The US cotton spot market experienced a notable shift in the first week of July. According to the latest USDA weekly data, the average spot price across seven designated markets surged 347 points to 72.98 cents/lb for the week ending July 9. This was not only higher than the previous week's 69.51 cents/lb but also 9.34 cents above the same period last year. The ICE December contract briefly touched its highest level since June 2. However, the price rally failed to translate into higher volumes—physical trading reached only 1,732 bales, down 55% from the prior week and 37% year-on-year.
This divergence between price and volume suggests that buyers remain cautious at current levels. For Chinese cotton-textile mills, the rapid rise in US cotton spot prices means a significant increase in imported cotton costs in the near term. Whether downstream yarn and grey fabric markets can absorb this cost pressure will be a key variable in the coming weeks.
Divergent Weather and Crop Progress
Behind the price jump is an uneven distribution of weather conditions across producing regions. In the Southeast, Alabama and Georgia reported squaring rates of 64% and 63%, respectively, with boll-setting rates at 22% and 14%. Crop ratings were mostly "good." In the Southwest, conditions were more complex. East and South Texas remained hot and dry, with bolls already opening in the Lower Rio Grande Valley and high whitefly populations reported. In West Texas, scattered rainfall brought 0.01-1.25 inches, but many areas stayed dry, and some fields suffered from high winds and hail. Crop growth stages ranged from early emergence to flowering.
This divergence directly impacts the quality and quantity of cotton available for future delivery. High-quality bales (grade 31+, staple 34-38) traded at 72.75-73.00 cents/lb, while mixed lots (grade 13+, leaf 5+) fetched only 68.00-70.00 cents/lb, a spread of nearly 5 cents. This indicates that the market is pricing a premium for quality, while lower-grade cotton faces greater selling pressure.
Shifts in Overseas Demand Structure
The most notable demand-side development was the concentration of inquiries. Domestic mills sought color 42+, leaf 4+ cotton for Q3-Q4 2026 delivery, but no trades were reported. Overseas inquiries came mainly from India, Pakistan, and Vietnam, while Far East agents looked for discounted lots.
This structure suggests that Chinese buyers have not rushed to enter the market amid the price spike. On one hand, domestic yarn demand remains slow-to-moderate, and finished order recovery is insufficient to support rapid raw material cost absorption. On the other hand, rigid demand from India and Pakistan is providing a floor for US cotton prices. For Chinese import teams, the risk is that if India and Pakistan continue to absorb supply, the available US cotton stock may tighten further, making later entry more expensive.
Implications of Cumulative Volumes
Despite the low weekly volume, cumulative spot trading since August 1 has reached 1.522 million bales, up 54.7% from 983,983 bales a year earlier. This long-term growth contrasts with the weekly decline, suggesting buyers are waiting for a price pullback before restocking.
For China, the growth in cumulative US cotton commitments means that global supply is tilting toward the US. If US cotton becomes less competitive on price, Chinese buyers may shift some demand to West African or Central Asian cotton. Such a shift, once established, would put medium-term pressure on US cotton's premium.