The US cotton spot market is showing a rare pattern of rising prices with expanding volumes, while futures diverge. For the week ending September 3, 2026, the average spot price for base quality cotton in seven designated markets reached 83.09 cents/lb, up 21 points from the previous week and 34% higher year-over-year—last year's level was just 61.95 cents. However, the ICE October contract settled at 83.36 cents/lb, down sharply from 91.06 cents a week earlier, a weekly drop of over 8%. This divergence between spot and futures suggests that near-term supply tightness is being priced against expectations of larger future harvests.
Signals Behind Price and Volume Data
Spot trading volume surged dramatically. The daily spot quotation system reported 6,975 bales traded during the week, versus just 934 bales the prior week—a six-fold increase—and 1,874 bales a year ago. Although total volume for the marketing year to date (13,623 bales) remains below last year's 15,874 bales, the weekly surge indicates that some buyers are seizing the price dip. The daily price range widened to 78.18–86.52 cents/lb, with intraday swings exceeding 10%, typical of a market at a critical juncture.
Domestic mills showed no new inquiries or trades, with most having covered near-term raw cotton needs. Yarn sales were slow to moderate. This contrast between active spot trading and silent mills suggests that current buyers are more likely traders or speculative inventory restocking rather than end-users. Far East agents inquired only for discounted lots and reported no transactions, reflecting overseas caution at current price levels.
Weather and Forward Contracting: Key Variables for New Crop Supply
West Texas continues to suffer hot, dry weather with daytime temperatures in the 90s to over 100°F; isolated thunderstorms provided minimal relief. Dryland fields are severely stressed, while irrigated fields show heat stress and boll shedding. Yield estimates vary widely, implying actual output may fall below early expectations. Pest pressure has weakened, and beneficial insects are now aiding control, offering some support for remaining plants.
Forward contracting data is even more telling. By end-August, US upland cotton growers had signed contracts for 25% of expected planted area, up sharply from 16% a year earlier. The Southwest led with 33% (vs. 26%), the South Central region reached 18% (vs. 6%), and the Southeast hit 14% (vs. 3%). This accelerated contracting signals that growers are comfortable locking in current prices, but it also means more supply is already committed, potentially easing concerns about future availability. The combination of tight spot supplies and a well-covered forward book may limit upside for futures in coming months.
Implications for the Supply Chain
The US cotton market is caught between low old-crop stocks, weather uncertainties for the new crop, and sluggish downstream demand. The spot price rise reflects basis recovery and short-term logistics tightness rather than a genuine pickup in end-use demand. Mills' persistent caution and slow yarn sales indicate that the destocking cycle is not over. For spinners relying on US cotton, current prices may not be the ideal entry point, but if weather issues worsen before the new crop arrives, prices could spike again.