At 78.18 cents per pound, the average spot quote across seven designated US cotton markets for the week ending September 10 fell 491 points from 83.09 cents the prior week. A near 5% weekly drop just as new crop heads to market looks less like routine volatility and more like a redistribution of pricing power.
Price Signals: Why Cash and Futures Diverged
In the same week, ICE December cotton settled 0.94 cents higher at 88.22 cents/lb, a 1.08% gain. Cash falling while futures rise pushed the spread to roughly 10 cents/lb, an unusual divergence. Futures trade on new-crop supply-demand expectations and macro flows; cash reflects actual willingness to take delivery. The quoted range of 77.24 to 79.46 cents shows holders conceding price to generate liquidity. Year-on-year, 78.18 cents remains about 26% above last year's 62.02 cents, meaning mills still face elevated raw material costs. That is precisely why buyers keep inventories lean and refuse to chase.
Volume Collapse: Weak Demand or Adequate Coverage
Weekly spot volume was just 2,570 bales, down from 6,975 the prior week and 6,154 a year ago, a drop of over 60% week-on-week. Season-to-date volume of 16,193 bales trails last year's 22,028 by about 26%. Two forces explain this. Mills have largely covered near-term through nearby needs, and yarn demand remains weak to moderate, with finished orders insufficient to justify larger raw cotton purchases. Export channels are equally quiet. Vietnamese mills made modest inquiries for 31 color, 3 leaf, 36mm cotton for immediate shipment; Mexican agents sought 41 and 42 color, 4 leaf, 34mm and above for immediate through October delivery. Inquiries exist, transactions do not. Buyers are probing the price floor, not restocking.
Regional Watch: Texas Weather and New-Crop Timing
The Southwest remains the focus. East and South Texas saw light spot trade, stalled CCC loan activity, and inactive forward contracting. India, Peru and Vietnam showed some interest in West Texas cotton, but again no deals. Weather-wise, Central Texas and the Blacklands saw strong thunderstorms early in the week, with up to 38mm of rain along the Brazos River lowlands. Fields have since dried, and producers have begun applying defoliants ahead of harvest. West Texas stayed hot and dry, with irrigated fields faring better while dryland yield expectations remain divided. Oklahoma's heat and lack of rain further degraded crop conditions, prompting downward yield revisions. Kansas saw a brief cooldown before temperatures rebounded above 37°C. On September 9-10, the American Cotton Shippers Association hosted the Texas Cotton Flow Conference in Lubbock, covering market dynamics, supply chain concerns and innovation. The timing, on the eve of harvest, underscores divergent views on output and price.
In transactions, a moderate lot of new-crop East/South Texas cotton traded at about 80.75 cents/lb warehouse delivery, grade 22 and above, 36-37mm. Old-crop West Texas cotton traded at 71.25-75.50 cents/lb FOB car/truck. The 5-9 cent new-versus-old spread reflects quality premiums expected from the new crop.
Transmission to the Supply Chain
For Chinese textile firms, weaker US cash prices offer short-term relief on raw material costs, but elevated futures keep basis risk alive for on-call purchases. If Southeast Asian mills continue inquiring without transacting, global yarn orders have yet to recover, and export-oriented fabric makers should brace for limited fourth-quarter order visibility. Harvest pace is the key variable. Smooth Texas picking and upward yield revisions could push cash lower; realized Oklahoma losses could provide interim support. Buyers should avoid one-way bets.