U.S. cotton spot prices retreated notably in the last week of June. USDA data showed the average price for base quality cotton across seven designated markets at 70.84 cents/lb for the week ending June 25, down 28 points from the prior week. Despite the weekly decline, prices remained 5.79 cents above the same period last year, reflecting a tighter supply-demand balance for the current marketing year. More strikingly, cumulative 2025/26 crop year sales reached 1.516 million bales, a 55.6% surge from 974,340 bales a year earlier, indicating that downstream mills are actively locking in forward contracts.
Regional Weather Divergence and Growth Stage Misalignment
Weather conditions across major U.S. cotton belts are now sharply polarized between the Southeast and Southwest, creating distinct impacts on crop development and potential yields. In the Southeast, Alabama, Georgia and surrounding states received widespread thunderstorms with 2-4 inches of weekly rainfall, significantly alleviating earlier drought conditions. The U.S. Drought Monitor reported a marked reduction in drought coverage in these areas. Early-planted fields are gradually entering the boll-setting stage, with squaring rates reaching 40% in Alabama and 30% in Georgia.
Conditions in the Southwest are far more challenging. Eastern Texas saw persistent heavy rain leading to waterlogged soils, field erosion and standing water in low-lying areas, causing yellowing in some cotton plants. More severely, on June 23, the High Plains region was hit by severe thunderstorms producing tornadoes and hail ranging from golf ball to tennis ball size. Some fields suffered catastrophic damage and are already being replanted to grain sorghum after insurance assessments. Meanwhile, West Texas and Oklahoma remain dry, with cotton at highly variable growth stages from just emerged to pre-squaring.
Thin Cash Trading and Shifting Overseas Demand
Despite the strong year-on-year increase in cumulative sales, spot market trading was thin during the week, with limited grower offerings and weak buyer demand. This apparent contradiction reflects a standoff between farmers reluctant to sell at current prices and mills cautious about restocking amid slow end-user orders and squeezed yarn margins.
On the export front, only Mexico, Peru and Turkey showed relatively strong buying interest, while inquiries from traditional heavy buyers like China, Vietnam and Bangladesh remained scarce. This shift in demand geography means U.S. cotton exporters must adapt to changing logistics and payment terms. For domestic Chinese cotton traders, monitoring the purchasing pace and credit conditions of these emerging markets is critical.
Futures Market Sentiment and Price Outlook
ICE December cotton futures settled at 76.97 cents/lb on June 25, up 0.71 cent from the prior session, but the week saw wide intra-week swings between a low of 69.28 cents and a high of 72.68 cents—a nearly 5% range. This volatility is directly tied to weather speculation: tornado news triggered short-covering rallies, while lackluster cash trading capped gains.
Fundamentally, cumulative 2025/26 sales exceeding 1.5 million bales provide a floor for forward demand. However, weather-driven yield uncertainty remains the biggest variable. If the Southeast stays wet and the Southwest dry, final production could fall below current USDA estimates, providing upside for spot prices. Conversely, if weather improves, farmer selling pressure could intensify.