CT SPECIALIST · Softs / Drought Supply
Z100008 – [CT] US Cotton Belt Drought DSCI Signal
Production-weighted drought severity across the US cotton belt captures growing-season moisture stress and transmits to Cotton forward 60-day returns via the supply-shock channel.
At a glance
DORMANT · WAITING FOR MAY
Current reading
+0.895
SEASONAL STATE
DORMANT · WAITING FOR MAY
US cotton growing season runs May through October; off-season sees the composite ffill…
Signal state
Drought Elevated
31 days in Healthy phase
Updated
Nov 04, 2026
USDM weekly release
Sample
26-year window
Weekly cadence; 2001 onward
As of Nov 04, 2026. Updated nightly. · NEXT WINDOW MAY-OCT US COTTON GROWING SEASON
SIGNAL OVERVIEW
The US Drought Monitor publishes a weekly Drought Severity and Coverage Index (DSCI) by county on a 0-500 scale that integrates five drought intensity classes. Weighted by county cotton production across Texas, Georgia, Mississippi, Arkansas, and other major cotton states, the index captures drought pressure on the actual bales-producing geography rather than raw land-area. Drought on the US cotton belt is the single most-watched short-lead supply signal for Cotton. Daily Spearman IC against Cotton forward 60-day returns is plus 0.122 at p-value 1.2e-22 across 6,366 observations, strongly significant on the 26-year sample. Phase plus 1 firings deliver plus 1.78 pp above baseline. Phase minus 1 firings deliver minus 2.19 pp. 3.97 pp directional spread with clean monotone phase pattern.
LIVE CHART
CT US Cotton Belt Drought DSCI Signal
What the chart is showing right now. The dark line is the US Drought Monitor DSCI weighted by county cotton production z-scored on a rolling window and tanh-bounded. Positive composite means elevated drought severity on the production-weighted cotton belt (bullish CT); negative composite means benign moisture conditions (bearish CT). The bronze line in the middle panel is ICE US Cotton No. 2 first-nearby. The bottom panel tracks the trailing 252-day Spearman information coefficient between the composite and Cotton forward 60-day returns.
CHART PLACEHOLDER
Live chart renders here once the Node.js data layer is wired. Until then this slot shows a static placeholder.
COMPOSITE
+0.895 / tanh
STATE
Drought Elevated
PHASE
+1.45
PHASE +1 EDGE
+1.78 pp
PHASE -1 EDGE
-2.19 pp
TODAY’S PLAYBOOK READING
STATE
Extreme Pos
STATE AND HISTORY
Drought Elevated firing at composite +0.895, 31 trading days running in HEALTHY phase. Phase +1 (Drought Elevated) delivers plus 3.40 percent fwd60d / plus 1.78 pp above plus 1.62 percent baseline. Phase -1 (Moisture Benign) delivers minus 0.57 percent / minus 2.19 pp below baseline. Daily Spearman IC plus 0.122 at p-value 1.2e-22 strongly significant.
THE DROUGHT-SUPPLY MECHANISM
The US Drought Monitor DSCI integrates five drought intensity classes on a 0-500 scale. Weighted by county cotton production, the composite captures stress on the actual bales-producing geography. Drought during squaring (June) and boll-development (July-August) directly reduces lint yield and quality; the signal is the primary short-lead US supply read.
HOW TO POSITION
Directional drought overlay for Cotton. Drought Elevated firings flag bullish supply-shock setups with Cotton strength following at 60-day horizon. Moisture Benign firings flag bearish regimes where yield support softens price. Pair with China Xinjiang and India Vidarbha precip, USDA WASDE stocks-to-use, and CFTC positioning for stacked supply conviction.
WHAT THE CHART SHOWS
The composite sits at +0.895 in the Drought Elevated band. US Drought Monitor DSCI weighted by county cotton production is running deeply above the rolling z-score mean through 2026.
TOP INPUTS FIRING
- Primary composite +0.895 State Drought Elevated, 31 days running in HEALTHY phase.
