1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints - The cotton sales progress is still fast and at a high level in the same period of previous years. The downstream stocking willingness has increased, and textile mills have started to price one by one. Supported by market bullish factors, the cotton fundamentals remain strong. Although the cotton price has significantly corrected recently, it is expected to mainly fluctuate in a short - term range [6]. 3. Summary by Directory 3.1 Market Information (First Part) - **Futures Market**: The closing prices, price changes, trading volumes, and open interest of various cotton (CF) and cotton yarn (CY) futures contracts are presented. For example, the CF01 contract closed at 15145 with a price increase of 5, and the CY05 contract closed at 20515 with a price decrease of 55 [2]. - **Spot Market**: Spot prices of various cotton and cotton yarn products are given, such as the CCIndex3128B cotton price at 15856 yuan/ton with a decrease of 75, and the CY IndexC32S cotton yarn price at 21300 yuan/ton with no change [2]. - **Price Spreads**: Different types of price spreads are provided, including cotton and cotton yarn inter - period spreads and cross - variety spreads. For example, the 1 - 5 month cotton inter - period spread is 620 with an increase of 25 [2]. 3.2 Market News and Views (Second Part) - **Cotton Market News** - As of January 19, 2026, the total cotton inventory in Zhangjiagang Free Trade Zone was 35,700 tons, a year - on - year decrease of 0.33%. The inventory showed a small increase, with Brazilian and American cotton mainly for warehousing and no outbound shipments in the past half - month. The contract trading volume of the 2025/26 cotton season reached 621,520 tons as of January 6, equivalent to 16% of the estimated national output, and the pre - sale volume of the 2026/27 season was at least 73,000 tons [4]. - As of January 17, the cotton planting progress in Brazil in the 2025/26 season was 36.34%, a month - on - month increase of 4.4 percentage points, but slower than the same period last year and the average of the past three years, mainly due to stagnant planting in Bahia and slow planting in Mato Grosso [5]. - In December 2025, China's cotton imports were 180,000 tons, a month - on - month increase of 51.3% and a year - on - year increase of 31.0%. In the 2025/26 season (from September 2025 to December 2025), the cumulative cotton imports were 490,000 tons, a year - on - year increase of 2.1%. The cotton yarn imports in December 2025 were 170,000 tons, a month - on - month increase of about 15.10% and a year - on - year increase of about 11.9%. The cumulative cotton yarn imports in the 2025/26 season were about 590,000 tons, a year - on - year increase of about 18% [5]. - **Trading Logic**: The cotton sales progress is fast, and downstream stocking willingness has increased. Supported by bullish factors, the cotton fundamentals remain strong. After the recent significant correction, it is expected to mainly fluctuate in a short - term range [6]. - **Trading Strategy** - Unilateral: It is expected that the US cotton will likely fluctuate in a short - term range, and Zhengzhou cotton fundamentals remain strong, also expected to mainly fluctuate in a short - term range [7]. - Arbitrage: Wait and see [7]. - Options: Wait and see [8]. - **Cotton Yarn Industry News** - The overall price of pure cotton yarn remained stable, with generally insufficient new orders and a weak market trading atmosphere. Some spinning mills reported a significant decrease in new orders, mainly fulfilling and digesting previous orders. Although foreign trade orders improved slightly, the boost to the overall market was limited [8]. - The sales of the whole - cotton grey cloth market remained the same as before, with prices mainly stable. In December 2025, the export volume of whole - cotton grey cloth was 48.85 million meters, a year - on - year increase of 9.3%, and the export value was 45.68 million US dollars, a year - on - year increase of 5.3%. The cumulative export volume from January to December 2025 was 639 million meters, a year - on - year increase of 23.17%, and the cumulative export value was 613 million US dollars, a year - on - year increase of 9.34%. The import volume in December 2025 was 37.87 million meters, a year - on - year increase of 26.95%, and the import value was 8.57 million US dollars, a year - on - year increase of 17.72%. The cumulative import volume from January to December 2025 was 350 million meters, a year - on - year increase of 15.82%, and the cumulative import value was 78.36 million US dollars, a year - on - year increase of 4.2% [9]. 3.3 Options (Third Part) - The closing prices, price changes, implied volatilities and other data of several cotton option contracts are presented. For example, the CF605C14600.CZC option contract closed at 334 on January 19, 2026, with a price decrease of 16.9% and an implied volatility of 13.3% [11]. - The 60 - day HV of cotton was 9.2812 yesterday, with a slight increase in volatility. The implied volatilities of different options were different [11]. - The PCR of the main contract of Zhengzhou cotton was 0.8667 yesterday, and the PCR of trading volume was 0.4688. The trading volumes of both call and put options decreased today. The option strategy is to wait and see [12][14]. 3.4 Relevant Attachments (Fourth Part) - Multiple charts are presented, including the price spread between domestic and foreign cotton under 1% tariff, cotton basis for January, May, and September, the price spread between CY05 - CF05 and CY01 - CF01, and the price spreads of CF9 - 1 and CF5 - 9 [25][26]

