1. Report's Industry Investment Rating - No information provided 2. Core Viewpoints - Near the Spring Festival, the operating rate of downstream enterprises in inland China has declined steadily, while that in Xinjiang has remained stable; large market fluctuations have driven the fluctuations of Zhengzhou cotton futures. The expected decline in the planting area in the new season and the acquisition cost support the lower price level, while the high raw material inventory of yarn mills and the high internal - external price difference limit the upside potential. It is expected that the market will fluctuate in the near term, and attention should be paid to the capital and macro - economic aspects [4] 3. Summary by Relevant Catalogs Global Cotton Production - As of January 24, the cotton planting in Brazil's 2025/26 season was 60.6% completed, a 24.3 - percentage - point increase from the previous period, and 14.3 percentage points faster than the same period last year. In Mato Grosso, the sowing of second - crop soybeans, cotton, and corn has accelerated after the first - crop soybean harvest. In Australia, the production is not expected to change significantly. The estimated cotton production this season is about 1 million tons (4.4 million bales), an 18% decrease from the previous season, consistent with the USDA's January supply - demand report [5] Domestic Cotton Inspection and Sales - As of January 28, the national lint inspection volume was 7.2127 million tons, a year - on - year increase of 12.86%. As of January 22, 2026, the national lint sales rate was 62.7%, a year - on - year increase of 24.1 percentage points and 28.2 percentage points higher than the average of the past four years [6] US Cotton Export and Trade Agreement - As of the week ending January 22, the cumulative contracted exports of US cotton this year were 1.7722 million tons, accounting for 68% of the annual forecasted total exports, a week - on - week increase of 2 percentage points, and 15 percentage points slower than the average of the past three years. The cumulative shipments were 0.8522 million tons, accounting for 48% of the total contracted volume, a week - on - week increase of 2 percentage points and 5 percentage points faster than the average of the past three years. In the week ending January 22, the weekly contracted volume of US upland cotton in 2025/26 was 46,200 tons, a 51% week - on - week decrease, mainly due to the decline in Vietnam's orders. The weekly export shipment volume was 1,015 tons, a 35% year - on - year increase, mainly due to the accelerated shipments in Southeast Asian countries. On January 27, India and the EU officially reached a trade agreement, which will eliminate the import tariffs on Indian textiles and clothing exported to the EU, with the highest tariff currently at 12%. This may enhance the price competitiveness of Indian textiles in the European market and lead to more direct competition for market share with China [7] Price Trends - From January 22 to January 29, 2026, the price of the ZCE cotton active contract increased from 14,730 yuan/ton to 14,910 yuan/ton, a rise of 180 yuan/ton, while the ICE active contract price decreased from 63.91 cents/pound to 63.46 cents/pound, a drop of 0.45 cents/pound [8] - The prices of imported cotton yarn at port pick - up points increased. For example, the price of Indian C32S increased from 21,480 yuan/ton to 21,520 yuan/ton, a rise of 40 yuan/ton; the price of Vietnam C32S increased from 21,480 yuan/ton to 21,570 yuan/ton, a rise of 90 yuan/ton; and the price of Indonesian C32S increased from 21,080 yuan/ton to 21,100 yuan/ton, a rise of 20 yuan/ton [11] - The import prices of US EMOT M and Brazilian M cotton decreased. The price of US EMOT M decreased from 74.10 cents/pound to 73.70 cents/pound, and the price of Brazilian M decreased from 71.30 cents/pound to 71.20 cents/pound [12] Inventory and Import and Export - As of the week ending January 22, the weekly contracted volume of 2025/26 US upland cotton was 46,200 tons, a 51% week - on - week decrease, a 17% decrease from the four - week average, and a 42% year - on - year decrease. Among them, Pakistan contracted 11,800 tons, and Vietnam contracted 10,300 tons [19] - As of January 28, the 2025/26 cotton inspection volume was 7.213 million tons, a year - on - year increase of 12.86% [33] - As of this Thursday, the sum of Zhengzhou cotton warehouse receipts and valid forecasts was 11,315, and the sum of Zhengzhou yarn warehouse receipts and valid forecasts was 7 [54]

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].

