1 min read

US Spot Cotton Prices Plummet to Lowest Level Since 2020

US spot cotton prices experienced a significant decline, falling to their lowest level since December 2020, as the market grapples with slow trading activity and limited supplies, according to the latest data published by the USDA.

Spot quotations for the base quality of cotton averaged 70.35 cents per pound for the week ending May 2, 2024, marking a sharp drop of 285 points from the previous week. This decline reflects a broader trend of weakening cotton prices amidst cautious buyer sentiment and ample global supplies.

"Spot quotations averaged 285 points lower than the previous week," the USDA report states. "This is the lowest weekly average since December 10, 2020 when it was 68.29 cents."

Despite the price drop, spot cotton trading remained sluggish, with limited supplies and producer offerings. Demand was moderate, with inquiries from domestic mill buyers but no reported sales. Export demand also remained subdued, with inquiries from mills in Taiwan but no confirmed transactions.

Meanwhile, planting progress in the Southeast continued, with favorable weather conditions allowing for fieldwork and planting activities. The lower Southeast received scattered thundershowers, while the upper Southeast experienced mostly sunny to partly cloudy conditions with localized precipitation.

"The warm conditions were ideal for planting and producers made good progress," the report notes.

As of the end of April, Upland cotton growers in the United States had booked 3% of their expected acreage, slightly higher than the previous year. Contracting activity was most pronounced in the South Central states, where about 4% of the crop was under contract.

The USDA report notes, "Spot cotton trading was slow. Supplies and producer offerings were light. Demand was moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive." This suggests that the market is currently characterized by cautiousness and limited activity, with prices facing downward pressure due to the confluence of factors such as weak demand and ample global supplies.