Group 1: Market Information - The closing prices of CF01, CF05, and CF09 contracts were 14025, 13965, and 13925 respectively, with price changes of -40, -35, and -150 [3]. - The closing prices of CY01, CY05, and CY09 contracts were 20005, 20190, and 19995 respectively, with price changes of -160, 0, and -240 [3]. - The price of CCIndex3128B was 15580 yuan/ton, up 31 yuan; the price of CY IndexC32S was 20720 yuan/ton, down 60 yuan [3]. - The price of Cot A was 78.70 cents/pound, down 0.50 cents; the price of FCY IndexC33S was 22116 yuan/ton, up 24 yuan [3]. - The price of (FC Index):M: to - port price was 77.63 cents/pound, down 0.47 cents; the price of Indian S - 6 was 54000 rupees/candy, unchanged [3]. - The price of polyester staple fiber was 7450 yuan/ton, up 70 yuan; the price of pure polyester yarn T32S was 11130 yuan/ton, unchanged [3]. - The price of viscose staple fiber was 12700 yuan/ton, up 100 yuan; the price of viscose yarn R30S was 17250 yuan/ton, unchanged [3]. - The 1 - 5 month spread of cotton was 60, down 5; the 5 - 9 month spread was 40, up 115; the 9 - 1 month spread was - 100, down 110 [3]. - The 1 - 5 month spread of cotton yarn was - 185, down 160; the 5 - 9 month spread was 195, up 240; the 9 - 1 month spread was - 10, down 80 [3]. - The CY01 - CF01 spread was 5980, down 120; the CY05 - CF05 spread was 6225, up 35; the CY09 - CF09 spread was 6070, down 90 [3]. - The 1% tariff - based internal - external cotton price spread was 1673 yuan/ton, up 58 yuan; the sliding - scale tariff - based internal - external cotton price spread was 1021 yuan/ton, up 21 yuan [3]. - The internal - external yarn price spread was - 1396 yuan/ton, down 84 yuan [3]. Group 2: Market News and Views Cotton Market News - As of July 27, the budding rate of U.S. cotton in 15 major cotton - growing states was 80%, 6 percentage points slower than the same period last year and the same as the five - year average [6]. - As of July 27, the boll - setting rate of U.S. cotton in 15 major cotton - growing states was 44%, 8 percentage points slower than the same period last year and 3 percentage points faster than the five - year average [6]. - As of July 27, the good - to - excellent rate of U.S. cotton in 15 major cotton - growing states was 55%, 5 percentage points higher than the same period last year and 5 percentage points higher than the five - year average [6]. - As of July 26, the total harvesting progress of Brazilian cotton was 21.7%, up 5 percentage points from the previous week and 3.1 percentage points slower than the same period last year [6]. - As of the week of July 28, 2025, the weekly cotton listing volume in India was 1.15 million tons, a year - on - year decrease of 64%; the cumulative cotton listing volume in the 2024/25 season was 5.093 million tons, a year - on - year decrease of 4% [7]. Trading Logic - U.S. cotton may be slightly weaker in the short term due to the increase in the actual sown area at the end of June and the alleviation of drought in the main producing areas, but there are potential positive factors such as trade negotiations and weather trading [8]. - The current cotton commercial inventory and import volume are at low levels in the same period over the years, which may lead to a slightly tight supply at the end of the season. The issuance of sliding - scale tariff quotas and the Sino - U.S. trade and tariff situation will affect the market [8]. - Considering that the downstream needs time to digest the current price, the cotton price is expected to fluctuate at the current level in the short term [8]. Trading Strategies - Unilateral: U.S. cotton is expected to fluctuate slightly stronger, and Zhengzhou cotton is expected to fluctuate in the short term [9]. - Arbitrage: Wait and see [10]. - Options: Sell put options [12][16]. Cotton Yarn Industry News - Recently, Zhengzhou cotton has been slightly weaker, and the pure - cotton yarn market has mainly maintained stable quotations. The transaction price is approaching the quotation. The downstream has insufficient orders and mainly replenishes inventory for rigid demand [12]. - The overall demand in the pure - cotton grey fabric market is weak, and the fabric price is mainly stable and weak. Some weaving factories in local areas have improved orders recently, but the order volume is small [12]. Group 3: Options - Today, the 10 - day HV of cotton was 10.0386, with a slight increase in volatility. The implied volatility of CF509 - C - 13800 was 13.6%, that of CF509 - P - 13600 was 11.8%, and that of CF509 - P - 13000 was 11.9% [14]. - Today, the position PCR of the main contract of Zhengzhou cotton was 0.8595, and the trading volume PCR of the main contract was 0.6113. The trading volumes of both call and put options increased [15]. - Option strategy: Sell put options [16].