Weekly Cotton Market Review
Average spot cotton quotations were 250 points lower than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton Program. Quotations for the base quality of cotton (color 41, leaf 4, staple 34, mike 35-36 and 43-49, strength 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 84.03 cents per pound for the week ended Thursday, May 15, 2014. The weekly average was down from 86.53 cents last week, but up from 81.37 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 85.22 cents on Friday, May 9 to a low of 83.29 cents on Thursday, May 15.
Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 15, totaled 5,143 bales. This compares to 7,008 bales last week and 7,074 bales reported a year ago. Total spot transactions for the season were 1,282,494, compared to 1,629,258 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 90.36 cents, compared to 93.05 cents last week.
Prices are in effect from May 16-22, 2014
Adjustment World Price (AWP) 70.87 ELS Competitiveness Payment 0.00
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2013 Crop 0.41
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2014 Crop 0.31
Source: Farm Service Agency, FSA, USDA
USDA ANNOUNCES SPECIAL IMPORT QUOTA #14 FOR UPLAND COTTON May 15, 2014
The Department of Agriculture’s Commodity Credit Corporation announced a special import quota for upland cotton that permits importation of a quantity of upland cotton equal to one week’s domestic mill use. The quota will be established on May 22, 2014 allowing importation of 14,941,776 kilograms (68,627 bales) of upland cotton. Quota number 14 will be established as of May 22, and will apply to upland cotton purchased not later than August 19, 2014, and entered into the U.S. not later than November 17, 2014. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period October 2013 through December 2013, the most recent three months for which data are available. Future quotas, in addition to the quantity announced, will be established if price conditions warrant. 2 Southeastern Markets Spot cotton trading was moderate. Supplies and demand were light. Producer offerings were light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures in the period to forward contract and fix prices on a light volume of 2014-crop cotton.
Planting activity advanced rapidly in Alabama and Georgia, but intermittent shower activity delayed fieldwork over the weekend in some areas. Replanting was underway in some fields and producers sprayed herbicides, applied lime, and fertilizer. Clear, sunny conditions helped soft soils to firm, but many low-lying areas in the Florida panhandle remained inaccessible, due to excessively wet conditions. Fieldwork was further delayed late week as a cold front entered the region and brought cooler temperatures in the 70s and additional wet weather. Mostly clear conditions with daytime highs in the upper 80s to lower 90s allowed planting to make good progress in the Carolinas and Virginia. Seedlings thrived in the warm, dry conditions and the first true leaves emerged in some of the earliest planted fields. Producers would welcome a timely shower in some areas of South Carolina where drier conditions prevailed.
South Central Markets
Spot cotton trading was inactive. Supplies of available cotton and demand were light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cool, wet weather prevailed during the week. Up to four inches of precipitation were reported across the region. A cold front late in the week brought overnight temperatures in the upper 40s. Daytime temperatures were in the 60s and 70s. Ideal planting conditions allowed producers to make excellent progress sowing cotton before the rains moved in. Planting surged to 57 percent in Arkansas, 44 in Missouri, and 26 percent in Tennessee, according to the Crop Progress report released on May 12 by the National Agricultural Statistics Service. These figures were ahead of the 5-year average. Local experts reported good germination in most fields. Limited fieldwork was reported.
Spot cotton trading was inactive. Supplies and producer offerings were very light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Wet, windy conditions dominated the weather pattern during the week. Rain fall accumulations of up to five inches were reported in most areas. A cold front late in the period brought daytime temperatures in the 60s and 70s. Overnight lows were in the 50s and 60s. Excellent planting conditions allowed producers to make good progress before rain storms halted fieldwork. According to the National Agricultural Statistics Service Crop Progress report, planting advanced to 77 percent in Louisiana and 45 percent in Mississippi. These figures were near the 5- year average. Fields that had emerged made good progress.
Spot cotton trading was inactive. Supplies were light. Demand was very light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Foreign mill inquiries were very light. Strong thunderstorms and heavy rainfall brought beneficial moisture as a cold front moved through Texas. Some areas of the Blackland Prairies accumulated more than six inches of precipitation. Damage was reported on seedlings, but the moisture helped advance the crop later in the week when warm, sunny conditions returned. Final planting was underway. In the Rio Grande Valley, cotton progressed and some fields were treated with insecticides. Slow, soaking rainfall was favorable for all crops. In Kansas, rainfall was received, but not enough to alleviate drought conditions that plagued the southwestern counties. The moisture was received mostly in the central and eastern counties. According to the National Agricultural Statistics Service (NASS), about 6 percent was planted. In Oklahoma, a few spotty rain showers were received that brought cooler morning temperatures in the 40s. Daytime highs were in the low 60s to low 70s. Cotton was emerging. NASS reported that 9 percent of the crop had been planted, and that seedbed preparation was 88 percent completed.
Spot cotton trading was slow. Supplies were light. Demand was very light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Foreign mill inquiries were very light. Counties in the Rolling Plains received around two inches of beneficial rainfall, and planting slowly expanded. Some producers delayed planting activities and waited for rainfall and warmer weather. Isolated areas south of Lubbock reported about one-half of an inch of precipitation. Although planting was getting started, replanting was underway on earlier planted drip irrigated fields. The entire region was in need of a period of wet weather to fortify subsoil and topsoil moisture levels. Local reports indicated that some seedlings had emerged. Producers continued to water fields.
