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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA July 14, 2017

Weekly Cotton Market Review – USDA

©Debra L Ferguson Stock Images

Average quotations were 146 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 65.52 cents per pound for the week ending Thursday, July 13, 2017.

 

 

The weekly average was down from 66.98 last week and from 68.85 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 67.29 cents Friday, July 7 to a low of 63.92 cents Thursday, July 13. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 13 totaled 239 bales.

This compares to 375 bales reported last week and 40,551 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,564,064 bales compared to 1,509,704 bales the corresponding week a year ago.

The ICE October settlement prices ended the week at 66.54 cents, compared to 69.47 cents last week.

Prices are in effect from July 14-20, 2017

  • Adjusted World Price (AWP) – 65.47
  • 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 – 0.00
    Source: Farm Service Agency, FSA, USDA

Regional Summaries

Southeastern Market

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

Clear to partly cloudy conditions prevailed across South Carolina and much of the lower Southeast during the period with daytime high temperatures in the 80s to high 90s. Scattered showers and thunderstorms brought around one-half of an inch up to 4 inches of moisture to areas throughout Alabama, portions of south Georgia, and the Gulf and Atlantic coastal regions.

The U.S. Drought Monitor reported the state of Georgia is entirely drought-free for the first time since April 19, 2016 on it’s map. The crop made good progress under excellent conditions. Early-planted cotton was treated with plant growth regulators in some areas. Cotton extension specialists reported that populations of Silver Whitefly, plant bugs, and stink bugs were building rapidly. Hotspots were treated as necessary.

Mostly clear conditions were observed across North Carolina and Virginia during the period with daytime high temperatures in the mid-80s. Intermittent afternoon shower activity brought less than one-half of an inch of accumulated moisture to these areas during the period. Local experts reported that the crop made good progress in the Carolinas and Virginia.

Insect pressure was mostly light, but cotton extension specialists reported that pest populations, including bollworms, were building. Some hotspots were treated. Producers continued to battle weeds in wet fields. Boll-setting was underway across the entire Southeast region and reached 21 percent in Alabama, 20 in Georgia, 7 in North Carolina, 17 in South Carolina, and 4 percent in Virginia, according to the National Agricultural Statistics Service’s Crop Progress report released on July 10.

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.

Mostly clear and hot climatic conditions prevailed during the period. A few scattered showers brought light amounts of moisture to isolated areas late-week. Daytime temperatures were in the 90s, with the heat index just reaching the triple digits. Overnight lows were in the 70s.

Crop specialists from the University of Tennessee advised producers to closely monitor soil moisture levels and irrigation scheduling during periods of high temperatures, which are forecast for the remainder of July and into August, to minimize the potential yield loss associated with hot weather and droughty conditions. The crop made normal progress under good conditions.

Plant growth regulators were applied as necessary. Fields were closely monitored for insect pests, particularly plant bugs and bollworms. Treatments were applied as necessary to control outbreaks. According to the National Agricultural Statistics Service’s Crop Progress report released on July 10, boll-setting reached 50 percent in Arkansas, 9 in Missouri, and 11 percent in Tennessee.

South 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.

Open skies and hot temperatures characterized weather conditions during the period. Isolated thunderstorms brought light amounts of moisture to some areas late-week. Daytime temperatures were in the 80s to 90s. Overnight lows were in the 70s. The crop made good progress in most areas. Outdoor activities included measures to control weeds in fields that have been too wet to support equipment. Plant growth regulators were applied as necessary.

The levels of boll worms, fleahoppers, and plant bugs were carefully monitored; local experts reported that insect pressure was light. Chemicals were applied as necessary to control outbreaks. According to the National Agricultural Statistics Service’s Crop Progress report released on July 10, boll-setting reached 54 percent in Louisiana and 22 in Mississippi.

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 Bangladesh, China, and Indonesia.

Dryland harvesting expanded and modules accumulated on gin yards in the Rio Grande Valley. More gins opened for the season and began to provide ginning services. Defoliants were applied to irrigated fields. Cotton fields were in full-bloom in south Texas. The crop progressed in the Upper Coast and Coastal Bend counties and bolls had begun to open.

