US cotton spot market is witnessing a rare divergence: prices rose 156 points week-on-week, yet spot volumes fell nearly 30%. This combination usually indicates supply-side expectations rather than real demand. For Asian mills relying on US cotton, the current price signal needs re-reading, not simple chasing.
Price-Volume Divergence
For the week ending August 13, the average spot price for base quality cotton in seven designated US markets was 77.71 cents/lb, up from 76.15 cents the prior week and notably above 63.30 cents a year ago. Weekly prices traded in a narrow range between 78.01 and 77.15 cents. However, spot transactions totaled only 2,471 bales, down from 3,508 bales the previous week and 4,084 bales a year earlier. Cumulative volume for the season stands at 4,748 bales, trailing last year's 5,150.
Farmers are holding back. In the Southeast, selling intentions are weak; in the Southwest, forward contracting interest is low. US domestic mills are nearly absent from spot buying, having covered near-term needs. Finished product demand is weak-to-moderate, keeping procurement cautious. This suggests the price rise is driven by tightening supply expectations, not restocking.
Weather and Yield Uncertainty
Weather is becoming the key variable. In the Southeast, Georgia and Alabama received 1-3 inches of rain, improving soil moisture. Boll setting reached 77% and 78%, respectively, with open bolls at 3% and 8%. However, parts of southern Alabama remain dry, stressing crops.
More critical is Texas. The High Plains remain hot and dry, with daytime highs of 95-105°F. Scattered showers are too late for severely stressed dryland fields, which are expected to be abandoned, lowering yield estimates. South Texas harvest has started slowly, with acceleration expected in September. Heat is hastening growth, but wet spots are delaying defoliant applications. For global buyers, the risk of dryland abandonment means actual deliverable supply may be lower than expected, adding support to forward prices.
International Inquiry Patterns
Despite thin trading, international inquiries show demand differentiation. Thai mills are seeking green card cotton (color 31, leaf 3, staple 37) for September-October shipment; Korean and Vietnamese agents are making moderate inquiries for similar specs. Far East agents are asking for discounted cotton but no deals are done. Mexico, Turkey, and Vietnam show relatively higher buying interest, while US mills stay quiet.
This suggests strong but price-sensitive demand for high-grade US cotton in Southeast Asia. Green card cotton's consistent quality makes it a preferred choice for locking orders, while discounted cotton inquiries reflect buyer caution. For exporters, the September-October shipment window means logistics and currency fluctuations will be key delivery risks.