [53]. - **International Market**: The international market was driven by the Chinese market, with prices soaring and then declining. Brazil's cumulative cotton exports in 2025 reached 3 million tons, a year - on - year increase of about 9%, hitting a record high. US cotton sales weakened again. The net increase in US cotton export sales in the current market year was 98,000 bales, a 27% decrease from the previous week and a 49% decrease from the average of the previous four weeks. The weak export data has a certain suppressing effect on the trend of US cotton. However, the high price difference between Chinese and US cotton may still support overall exports. In general, US cotton is still under short - term upward pressure and is expected to maintain a volatile trend [53]. 3. Summary by Directory 3.1 Cotton Market Analysis - **Futures Price**: Zheng Cotton soared and then declined this week, with a weekly increase of 0.62%. ICE cotton also soared and then declined, with a weekly increase of 0.58% [9]. - **Spot Price**: This week, the cotton price index rebounded. The 3128 index rose by 393 yuan/ton compared with last week, and the 2129 index rose by 345 yuan/ton [14]. - **Import Situation**: In November, 120,000 tons of cotton were imported, a year - on - year increase of 10,000 tons. As of the second half of November, the commercial inventory of cotton was 4.6836 million tons, and the market entered an accelerated inventory accumulation stage [19][20]. - **Downstream Inventory**: In November, the yarn inventory was 26.33 days, a year - on - year decrease of 1.13 days. The grey fabric inventory was 32.34 days, a year - on - year increase of 0.69 days [28]. - **Yarn Price**: This week, yarn prices rose. The price of OEC10S yarn increased by 130 yuan/ton compared with last week, the price of C32S yarn increased by 160 yuan/ton, and the price of JC40S yarn increased by 150 yuan/ton [32]. - **Warehouse Receipts and Effective Forecasts**: This week, the total number of Zheng Cotton warehouse receipts and forecasts increased by 198. The number of warehouse receipts was 7,189, and the number of effective forecasts was 2,248, totaling 9,437 [37]. - **Seed Cotton Acquisition**: No specific acquisition situation was described in detail, only the price data chart of Xinjiang seed cotton acquisition was presented [40][41]. - **US Cotton Exports**: As of January [the specific day is missing], the net sales of US upland cotton exports in the current year increased by 98,000 bales, and the net sales of exports in the next year were 22,500 bales [43]. - **US Weather**: The proportion of abnormally dry areas in the US was 22.8%, the proportion of moderately drought - affected areas was 24.4%, the proportion of severely drought - affected areas was 11.6%, the proportion of extremely drought - affected areas was 1.6%, and the proportion of exceptionally drought - affected areas was 0.1%. The total area in drought (D1 - D4) was 37.5% [50]. 3.2后市展望 - The domestic market is expected to cool down after the policy expectations are realized and return to fundamentals, with limited adjustment space for Zheng Cotton. - The international market is affected by China. The high export volume of Brazilian cotton and the weak export data of US cotton co - exist. US cotton is under short - term upward pressure and is expected to maintain a volatile trend [53].

Core Viewpoint - Domestic cotton prices are expected to experience fluctuations and rise in the fourth quarter of 2025, driven by cost support, improved demand expectations, and reduced supply pressure [3][17]. Group 1: Price Trends - In the fourth quarter, the average price of China's 3128B grade cotton was 14,570.51 yuan/ton, a decrease of 0.46% from the third quarter but an increase of 0.03% compared to the fourth quarter of 2024 [4][18]. - The highest price reached 15,077 yuan/ton at the end of December, while the lowest was 14,188 yuan/ton at the beginning of October, with a price difference of 889 yuan/ton [4][18]. Group 2: Supply and Demand Dynamics - The sales progress of new cotton is rapid, with cotton spinning enterprises showing strong demand and ginning factories selling cotton actively, leading to a decrease in market selling pressure [6][20]. - Following the U.S.-China trade meeting on October 30, the cancellation of certain tariffs has improved the foreign trade environment, resulting in increased operating rates for cotton spinning enterprises [7][21]. Group 3: Future Price Expectations - In the first quarter of 2026, cotton prices may rise but are expected to face risks of retreat after reaching peaks due to increased cotton imports and a significant rise in commercial inventory levels [9][23]. - The total cotton production for the 2025/26 season is projected to reach 7.46 million tons, an increase of 11.34% year-on-year, with commercial inventory expected to rise to 671.66 million tons by the end of December [11][25]. Group 4: Demand Outlook - The demand side is expected to show limited performance in the first quarter, with low profit margins for textile enterprises and weak replenishment intentions ahead of the Spring Festival [13][27]. - The overall demand may remain subdued in February due to the holiday, with a potential recovery in March as the traditional demand season begins, contingent on downstream order follow-ups [13][27].