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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA June 16, 2017

Weekly Cotton Market Review – USDA

©Debra L Ferguson Stock Images

Average quotations were 216 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 71.38 cents per pound for the week ending Thursday, June 15, 2017.

This is the lowest weekly average since week ending January 19, 2017 when the average was 70.92. The weekly average was down from 73.54 last week, but up from 61.96 cents reported the corresponding period a year ago.

Daily average quotations ranged from a high of 72.96 cents Friday, June 9 to a low of 69.11 cents Thursday, June 15. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 15 totaled 268 bales. This compares to 1,344 bales reported last week and 3,302 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,562,681 bales compared to 1,461,648 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 71.91 cents, compared to 76.55 cents last week.

Prices are in effect from June 16–22, 2017

  • Adjusted World Price (AWP) – 67.31
  • ELS Competitiveness Payment – 0.00
  • Loan Deficiency Payment (LDP) – 0.00
  • Fine Count Adjustment 2016 Crop – 0.00
  • Coarse Count Adjustment (CCA) – 0.00
  • Fine Count Adjustment 2017 Crop – 0.06
    Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #8 FOR UPLAND COTTON June 15, 2017

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 June 22, 2017, allowing importation of 13,890,026 kilograms (63,796 bales) of upland cotton.

Quota number 8 will be established as of June 22, 2017, and will apply to upland cotton purchased not later than September 19, 2017, and entered into the U.S. not later than December 18, 2017. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period January 2017 through March 2017, 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.

Regional Summaries

Southeastern Market

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

Sunny and warm conditions prevailed over most of the Southeast region over the weekend with daytime high temperatures in the upper 80s to lower 90s. The clear weather helped to dry soggy fields in areas of the lower Southeast that received heavy rainfall in recent weeks.

Planting activity slowly neared completion in Alabama as producers continued outside activities in fields firm enough to support equipment. In Georgia, seedlings were emerging and squaring advanced at a rapid pace. Producers attempted to complete fieldwork ahead of widespread thunderstorms, which returned to the region mid-week.

Planting activity rapidly neared completion in the Carolinas and Virginia. Producers scouted fields for insects and monitored square retention on young plants. Local experts reported pressure from thrips was light-to-moderate along the Coastal Plain with heavier infestations observed in the Pee Dee region. Producers completed herbicide and fertilizer application to fields ahead of wet weather forecast in the near term.

According to the National Agricultural Statistics Service’s Crop Progress report released June 12, squaring had reached 17 percent in Georgia, 12 in Virginia, 11 in North and South Carolina, and 9 percent in Alabama. The cotton condition was rated mostly good across the region.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Hot, humid climatic conditions prevailed during the period. Less than one-half of an inch of rain was reported in the Memphis territory, but it was sufficient to keep humidity levels high. Daytime temperatures were in the low 90s, with heat indexes five to ten degrees higher. Overnight lows were in the 60s to 70s.

The crop made good progress; however, due to the erratic planting dates, there is a high degree of variability in stand development throughout the region. Fieldwork included the application of fertilizer, weed control measures, and monitoring of the population levels of a variety of insect pests. Fields were treated as necessary to control outbreaks.

The National Agricultural Statistics Service reported that squaring had reached 32 percent in Arkansas and 18 percent completed in Tennessee. These figures were ahead of the five-year average except in Missouri, which lagged about two weeks behind with no squaring reported.

South Delta

Cotton Commentary


Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Hot, humid, but mostly dry conditions dominated the weather pattern. Around one-half of an inch of rain was reported in parts of the territory. Some cotton-producing areas did not receive any beneficial rainfall.

Isolated, heavy thunderstorms brought 2 inches of precipitation to northeastern Louisiana, which resulted in minor flash flooding and saturation of some low-lying fields. Daytime temperatures were in the 80s to 90s, with heat indexes five to ten degrees higher. Overnight lows were in the 60s to 70s.

The crop made good progress; however, there are wide differences in stand development throughout the region. Fieldwork included the application of fertilizer and weed control measures.

The population levels of several types of insect pests, including aphids, plant bugs, and thrips, were carefully monitored. Chemicals were applied as necessary in fields where insect populations exceeded the economic threshold for treatment.

According to the National Agricultural Statistics Service, squaring had reached 36 percent in Louisiana and 12 percent in Mississippi. These figures were at or ahead of the five-year average of 26 and 13 percent respectively.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was very light. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were moderate. Interest was best from China, Indonesia, and Vietnam.

In the Rio Grande Valley (RGV), heat units increased and caused bolls to pop-open on the lower branches. The first certified bale was harvested and delivered on June 6, according to news sources. Widespread harvesting was expected to commence in four to six weeks.

Ginning will most likely start after a backlog of modules are accumulated on gin yards. Irrigation was applied in south Texas and in the RGV to help keep up with water demand for continued fruiting. Stands were heavily blooming in the Coastal Bend and some earlier-planted fields had begun to set bolls.

In the Upper Coast, some fields had begun to bloom. Reports from the Blackland Prairies indicated that soggy fields had dried and fieldwork was active. Producers were busy managing weed populations that were spurred from heavy rainfall the previous reporting period. Some later planted fields presented match-head squares.

Cotton has been planted in Kansas and producers have started planting other crops. The crop was off to a slow start, but had advanced to 5 true leaves in some fields. Some areas were dry and could use more rainfall.

