Report Summary 1. Report Industry Investment Rating No investment rating is provided in the report. 2. Core Viewpoints - This week, cotton prices are oscillating at a high level. Overseas, the weather in US cotton - growing areas has been favorable recently, with the drought - affected area of US cotton remaining at 3% as of July 22, and the good - to - excellent rate of US cotton at 57% as of July 20, higher than last week and last year. Also, the net export sales of US cotton last week were only 100,000 bales, which put pressure on US cotton. However, the high - temperature and low - rainfall weather in the western US cotton - growing areas in the coming week is unfavorable for cotton growth, and the strong performance of US crude oil and US grains provides support for US cotton. With these mixed factors, US cotton is oscillating. - In the domestic market, on the supply side, the current commercial cotton inventory is continuously being consumed, and the import of cotton is relatively low. The downstream demand is in the off - season, the operating rate of spinning mills is decreasing, and the finished - product inventory is constantly accumulating. Currently, the new - season cotton in Xinjiang is in the full - bloom stage, the soil moisture is fair, and the high - temperature situation in the growing areas has recently eased. - Strategy: With mixed factors, US cotton is oscillating. In China, the low import of cotton and the continuous consumption of commercial inventory lead to a relatively fast inventory - reduction speed. After continuous increases, the short - term futures market is oscillating. In addition, the downstream demand is still weak, combined with the increase in the planting area of new - season cotton and the alleviation of high - temperature in Xinjiang, which will limit the upward range of Zhengzhou cotton futures [8]. 3. Summary by Directory 3.1 Main Views - US cotton is affected by both positive and negative factors and is oscillating. In China, due to low cotton imports and continuous consumption of commercial inventory, the inventory - reduction speed is fast. After continuous increases, the short - term futures market is oscillating. The weak downstream demand, increased new - season cotton planting area, and alleviated Xinjiang high - temperature will limit the rise of Zhengzhou cotton [8]. 3.2 Market Review - As of the close on July 25, the ICE US cotton 12 contract closed at 68.23 cents per pound, down 0.53 points from last week's close, a weekly decline of 0.77%. The CF2509 contract closed at 14,170 yuan per ton, down 100 points from last week's close, a weekly decline of 0.70% [10]. 3.3 Fundamental Analysis - **US Cotton Growth**: As of the week of July 20, 2025, the good - to - excellent rate of US cotton was 57%, up from 54% the previous week and 53% in the same period last year. The boll - setting rate was 33%, up from 23% the previous week and compared with 40% in the same period last year and a five - year average of 33%. The budding rate was 71%, up from 61% the previous week and compared with 79% in the same period last year and a five - year average of 75% [14][18]. - **US Cotton Exports**: In the 2024/2025 season, the net export sales of US upland cotton were - 32,700 bales, significantly lower than the previous week and the four - week average. In the 2025/2026 season, the net export sales were 132,600 bales. The export shipment volume of US upland cotton was 184,800 bales, a week - on - week increase of 18% but a 12% decrease compared with the four - week average [14][22]. - **Domestic Spinning Mills**: As of July 24, the operating load of mainstream spinning mills was 67.6%, a week - on - week decrease of 2.73%. The operating rate continued to decline this week. The cotton inventory of mainstream spinning mills was equivalent to 27.90 days of storage, and the yarn inventory of major spinning mills was 31.7 days, a week - on - week increase of 0.63% [14][26][29]. - **Domestic Cotton Inventory**: As of July 24, the inventory of imported cotton at major ports decreased by 3.28% week - on - week, with a total inventory of 353,300 tons, and the inventory continued to decline during the week [14][31]. 3.4 Spread Tracking - The report mentions cotton basis, cotton 9 - 1 spread, cotton - yarn spread, and domestic - foreign cotton spread, but no specific data or analysis is provided [36].

Group 1: Report's Core View - This week, cotton prices showed a volatile trend. Abroad, the weather in US cotton - growing areas has been favorable recently, with increased rainfall alleviating the poor soil moisture in the western regions. As of June 17, the drought - affected area in US cotton - growing areas dropped to 3%, lower than last year. Last week, the good - to - excellent rate of US cotton was 48%, at the average level of previous years. US cotton export net sales reached 358,100 bales last week, a significant increase. The external market is a mix of bullish and bearish factors, with US crude oil rebounding after a decline due to geopolitical factors and the US dollar index stabilizing as the Fed maintains the interest rate. In the domestic supply side, the current commercial cotton inventory is continuously being consumed, and cotton imports are scarce. The downstream demand is in the off - season, resulting in a lackluster cotton price under the situation of weak supply and demand. The new cotton sowing in Xinjiang is completed, and the weather in the growing areas is normal, with good cotton growth. The strategy is that with the mix of bullish and bearish factors, US cotton prices continue to decline. Currently, the new cotton sowing in China is completed, the weather in growing areas is favorable, the commercial inventory is decreasing, and cotton imports are low. Under the weak supply - demand situation, the cotton price remains stable. Waiting for new guidance, the Zhengzhou cotton will continue to move in a volatile manner in the short term [6]. Group 2: Market Performance Review - As of the close on June 20, the ICE US cotton 12 contract closed at 66.76 cents per pound, down 1.14 points from last week's close, with a weekly decline of 1.68%. The CF2509 contract closed at 13,495 yuan per ton, unchanged from last week [8]. Group 3: Fundamental Analysis US Cotton Sowing and Growth - As of the week of June 15, the good - to - excellent rate of US cotton was 48% (49% the previous week, 54% in the same period last year), the planting rate was 85% (76% the previous week, 89% last year, with a five - year average of 90%), the boll - setting rate was 3% (5% last year, five - year average of 3%), and the budding rate was 19% (12% the previous week, 21% last year, five - year average of 17%) [16]. US Cotton Exports - As of the week of June 12, the net export sales of US 2024/2025 upland cotton were 83,000 bales (60,000 bales the previous week), the net sales of 2025/2026 upland cotton were 275,000 bales (36,000 bales the previous week), and the export shipments were 205,000 bales (236,000 bales the previous week) [21]. Domestic Spinning Mills' Operation - As of June 19, the operating load of mainstream spinning mills was 71.7%, a 0.69% decline from the previous week. Spinning mills have limited new orders. Small and medium - sized spinning mills in the inland areas often operate in staggered shifts, with the operating rate reduced to 50% - 60%. The operation of Xinjiang spinning mills is basically stable, maintaining at 80% - 90% [25]. Domestic Spinning Mills' Inventory - As of the week of June 19, the inventory of mainstream spinning mills in terms of cotton storage days was 28.2 days. As of June 19, the yarn inventory of major spinning mills was 30.5 days, a 1.33% increase from the previous week. Currently, the operating rate of Foshan grey fabric factories is 20% - 30%, and the overall raw material procurement is cautious. The raw material inventory of yarn enterprises has accumulated, with the inventory of some large factories in Xinjiang around 35 - 40 days and that of inland enterprises around 17 - 28 days [28]. Domestic Cotton Inventory - As of June 20, 2025, the total commercial cotton inventory was 2.9915 million tons, a decrease of 106,500 tons (3.44% decline) from the previous week. Among them, the commercial cotton in Xinjiang was 2.1193 million tons, a decrease of 87,100 tons (3.95% decline) from the previous week, and the commercial cotton in inland areas was 447,500 tons, a decrease of 1,000 tons (0.22% decline) from the previous week. As of June 19, the inventory of imported cotton at major ports decreased by 4.15% from the previous week, with a total inventory of 424,700 tons, and the inventory continued to decline during the week [30].