Desert Southwest (DSW)
Spot cotton trading was inactive. Supplies, producer offerings, and demand were light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. The first post-plant irrigations were underway in Yuma, Arizona. The crop remains at 6 to 10 days ahead of last year at this time. Little or no pest pressure or diseases were reported. The Safford Valley was approximately 90-95 percent planted. Local sources reported some of the crop was up to stand. Conditions were windy in the period. No damage was reported. Local experts in New Mexico and El Paso, Texas reported the crop struggled under cooler temperatures and extremely windy conditions.
San Joaquin Valley (SJV)
Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were lower. Foreign mill inquiries were light. Competitive foreign growths such as Australian and Brazilian cotton were more attractive to foreign mill buyers as ICE July futures remained over 90 cents. No new sales were reported. No forward contracting or domestic mill activity was reported. Temperatures were in the mid-to-high 80s along with strong winds early in the period. A heat wave had temperatures reaching 104 degrees by mid-week. Several Valley locations reported good seedling emergence and vigor. Some fields were treated with insecticide for thrips. In drought news, it was reported that the US Bureau of Reclamation would release Millerton Lake water to meet water obligations to the San Joaquin River Exchange Contractors Water Authority, which holds senior water rights. This is the first time in decades that this will be done. The exchange provides irrigation water to approximately 240,000 acres of farmland. With extremely dry conditions this year, California is preparing for a severe wildfire season.
American Pima (AP)
Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mills inquired for new-crop cotton. Shippers reported that mills continued to show resistance to landed prices over 200.00 cents. Some mills were willing to substitute AP for Chinese ELS even though it contains contamination. It was noted that it was more economical for the mills to hire additional workers to remove the contamination. Hot, dry conditions allowed the crop to make excellent progress in the far west. Local experts reported that plants were averaging about 4-5 squares per plant in Yuma, Arizona. First blooms were sighted in fields that were planted in early to mid-February. No significant pest pressures were reported. Some disease-related issues were reported particularly Race 4 fusarium and black root rot in the San Joaquin Valley. In a few cases, replanting was done. Some treatments were made for thrips.
Domestic mill buyers inquired for a heavy volume of 2014-crop cotton, color 41, 51, and 42, leaf 4 and 5, and staple 34 and longer for October through May 2015 delivery. Mill buyers inquired for color 53 and better, leaf 5 and better, and staple 32 and longer for January through March 2015 delivery. No sales were reported. Demand for ring-spun and open-end yarn remained good. Most mills continued to operate at capacity. Demand through export channels was moderate, but tapered as foreign mills sourced more competitively priced growths from Argentina, Australia, and Brazil. Agents for mills in Indonesia inquired for a moderate volume of color 31, leaf 3, and staple 34 and 35. Indonesian and Vietnamese mill buyers inquired for a moderate volume of color 31, leaf 3, and staple 35 and longer for June shipment. No sales were reported. 4
Regional Price Information
.. Even-running lots containing color 31, leaf 2 and 3, staple 36, mike 35-49, strength 27-30, and uniformity 81-83 sold for 125 points on ICE July futures, FOB car/truck (Rule 5, compression charges paid). .. A moderate volume of color 21, 31, and 41, leaf 2-4, staple 35 and 36, mike 35-49, strength 27-30, and uniformity 79-82 sold for 90.00 to 91.50 cents per pound, same terms as above. .. A moderate volume of color 41 and better, leaf 3-5, staple 34-37, mike 43-52, strength 27-30, and uniformity 79-81 sold for around 84.25 cents, same terms as above. .. A light volume of color 52, 43, and 53, leaf 5-8, staple mostly 35, mike 37-39, strength 28-30, and uniformity 79-81 sold for around 72.25 cents, same terms as above.
South Central Markets
North Delta .. No trading activity was reported.
South Delta .. No trading activity was reported.
East Texas .. No trading activity was reported. West Texas .. A light volume of color 21 and 31, leaf 2, staple 35, mike 40-45, strength 30-32, uniformity 79-83, and 100 percent extraneous matter (bark) sold for around 79.50 cents per pound, FOB car/truck (compression charges not paid).
West Texas .. A light volume of color 31, leaf 2-3, staple 34, mike 35-49, strength 27-30, uniformity 79-81, and 100 percent extraneous matter (bark) sold for around 78.50 cents, same terms as above. .. A light volume of color 31-41, leaf 4 and 5, staple 34 and longer, mike 40-49, strength 26-30, uniformity 79-82, and 100 percent extraneous matter (bark) sold for around 75.50 cents, same terms as above.
Desert Southwest .. No trading activity was reported. San Joaquin Valley .. No trading activity was reported. American Pima .. No trading activity was reported.
Cotton & Wool
The following information was excerpted from the Cotton & Wool Outlook report, released on May 13, 2014:
Global Cotton Production to Decrease in 2014/15 but Remain Above Consumption
The first U.S. Department of Agriculture (USDA) cotton forecast for 2014/15 projects that global cotton production will decline for the third consecutive season. Although projected at its lowest in 5 years, production remains above expectations for consumption. World production is projected to decline slightly from 2013/14 (to 115.5 million bales) as area is expected to shift from China and Australia to lower-yielding countries. Based on USDA’s initial projections, China, India, the United States, and Pakistan will account for a combined 71 percent of world production in 2014/15, similar to 2013/14. Global cotton consumption for 2014/15 is projected at 111.8 million bales, a 2-percent increase from the current season, as mill use continues to expand from 2011/12’s 8-year low. Modest growth in world gross domestic product (GDP) is expected to support the consumption growth in 2014/15. China, India, and Pakistan are expected to lead global cotton mill use and account for a combined 65 percent of world consumption in 2014/15, slightly above the current season’s estimate.
U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) recognize that President Trump’s executive order to withdraw the United States from the Trans-Pacific Partnership (TPP) was inevitable.