US cotton spot prices are experiencing a notable correction. For the week ending July 2, the average price for base quality cotton across seven designated markets fell 133 points to 69.51 cents/lb, a weekly drop of about 1.9%. Although still 4.32 cents above last year, this is one of the largest weekly declines of the season. The most active ICE December futures contract also fell 0.92% to 77.12 cents/lb, signaling weakening support for raw material costs.
Supply and Demand: Volumes Up, Trading Thin
Year-to-date, total spot cotton sales for the 2025/26 season reached 1,520,294 bales, up 55% from 981,244 bales a year earlier. This suggests mills and traders locked in significant inventory earlier. However, current weekly trading is thin: the Southeast market reports moderate supply and demand, while the South Texas market sees only sporadic inquiries, mainly from Bangladesh and Turkey. The divergence between strong annual totals and weak current activity indicates a shift in buying pace—pre-stocking is mostly done, and buyers are now waiting for lower prices.
Weather Divergence: Drought and Storms
Major US cotton regions face contrasting weather. The northern Southeast (Carolinas, Virginia) received 0.5-1 inch of rain, helping ease severe drought in coastal areas, but deeper soil moisture remains insufficient. The southern Southeast (Alabama, Georgia) saw little rain, with squaring rates at 53% and 46%, respectively, and boll set at 13% and 8%, with overall crop ratings “good.” In contrast, the Southwest (West Texas, Kansas, Oklahoma) faces extreme heat (99-105°F), hail, and winds up to 110 mph. Crop adjusters have assessed damaged fields. Kansas and Oklahoma received some rain but strong winds hinder growth, and Saharan dust clouds add stress. This east-west weather split creates significant yield uncertainty.
Industry Impact: Cost Relief and Cautious Buying
For downstream mills, falling spot prices improve raw material costs. At 69.51 cents/lb, prices are below many mills’ psychological threshold of 70 cents. The ICE decline reinforces short-term bearish sentiment. However, persistent drought in West Texas could trigger supply concerns by August, pushing prices higher. For buyers with immediate needs, current levels may present a buying opportunity, but hedging is recommended to manage weather-related volatility.