The US cotton spot market is sending a subtle signal: prices are rising, but volumes are shrinking. For the week ending August 13, the average spot price for base quality cotton in seven designated markets reached 77.71 cents/lb, up 156 points from the previous week and 22.8% higher year-on-year. However, spot trading volume fell to 2,471 bales, down about 30% week-on-week. This divergence suggests a market in a standoff—sellers are reluctant to sell, buyers are cautious, and the price increase is more driven by supply expectations than actual transactions.
Price and Volume Divergence
Daily quotes ranged narrowly between 78.01 and 77.15 cents/lb, with a spread of less than one cent, indicating a lack of directional momentum. ICE October futures settled at 82.36 cents/lb, up 40 points from last Thursday, with a futures-spot spread of about 4.65 cents in a nearby premium structure. Notably, total spot transactions for the season so far stand at 4,748 bales, down about 8% from last year, reflecting a slower overall buying pace.
The volume contraction is primarily due to farmers' weak selling interest. Reports from the Southeast and Southwest indicate that farmers are reluctant to sign forward contracts, and CCC loan cotton trading is sluggish. Behind this is rising production costs and concerns about late-season weather risks—dryland fields in Texas face abandonment due to insufficient rainfall, and yield estimates are being revised down, prompting holders to wait for higher prices.
Weather and Crop Progress
Weather factors are reinforcing tightening supply expectations. The Southeast (Georgia, Alabama) received 1-3 inches of rain this week, replenishing soil moisture, but parts of southern Alabama remain dry. In Texas, rainfall was uneven; the northern High Plains saw isolated thunderstorms, but for severely stressed dryland fields, the rain came too late, raising abandonment probabilities. Harvesting has begun in South Texas but at a slow pace, expected to accelerate in September.
Crop progress data confirm regional divergence: boll setting rates are 78% in Alabama, 77% in Georgia, 84% in North Carolina, 81% in Virginia, but only 64% in South Carolina. Open boll rates are 8% in Alabama and 3% in Georgia, overall slower than usual. This suggests the new crop peak may be delayed, shifting near-term supply pressure and supporting nearby prices.
Pest pressure is generally light, but localized issues need attention: aphids are increasing in the Blackland Prairies, cotton fleahoppers found in the Brazos River area, and stink bugs require control in Coastal Bend. These sporadic pests are not yet a major threat, but favorable weather could impact yields.
Demand: Stable Domestically, Weak Abroad
US mills have made no inquiries or purchases, as most have secured near-term supplies. Finished product demand is weak to moderate, and buyers remain cautious. On the export front, agents from Thailand, South Korea, and Vietnam have shown moderate interest in green card grade cotton (color 31, leaf 3, staple 37) for September-October shipment; inquiries for discounted cotton from the Far East have not resulted in trades. Mexico, Turkey, and Vietnam show relatively higher buying interest, but overall demand is limited.
This "stable domestic, weak external" pattern implies that short-term US cotton prices are more supply-driven than demand-led. For buyers, chasing prices at current levels is risky, but if new crop arrivals are delayed, there could be temporary supply gaps.