In Oklahoma, some of the early May-planted fields were replanted and some fields were planted for the first time. Some stands had emerged. Warehouses continued to ship bales.

West Texas

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was very light. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were moderate. Interest was best from China, Indonesia, and Vietnam.

Early in the reporting period, stands emerged under sunny conditions, but suffered under hot, dry conditions later in the period. Thunderstorms, hail, and high winds were in the area, but rainfall was isolated. Some fields received hail damage.

More rainfall is needed to help the stands thrive. Irrigation was applied if available. According to local reports, some stands had emerged, and some were at 5 to 6 true leaves. Daytime temperature highs were in the upper 90s to low 100s and nighttime lows were in the upper 60s to lower 70s.

Thrips and other plant pests were reported by industry experts. Fields were treated as needed. Tillage and herbicide applications were underway to help control weeds.

Planting deadlines for most counties have expired, except for the Rolling Plains counties east of the Caprock that have until June 20 for full insurance coverage. Warehouses continued to ship bales for export.

Western Markets

Desert Southwest (DSW)

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

Hot, dry conditions were the norm in Arizona. Temperatures were in the low 100s. Excessive heat warnings are posted as high temperatures were forecasted to be around 110 degrees. Local experts advised producers to manage the crop for heat and water stress as conditions were set for a Level 1 stress situation.

Producers were busy applying herbicides to control weed growth. No significant insect pressure was reported. Some Yuma cotton fields reached peak bloom. According to the National Agricultural Statistics Service’s Crop Progress report for week ending June 11, squaring was 35 percent in Arizona, compared to 39 percent the previous year.

The condition of the crop was rated mostly good to excellent. Local sources reported the crop made good progress in New Mexico and El Paso, Texas.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

A storm brought strong winds and approximately one-tenth of an inch of rainfall early in the reporting period. Snow showers fell in higher elevations. Temperatures eased into the low to mid-90s mid-week. Temperatures are forecasted to be in the mid-100s and producers were advised to monitor soil moisture and to minimize heat stress with water management.

Some fields received the first post-plant irrigations early in the period. Local experts and producers reported intense lygus pressure. Many fields have been treated multiple times.

According to the National Agricultural Statistics Service’s Crop Progress report for week ending June 11, squaring was 10 percent, compared to 14 percent the previous year. This is well below the five-year average of 28 percent. The condition of the crop was rated mostly excellent.

American Pima (AP)

Spot cotton trading was inactive. Supplies were light. Demand was good. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were good for 2017-crop cotton and mostly for price discovery.

Some shippers reported offering prices at 150.00 cents landed Asia for color 2, leaf 2, and staple 46 and longer. No sales were reported. According to the Foreign Agricultural Service export sales report, approximately 69,500 bales of 2017-crop AP was committed for the week ending June 8, 2017.

Hot, dry conditions advanced the crop in the Far West. No moisture was recorded for the Desert Southwest and approximately one-tenth of an inch of rainfall was recorded in the San Joaquin Valley.

Precautions were taken as temperatures were forecasted to reach into the mid-to-high 100s throughout the region. Producers were advised to manage the crop for heat and water stress.

Overall, the crop made good progress in Arizona, New Mexico, and El Paso, Texas. Some Yuma, Arizona cotton fields reached peak bloom. Little to no bug pressure was reported; although producers sprayed herbicides to control weeds. Local experts and producers reported intense lygus pressure in the San Joaquin Valley of California.

Many fields have been treated multiple times. There is concern about loss of yield potential in a year where planted acreage increased. Producers cultivated or had work crews hand-hoeing fields to control weeds.

Textile Mill

Demand was good for 2017-crop cotton, color 41, leaf 4, and staple 34 for November 2017 through October 2018 delivery. No sales were reported. Most mills have covered their nearby raw cotton needs.

Reports indicted mill buyers were busy fixing on-call sales and exiting the July contract as first notice day approaches. Finished product demand was lackluster. Most mills operated four to seven days.

Demand through export channels was moderate. Agents for mills in China purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for June shipment. Korean mill buyers inquired for a moderate volume of 2017-crop cotton, color 31, leaf 3, and staple 34 for November 2017 through March 2018 shipment.

Turkish mill buyers inquired for a moderate volume of 2017-crop cotton, color 41, leaf 4, and staple 33 for January 2018 shipment.

Representatives for mills in Pakistan inquired for a moderate volume of USDA Green Card class, color 41, leaf 4, and staple 35 and 36 for January/February 2018 shipment.

Regional Price Information

Southeastern Markets

  • No trading activity was reported.

South Central Markets

North Delta

  • No trading activity was reported.

South Delta

  • No trading activity was reported.

Southwestern Markets

East Texas

  • A mixed lot containing a light volume of color 32 and better, leaf 3 and better, staple 35 and longer, mike averaging 38.1, strength averaging 28.1, and uniformity averaging 79.0 sold for around 64.50 cents per pound, FOB car/truck (compression charges not paid).

West Texas

  • A mixed lot containing a light volume of mostly color 31 and better, leaf 3 and better, staple 35 and longer, mike 31-48, strength averaging 29.3, uniformity averaging 79.8, and 50 percent extraneous matter sold for around 64.50 cents per pound, FOB car/truck (compression charges not paid).

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 June 16, 2017