Group 1 - ICE cotton futures prices have shown a weak oscillating trend since the fourth quarter, with the main contract dipping to a low of 63 cents per pound due to the U.S. government shutdown causing data absence and global trade uncertainties, as well as unfavorable changes in U.S. cotton production estimates and export conditions [1] - The USDA's December supply and demand report indicates a slight increase in global cotton ending stocks, with initial stocks raised by 120,000 bales, production estimates reduced by 290,000 bales, and consumption estimates lowered by 270,000 bales, resulting in a net increase of 40,000 bales in ending stocks, reflecting overall stability [2] - The U.S. cotton production estimate was raised by 150,000 bales, while consumption was reduced by 100,000 bales, leading to a 200,000 bale increase in ending stocks, totaling 4.5 million bales, with a notable increase in the beginning stocks contributing to this rise [3] Group 2 - The U.S. weekly export report shows a significant increase in weekly cotton contracts, with a total of 66,300 tons signed, marking a 258% week-over-week increase and a 28% year-over-year increase, with Vietnam and Mexico being the largest buyers [4] - Brazil's cotton planting area is expected to decrease due to falling prices and adverse weather conditions affecting planting schedules, with the Mato Grosso state predicting a production of 2.58 million tons, a decrease from previous estimates [5] - In contrast, Pakistan's spinning mills are operating at a high rate, while Indian and Vietnamese mills are experiencing a downward trend in operating rates, with Pakistan's mills performing at their highest levels in three years [6][7] Group 3 - The EU's textile and apparel imports from China, Vietnam, Bangladesh, and the U.S. increased by 10.68% year-over-year in the first nine months of 2025, with a total import value of €436.75 billion, while U.S. textile and apparel imports showed a slight decline in August [8] - The USDA's December report forecasts China's cotton production for 2025/2026 at 7.3 million tons, a 5% increase year-over-year, while India's production is estimated at 5.22 million tons, indicating limited adjustment potential for both countries [9]

1. Report Industry Investment Ratings - Cotton: Neutral to bearish [3] - Sugar: Neutral [7] - Pulp: Neutral [10] 2. Core Views of the Report - Cotton: New - year global cotton supply - demand is expected to be loose, with increased supply pressure and demand - side stress. Domestic cotton de - stocking is fast, but new cotton listing may limit price decline [2] - Sugar: Brazilian supply is strong, suppressing raw sugar prices, while ethanol provides support. In China, typhoons may affect production, and trade frictions increase volatility [5][6][7] - Pulp: Global supply pressure exists, and domestic demand is weak. Tariff wars and insufficient fundamental improvement keep prices at the bottom [9][10] 3. Summary by Relevant Catalogs Cotton Market News and Key Data - Futures: Cotton 2601 contract closed at 13,320 yuan/ton, up 50 yuan/ton (+0.38%) [1] - Spot: 3128B cotton Xinjiang arrival price was 14,510 yuan/ton, down 3 yuan/ton; national average was 14,664 yuan/ton, down 10 yuan/ton [1] - Import: In August, Thailand imported about 9,057 tons of cotton, down 43.5% month - on - month and up 1.2% year - on - year [1] Market Analysis - Macro: Sino - US trade war escalated, and the US government shutdown affected data release [2] - Supply - demand: Global supply - demand is loose, and domestic de - stocking is fast, but new cotton listing increases supply [2] Strategy - Neutral to bearish due to trade war and production increase expectations [3] Sugar Market News and Key Data - Futures: Sugar 2601 contract closed at 5,408 yuan/ton, up 5 yuan/ton (+0.09%) [4] - Spot: Guangxi Nanning price was 5,790 yuan/ton, unchanged; Yunnan Kunming price was 5,760 yuan/ton, down 10 yuan/ton [4] - Production: In Brazil, 40.855 million tons of sugarcane were crushed in late September, up 5.18% year - on - year [4] Market Analysis - International: Brazilian supply is strong, and ethanol supports prices [5] - Domestic: Supply is sufficient, and typhoons may affect production [6] Strategy - Neutral due to typhoon impact and trade frictions [7] Pulp Market News and Key Data - Futures: Pulp 2511 contract closed at 4,856 yuan/ton, unchanged [8] - Spot: Shandong Chilean silver star coniferous pulp was 5,600 yuan/ton, up 10 yuan/ton; Russian needle pulp was 4,965 yuan/ton, down 10 yuan/ton [8] - Market: Imported pulp prices had different trends, with some rising and some stagnant [8] Market Analysis - Supply: Overseas mills' plans have limited impact, and domestic supply is still loose [9] - Demand: Global and domestic demand is weak, and paper mills' procurement is cautious [9] Strategy - Neutral due to tariff wars and weak fundamentals [10]