US cotton spot prices rose to 77.71 cents/lb in the week ending Aug 13, up 156 points from the prior week and 14.41 cents higher than a year ago. However, this rally was not demand-driven—spot trading volume fell to 2,471 bales, down 30% from the previous week and nearly 40% from a year ago. The divergence between price and volume reveals a market dominated by weather premiums while demand remains conspicuously absent.
Market Background
According to USDA data, the average spot price for base quality cotton (color 41, leaf 4, staple 34, micronaire 35-36 and 43-49, strength 27.0-28.9, uniformity 81.0-81.9) in seven designated markets rose to 77.71 cents/lb from 76.15 cents/lb the prior week. Daily quotes ranged from 78.01 cents/lb on Aug 7 to 77.15 cents/lb on Aug 13. ICE October futures settled at 82.36 cents/lb, up 0.40 cents from the previous Thursday.
Spot and futures moved in tandem, but volumes hit a seasonal low. Year-to-date spot trading totaled 4,748 bales, down from 5,150 bales a year ago. Growers showed reluctance to sell, CCC loan collateral trading was sluggish, and forward contracting interest was weak—supply-side holding sentiment is strong, while buyers remain on the sidelines.
Industry Impact
Weather is the core driver behind the price increase. The Southeast received 1-3 inches of rainfall, with the heaviest amounts from the Georgia coast to northeast Alabama, boosting soil moisture. However, parts of south Alabama remain dry. Texas continued hot and dry, with daytime highs in the 95-105°F range. Isolated thunderstorms in the northern High Plains came too late for severely stressed dryland fields, raising abandonment expectations and lowering yield forecasts.
Crop progress data confirms weather disruption: boll setting rates are 78% in Alabama, 77% in Georgia, 84% in North Carolina, 81% in Virginia, and 64% in South Carolina. Opening boll rates are 8% in Alabama and 3% in Georgia, below normal. This suggests a delayed harvest and higher quality dispersion risk, which could widen grade premiums later.
Demand is weak both domestically and internationally. US mills reported no inquiries or transactions, with most having sufficient near-term supplies. Finished product demand is poor to moderate, and mills are cautious. Export channels show moderate inquiries from Thailand, South Korea, and Vietnam for green card cotton (color 31, leaf 3, staple 37) for Sep-Oct shipment, but no deals for discounted Far East offers. Mexico, Turkey, and Vietnam show relatively higher interest, but overall conversion remains limited.