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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA March 25, 2016

Weekly Cotton Market Review – USDA

Spot cotton quotations were 12 points lower than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton and Tobacco 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 56.40 cents per pound for the week ended Thursday, March 24, 2016.

 

The weekly average was down from 56.52 cents last week and 61.62 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 55.83 cents Friday, March 18 to a high of 56.78 cents Wednesday, March 23.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended March 24 totaled 17,242 bales. This compares to 45,424 bales reported last week and 49,402 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,344,207 bales compared to 1,916,778 bales the corresponding week a year ago. The ICE May settlement prices ended the week at 57.72 cents, compared to 58.36 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #7 FOR UPLAND COTTON March 24, 2016

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 March 31, 2016, allowing importation of 13,790,601 kilograms (63,339 bales) of upland cotton.

Quota number 7 will be established as of March 24, 2016, and will apply to upland cotton purchased not later than June 28, 2016, and entered into the U.S. not later than September 26, 2016.

The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period November 2015 through January 2016, 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.

Prices are in effect from March 25 – March 31, 2016

  • Adjusted World Price (AWP) – 44.84
  • ELS Competitiveness Payment – 0.00
  • Loan Deficiency Payment (LDP) – 7.16
  • Fine Count Adjustment 2014 Crop – 0.02
  • Coarse Count Adjustment (CCA) – 0.00
  • Fine Count Adjustment 2015 Crop – 0.00
    Source: Farm Service Agency, FSA, USDA

Regional Summaries

Southeastern Market

Spot cotton trading was moderate. Supplies were moderate. Producer offerings were moderate. Demand was moderate. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

Cloudy and overcast conditions were observed across the lower Southeast over the period. Light, scattered shower activity brought around one-quarter to one-half of an inch of moisture to areas along the Gulf Coast and portions of south Georgia.

Fieldwork was briefly interrupted in areas where rainfall was heaviest, but mostly dry and sunny conditions prevailed the latter part of the period. Producers continued applying pre-emergent herbicides and fertilizers.

Similar conditions were observed along the coastal Carolinas and Virginia as scattered showers brought around one-quarter of an inch of moisture to these areas and locales further inland.

Producers took advantage of dry and sunny conditions during the period to continue field preparations ahead of scattered thunderstorms forecast in the near term.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. A few producers pondered planting options while monitoring ICE futures prices.

No forward contracting was reported; many producers were hoping for cotton prices to increase several cents before forward contracting additional acres of cotton.

A cold front late in the period brought freezing temperatures and a wintry mix of sleet and rain to fields that were already saturated from previous storms. Up to 1 inch of rain was received in some areas. No fieldwork was reported. Producers continued to inspect and prepare equipment in advance of the rapidly approaching planting season.

South Delta

Spot cotton trading was slow. Supplies of available cotton were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. Some producers were considering cropping options while monitoring ICE futures prices.

No forward contracting was reported; many producers were hoping for a surge in cotton prices before booking any additional acres of cotton.

A cold front brought temperatures in the mid-30s and up to 1 inch of rain in isolated areas. The additional precipitation hampered outdoor activities. Field operations in most areas were expected to remain at a standstill until water could move off submerged fields. Assessments of damage to emerged corn were still underway.

Producers continued to inspect and prepare equipment in advance of the rapidly approaching cotton-planting season.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was slow. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were weak. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate.

South Texas and the Rio Grande Valley (RGV) received beneficial rainfall, which reduced the need to irrigate. Planting neared completion in the RGV, and continued along the Coastal Bend. Sowing in the Upper Coast is just getting started. South Texas received a storm early in the period, which saturated fields and contained 70 mph winds.

In eastern Texas, heavy rainfall late in the period flooded fields and deposited large hail stones in some areas. Field preparations were underway, but no planting was reported. In Kansas, subsoil moisture is good, but topsoil has dried from the windy conditions.

Meetings were attended. In Oklahoma, damp and windy conditions hampered field progress. Fast winds fueled a wildfire that burned more than 70,000 acres in north central counties. Reports indicated that some affected acres were cropland.

West Texas

Spot cotton trading was slow. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate.