- USDM cotton-weighted DSCI deeply positive Raw z-score +1.45; USDM drought severity on the production-weighted cotton belt has run multiple standard deviations above the rolling mean through 2026.
- Daily IC strongly significant, non-overlap not independent Daily Spearman IC plus 0.122 at p-value 1.2e-22 strongly significant on full distribution. Non-overlap IC plus 0.069 at p-value 0.48 not independently significant on 107 samples.
THE TAKEAWAY
What this means for you today
THE DROUGHT CALL
Composite +0.895, Drought Elevated. US Drought Monitor DSCI weighted by county cotton production is running deeply above the rolling z-score mean through 2026 with raw z at plus 1.45. Signal firing in Drought Elevated bucket for 31 days; forward 60-day edge in Phase +1 historically runs plus 1.78 pp above baseline.
THE EMPIRICAL CONTEXT
Daily IC plus 0.122 at p-value 1.2e-22 strongly significant on 26-year sample. Phase +1 (Drought Elevated) delivers plus 1.78 pp above baseline; Phase -1 (Moisture Benign) delivers minus 2.19 pp. 3.97 pp directional spread with clean monotone phase pattern.
THE HONEST CAVEAT
Non-overlap IC at 60-day sampling plus 0.069 at p-value 0.48 not independently significant on 107 samples. Signal is seasonal (US cotton growing season May-October); off-season composite ffills forward and short-horizon value concentrates in the growing season. 26-year USDM sample from 2001 is shorter than other weather-based signals.
THE REGIME MAP
The three phases, forward returns and sample share
Computed from 6,366 post-warmup trading days (2001 onward). Baseline Cotton fwd60d mean plus 1.62 percent. Phase +1 (Drought Elevated) delivers +1.78 pp edge; Phase -1 (Moisture Benign) delivers -2.19 pp. 3.97 pp directional spread with daily IC plus 0.122 strongly significant.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Drought Elevated TODAY | +1 | 38.6% (2457 d) | +3.40% | +1.78pp | 2026 (current), 2022, 2011 | |
| On Trend | 0 | 24.6% (1566 d) | +2.09% | +0.47pp | various | |
| Moisture Benign | -1 | 36.8% (2343 d) | -0.57% | -2.19pp | 2018-19, 2015, 2004-05 |
The historical pattern
Signature episodes in the 26-year sample
What this measures
Z-score of US Drought Monitor DSCI weighted by county cotton production across the US cotton belt (TX, GA, MS, AR, MO, OK, AL, LA, NC, SC, TN), tanh-bounded. Positive composite equals elevated drought severity on the production-weighted cotton belt (bullish CT via supply shock); negative composite equals benign moisture conditions (bearish CT). Target ICE US Cotton No. 2 first- nearby back-adjusted close.
Why it matters
Why US cotton belt drought matters
The US Drought Monitor publishes the weekly Drought Severity and Coverage Index on a 0-500 scale that integrates five drought intensity classes. Weighted by county cotton production across Texas, Georgia, Mississippi, and other major cotton states, the index captures drought pressure on the actual bales-producing geography rather than raw land-area. Drought during squaring (June) and boll- development (July-August) directly reduces lint yield and quality; the signal is the primary short- lead US supply read for Cotton futures.
How to use this signal today
Directional drought overlay for Cotton positioning. Drought Elevated firings flag bullish supply- shock setups with Cotton strength historically following at 60-day horizon; Moisture Benign firings flag bearish regimes where yield support softens price. Pair with China Xinjiang and India Vidarbha precip signals (non-US supply), USDA WASDE stocks-to-use (systemic balance), and CFTC positioning for stacked supply-plus-positioning conviction.
Risk overlay
Daily IC strongly significant but non-overlap test (107 independent 60-day samples) plus 0.069 at p-value 0.48 not independently significant. Signal is seasonal (US cotton growing season May- October); off-season composite ffills forward and short-horizon value concentrates in the growing season. 26-year USDM sample from 2001 is shorter than other weather-based agricultural signals.
Signal consumers and siblings
Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Nov 06, 2026 05:00 AM ET