A phrase used to describe that awkward moment when you have to dump so bad that the poop has actually exited your anus and is toucing your tighty whitey Hanes cotton underwear.
Andy: Hey Floyd, you gotta pull over. I have to take a dump.
Floyd: Can't you wait 10 more minutes!! We're almost there.
Andy: No Floyd, I can't wait!! I'm touchin' cotton!!!
the point at which your bowel movements are so strong that the turd has actually begun exiting the anus, therefor touching the cotton in your underwear