Warm, windy daytime conditions prevailed and interrupted field activities. Wind gusts of over 60 miles per hour were reported during the period. Blowing dust dried the topsoil and the entire territory is in need of a period of wet weather to fortify moisture levels ahead of planting. Most fields had been prepared. Ginner meetings were attended.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were steady. Producers inquired for new-crop contracting. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

The Yuma, Arizona cotton crop made good progress. Central Arizona producers will receive some water allocations from San Carlos and Hohokam Irrigation Districts. The El Paso County Water Improvement District 1 plans to release irrigation water for producers on March 27 for April 1 delivery.

The initial allocation is two-acre feet for producers. Allocations are likely to increase if more rain and snow comes in April. In past drought years, water for irrigation purposes was not released until June, allowing no water for pre-plant irrigation.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Fieldwork was slow. No rain was received and no planting was reported. Droughty conditions persisted, and was rated severe to exceptional, according to the U.S. Drought Monitor.

American Pima (AP)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local prices were steady. Producers inquired for new-crop contracts. No forward contracting was reported.

The crop in Yuma, Arizona made good progress. Planting gained momentum in central Arizona. No planting was reported in New Mexico or El Paso, Texas. Planting was initiated in Kern County, which is in the San Joaquin Valley.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2015 and 2016-crop cotton, color 42 and better, leaf 5 and better, and staple 35 and longer for fourth quarter 2016 delivery. No sales were reported. Most mills have covered their immediate-to-nearby raw cotton needs. Yarn demand was moderate-to-good. Most mills operated five to seven days.

Demand through export channels was moderate. Agents throughout the Far East inquired for any low-grade or discounted styles of cotton. No sales were reported.

Regional Price Information

Southeastern Markets

  • A moderate volume of color 21-41, leaf 2-4, staple 35-38, mike 50 and higher, strength 28-31, and uniformity 80-82 sold for around 58.25 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A heavy volume of color 21 and 31, leaf 2 and 3, staple 36-38, mike 43-49, strength 28-31, and uniformity 80-83 sold for around 750 points on ICE May futures, same terms as above.
  • A moderate volume of color mostly 51, leaf 3 and 4, staple 34, mike 37-49, strength 25-27, and uniformity 79-81 sold for around 25 points on ICE May futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • Mixed lots containing color mostly 31-51, leaf 3 and 4, staple 34-38, mike 35-49, strength 28-31, and uniformity 80-82 sold for around 150 to 175 points off ICE May futures, same terms as above.
  • Mixed lots containing color mostly 51 and 52, leaf 3 and 4, staple 33-35, mike 37-52, strength 25-28, and uniformity 79-81 sold for around 200 points off ICE May futures, same terms as above.

South Central Markets

North Delta

  • A light volume of color 41, leaf 4 and better, staple 35 and longer, mike 50-55, strength 29-36, and uniformity 79-84 traded for around 59.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

  • A moderate volume of color 41 and better, leaf 4 and better, staple 35, mike 50-54, strength 28-32, and uniformity 79-83 traded for around 57.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

Southwestern Markets

East Texas

  • In Oklahoma, a light volume of color 31 and better, leaf 4 and better, staple 35 and longer, mike 44-51, strength 30-33, uniformity 80-82, and 50 percent extraneous matter sold for around 50.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 41 and better, leaf 4-6, staple 34 and 35, mike 38-43, strength 30-33, and uniformity 80-82 sold for around 49.50 cents, same terms as above.
  • In Texas, a light volume of mostly color 31 and better, leaf 3 and better, staple 31 and longer, mike 41-48, strength 24-29, and uniformity 77-80 sold for around 48.50 cents, same terms as above.

West Texas

  • A light volume of color 21 and 31, leaf 3 and better, staple 38 and 39, mike 38-41, strength 31-32, and uniformity 80-81 sold for around 60.00 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a light volume of color 22 and better, leaf 4 and better, mostly staple 36-38, mike 41-47, strength 29-34, and uniformity 79-83 sold for around 55.25 cents, same terms as above.
  • A light volume of color 31 and better, leaf 3 and 4, staple 37 and longer, mike 38-43, strength 31-34, and uniformity 80-82 sold for around 53.75 cents, same terms as above.

Western Markets

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.
Ernst Undesser
From USDA March 25, 2016