The US cotton spot market is experiencing a price surge followed by a sharp contraction in trading volume. In the week ending July 9, the average spot price for base quality cotton across seven designated markets jumped 347 points week-on-week to 72.98 cents per pound. This price is not only higher than the previous week's 69.51 cents but also 14.7% above last year's 63.64 cents. However, the price rally did not spur higher volumes—weekly trading fell to just 1,732 bales, down 55% from 3,865 bales the prior week and below the 2,739 bales traded a year ago.
Price-Volume Divergence
Daily data shows the weekly average price ranged from a low of 71.11 cents on July 6 to a high of 74.10 cents on July 7, a spread of nearly 3 cents. The ICE December contract rose 3.8% on Tuesday to its highest since June 2, before settling Thursday at 80.63 cents, down 0.05%. Futures strength supported spot prices, but downstream mills clearly hesitated to chase highs.
The volume drop stems from cautious mill buying strategies. Domestic textile mills submitted moderate inquiries, mainly for color grade 42 and above, leaf grade 4 and above, for Q3-Q4 2026 delivery, but no trades were reported. Yarn demand remained slow to moderate, with buyers balancing raw material costs against finished order commitments. Export channels were similarly quiet, with Far East agents seeking discounted cottons but no transactions closed.
Crop Progress and Weather Divergence
USDA's July 6 crop progress report showed squaring and boll-setting rates in the Southeast ahead of last year. Alabama reported 64% squaring and 22% boll-setting, Georgia 63% and 14%, with most crops rated good. However, conditions in the Southwest were mixed.
East and South Texas faced hot, humid weather, with crops needing more rain. Cotton in the Coastal Bend ranged from blooming to cutout, while bolls in the Lower Rio Grande Valley were cracking open. Whitefly populations were high, and producers were preparing for harvest. West Texas, Kansas, and Oklahoma saw daytime highs of 95-102°F, with scattered rain up to 1.25 inches, but many areas remained dry. Some fields were hit by strong winds and hail. Dryland cotton was progressing but needs sustained rainfall.
This regional weather divergence suggests potential differences in new-crop quality and timing. A favorable Southeast could ensure stable supply of high-grade cotton, while persistent drought in the Southwest may impact fiber length and strength, widening price spreads between grades.
Season-to-Date Volume and Forward Signals
Despite the weak weekly volume, season-to-date (since August 1) spot trading reached 1,522,026 bales, up 54.7% from 983,983 bales last year. This indicates mills and merchants had already built significant inventories at lower prices earlier in the season. The current lull appears more a phase adjustment than a fundamental demand deterioration.
Trade reports show high-grade cotton (grade 31 and above, leaf 3 and above) traded at 72.75-73.00 cents/lb, while mixed lots (grade 13 and above, leaf 5 and above) fetched 68.00-70.00 cents/lb, a spread of 3-5 cents. This suggests a diverging supply-demand structure: premium cotton remains tight and price-supportive, while lower grades face more negotiation space.
Overseas mill inquiries came mainly from India, Pakistan, and Vietnam, but interest focused on discounted lots, indicating price sensitivity across Southeast Asia. If US cotton stays elevated, some buyers may shift to Brazilian, Australian, or West African origins.