U.S. cotton spot markets are undergoing a subtle price correction. For the week ending June 25, the average spot price for base quality cotton across seven designated markets fell 28 points from the previous week to 70.84 cents per pound. While this remains 5.79 cents higher than the same period last year, the weekly decline itself sends a noteworthy signal: in the context of cumulative spot sales for the 2025/26 season surging 55.5% year-on-year to 1.516 million bales, the price retreat suggests market hesitation at elevated levels.
Divergent Weather: A Tale of Two Extremes
If price movements reflect immediate market sentiment, weather conditions across growing regions fundamentally determine supply elasticity in the months ahead. This week, U.S. cotton belts presented a sharply contrasting picture: beneficial rains in the Southeast versus excessive rainfall and storm damage in the Southwest.
In the Southeast, Alabama, Georgia, and the Florida Panhandle received 2 to 4 inches of weekly rainfall, with some areas seeing even higher totals. The U.S. Drought Monitor confirmed that this heavy precipitation significantly reduced the extent and severity of drought in these areas. Adequate moisture directly benefits cotton plants currently in the squaring-to-boll-setting stage. NASS data show Alabama's cotton squaring rate at 40% and Georgia's at 30%, with early-planted fields gradually entering the boll-setting phase. In contrast, while the Carolinas and Virginia received 0.5 to 1 inch of rain, drought alerts remain in effect, with squaring rates ranging from 17% to 31%, indicating moisture disparities even within the Southeast.
The situation in the Southwest is far more complex. Following early-week showers, soils in East and South Texas remain excessively wet, halting field operations. Industry sources report that some fields have experienced runoff and waterlogging. The northern Coastal Bend region has received over 20 inches of rain in the past 60 days, significantly boosting reservoir levels at Lake Corpus Christi and other depleted water bodies, alleviating long-term drought concerns. However, the cost has been widespread soil saturation and standing water in low-lying areas, with some cotton plants showing yellowing leaves.
A more extreme shock occurred in the Texas High Plains on June 23, when severe thunderstorms spawned tornadoes and hail the size of golf balls to tennis balls. Damage assessments are underway, with multiple dryland fields already insured and slated for replanting to grain sorghum. This event implies a potential downward adjustment in the actual harvested acreage for the Southwest this season.
Thin Trading and Demand Dynamics
In contrast to the active weather patterns, spot market trading was generally light. The daily average price range for base quality cotton across the seven markets fluctuated between a low of 69.28 cents/lb on June 24 and a high of 72.68 cents/lb on June 22. Although the ICE December contract edged up 0.93% to 76.97 cents/lb on Thursday, the weakness in the spot market indicates that downstream mills' purchasing appetite has not been reignited by the futures rebound.
Market reports from all major producing regions converge on the same conclusion: market supplies and grower offerings are limited, while buyer demand is subdued. In East and South Texas, overseas mill inquiries were scarce, with only Mexico, Peru, and Turkey showing relatively higher buying interest. This pattern reflects a regional divergence in global textile end-demand—consumption in major Southeast Asian and South Asian markets may be slowing, while some Latin American countries still have firm requirements.
Notably, despite the weekly price decline, cumulative spot sales for the current marketing year (beginning August 1, 2025) have reached 1.516 million bales, far exceeding last year's 974,340 bales. This suggests that, on an annual basis, U.S. cotton sales are ahead of schedule. The current price correction is more likely a technical adjustment rather than a trend reversal.
Growth Progress and Supply Outlook
Looking at crop development stages, the divergence among major producing regions is widening. Early-planted fields in the Southeast are entering the boll-setting phase, while the Southwest ranges from just-emerged to pre-squaring. Planting is complete in the Texas Rolling Plains, but some Kansas fields show weak seedling growth due to cold damage and require warm, sunny weather for recovery. Intermittent rains in Oklahoma have aided stand establishment, but weed pressure is high, and windy, rainy weather has limited herbicide applications.
This divergence, combined with weather disruptions, means significant uncertainty remains regarding final yields and harvested acreage for the 2025/26 U.S. cotton crop. Favorable rains in the Southeast should help stabilize or even increase yields, but replanting in storm-affected areas of the Southwest will directly reduce total supply. Additionally, ongoing drought conditions in West Texas, Kansas, and Oklahoma have not been fundamentally alleviated by scattered showers, leaving irrigation demands high.
For international buyers, the current spot price of 70.84 cents/lb may represent a noteworthy opportunity. Given the strong sales pace and rising supply risks in the Southwest, prices could rebound once the market digests near-term bearish factors.