US cotton spot market is undergoing a repricing driven by weather and expectations. For the week ending Aug 6, the average price for base quality cotton in seven designated markets rose to 76.15 cents/lb, up 245 points from the previous week and 686 points year-over-year. More notably, spot trading volume jumped from 817 bales to 3,508 bales, signaling a shift from wait-and-see to tentative entry.
Signals Behind the Data
Daily spot prices ranged between 75.29 and 76.75 cents/lb, with the low on Jul 31 and high on Aug 6. ICE October futures settled at 81.96 cents/lb, up 2.55 cents from the prior week, widening the basis to 5.81 cents, reflecting stronger expectations of tighter supply.
Spot volume surged to 3,508 bales, 4.3 times the previous week and 3.3 times year-ago. This increase is not coincidental—with weather premium persisting, some traders and mills are locking in supplies to avoid higher costs later. However, cumulative spot volume for the season is only 2,277 bales, far below last year, indicating low liquidity that could amplify price swings.
Divergent Weather and Yield Prospects
The Southeast and Southwest show contrasting weather patterns. The Southeast received widespread thunderstorms with 1-3 inches of rain, easing drought. Crop conditions improved, with Georgia boll setting at 63% and Alabama at 67%, and early-planted fields showing open bolls.
In contrast, Texas is suffering extreme heat and water stress. West Texas has seen temperatures above 100°F, with some plants wilting and boll shed risk rising. Southwestern Oklahoma may trigger insurance claims due to drought and heat. While the Rio Grande Valley and Coastal Bend are progressing with harvest, overall yield losses may not be fully offset.
This divergence means that even if the Southeast has a strong crop, western drought could drag national average yields. Buyers should watch for quality differentials—West Texas cotton may see discounts due to reduced fiber strength or length.
Demand: Cautious but Structural Opportunities
Domestic mills are buying moderate quantities of color 42/51, leaf 4, staple 34+, with delivery in Oct-Dec, suggesting preparation for fall/winter orders. Some are inquiring for color 41, leaf 3, staple 38 with delivery through 2027, reflecting long-term supply stability concerns.
Export inquiries from Korea and Vietnam for GreenCard class (color 31, leaf 3, staple 37) for Sep/Oct shipment, and Bangladesh for near-month color 41, indicate a tilt toward higher grades. While no trades were reported, the demand structure suggests that if prices correct, higher-quality cotton may absorb faster than lower grades.
Yarn demand is slow-to-moderate, and mills remain cautious, contrasting with higher spot volume. A plausible explanation is that current buying is restocking rather than trend-following. If prices break psychological levels, demand may quickly retreat, so chasing rallies is risky.