US cotton spot prices are undergoing a notable correction. For the week ending July 2, the average price for base quality cotton across seven designated markets fell to 69.51 cents per pound, down 133 points from the prior week. Although still 4.32 cents above last year, the weekly decline is the steepest in nearly two months. ICE December futures also weakened, settling at 77.12 cents per pound on Thursday, down 0.72 cents. This pullback is not isolated but reflects the interplay between global textile demand expectations and regional weather conditions.
New-Crop Volume Surge: Mills Position Early
Cumulative spot sales for the 2025/26 marketing year (starting August 1) have reached 1.52 million bales, a 55% increase from 981,244 bales a year earlier. This volume surge is a critical signal: despite lackluster global apparel demand, mills and traders are actively building positions, indicating that the current spot price near 69 cents is seen as an attractive entry point. Notably, foreign mill inquiries remain scarce overall, but interest from Bangladesh and Turkey is relatively concentrated, reflecting restocking appetite from South Asia and the Middle East.
Regional Weather Divergence: Drought vs. Rain
The Texas Eastern-Southern region experienced hot, dry conditions with daytime highs of 95-99°F and no measurable precipitation. In South Texas, early-planted fields have reached the sixth week of blooming, with some bolls beginning to crack, but persistent heat and pest pressure continue. The Texas Western-Kansas-Oklahoma region faced extreme weather: gusts up to 110 mph were recorded in Slaton, Texas, and hail damaged seedlings in some areas. Although intermittent thunderstorms brought trace to 3 inches of rain, strong winds limited moisture retention, and monitoring for thrips, tarnished plant bugs, and diseases continues.
Conditions in the Southeast were more favorable. Eastern parts of the Carolinas and Virginia received 0.5-1 inch of rain over the weekend, providing some relief to areas suffering from severe to extreme drought along the Atlantic coast. In Alabama, squaring reached 53%, and in Georgia, 46%; boll set was 13% in Alabama and 8% in Georgia, with both states rated "good." However, North Carolina’s squaring was only 48%, and South Carolina’s just 30%, with boll set just beginning—more rain is needed.
Supply-Demand Dynamics and Price Outlook
The core tension in the US cotton market lies between the 55% surge in new-crop sales and the divergent weather conditions across producing regions. On one hand, the volume increase suggests buyers are comfortable with current price levels and are pre-positioning to avoid later weather premiums. On the other hand, the high heat and pest pressure in Texas, coupled with insufficient rainfall in parts of the Southeast, mean final production could be at risk. USDA’s June 29 crop progress report rated cotton in both states as "good" to "fair," but if July-August weather deteriorates, downgrades are likely.
For downstream mills, the current spot price near 69 cents is a multi-month low, but the futures market at 77 cents implies a basis of nearly 8 cents. If weather-driven speculation heats up before the new crop arrives, that basis could widen, making it critical for buyers to evaluate hedging windows.