Defoliants and pre-harvest aids were expected to be applied in about 10 days. Some stray thunderstorms were present and caused delays. In east Texas, the crop progressed with daytime temperature highs in the upper 90s to low 100s. A considerable amount of acreage was cultivated to control weeds. Fields had begun to bloom. Intermittent storms brought rainfall to localized areas.

In Kansas, the crop advanced under hot weather conditions with high temperatures in the upper 90s to low 100s. Industry was encouraged with producers who grew cotton for the first time. In Oklahoma, recent rainfall gave a boost to stands. Producers applied insecticides and herbicides as needed.

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 Bangladesh, China, and Indonesia.

The crop advanced and fields dried with daytime temperatures in the mid-to-upper 90s. Stands squared and first blooms were detected in some fields. Replanted fields had emerged and were at the 2 to 3 true leaf stage. Irrigation was underway. Fertilizer and plant growth regulators were applied as needed. Industry sources cited heavy damage from hail. Some areas reported as much as 50 percent loss of planted acres.

Local reports indicated that some fields that had been lost to hail storms were replanted with uninsured cotton, dryland sorghum, or left fallow. Recent rainfall increased weed pressure and spraying was active. Educational information and expert support reminded industry members that communication and label use is essential to minimalize drift issues.

Teams of hoe crews were in the fields helping to control weed populations. Insect pressure was light, according to industry sources. Active monitoring for the fall armyworm and other pests was underway.

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.

Triple digit temperatures continued, with a one day high of 118 degrees in central and western Arizona. Producers managed the crop to prevent heat stress with irrigation. Little-to-no insect pressure was reported. Bolls were cracking open in Yuma, Arizona. Sunny, hot conditions progressed the crop in New Mexico and El Paso, Texas. Passing thunderstorms produced little moisture. Producers managed growth with plant growth regulators. Overall, the crop made good progress in the DSW.

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.

Hot, dry conditions advanced the crop. Producers were irrigating. The crop was blooming and in good condition.

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 mill inquiries were good for new-crop cotton. Interest was best from China and Peru.

Triple digit temperatures continued for most of the far west. Afternoon thunderstorms deposited less than one-quarter of an inch of moisture for cotton-growing areas of New Mexico and El Paso, Texas. Crop experts reminded producers to continue to monitor insect activity and check plant growth to best decide on treatment schedules. Overall, the crop made good progress in the region.

Textile Mill

Domestic mill buyers inquired for a light volume color 41, leaf 4 and better, and staple 35 and longer for January 2018 and forward delivery. No sales were reported. Most mills have covered their immediate to nearby raw cotton needs. The undertone from mill buyers was cautious.

Demand through export channels was light. Mill buyers in the Far East continued to inquire for a light volume of low-grade styles of cotton for January through May 2018 shipment. No sales were reported.

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

  • In Oklahoma, a light volume of mostly color 31, leaf 3, staple 36 and 37, mike 37-45, strength 27-30, uniformity 80-82, and 100 percent extraneous matter sold for around 70.00 cents per pound, FOB car/truck (compression charges not paid).
  • In Kansas, a mixed lot containing a light volume of mostly color 41 and better, leaf 3 and better, staple 37 and longer, mike 35-46, strength 26-31, uniformity 79-82, and 50 percent extraneous matter sold for around 67.00 cents, same terms as above.

West Texas

  • A mixed lot containing a light volume of mostly color 41 and better, leaf 3 and better, staple 37 and longer, mike 35-46, strength 26-31, uniformity 79-82, and 50 percent extraneous matter sold for around 67.00 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.

Supply & Demand

The following information was excerpted from the World Agricultural Supply and Demand Estimates report released on July 12, 2017

The U.S. 2017/18 cotton projections show production is 200,000 bales lower than last month. With no change in domestic use or exports, ending stocks are also revised down 200,000 bales. The decrease in the crop projection is attributed mainly to lower planted area as indicated in the June 30 Acreage report, combined with slightly less favorable assumptions about abandonment based on current conditions.

The projected range of 54 to 68 cents per pound for the marketing year average price received by producers is unchanged on the lower end and reduced 6 cents on the upper end; the midpoint of 61 cents is reduced 3 cents from last month.

Higher production is increasing this month’s global cotton stocks forecasts for both 2016/17 and 2017/18. The world carry in for 2017/18 is increased 934,000 bales owing in large part to an upward revision of 500,000 bales for India’s estimated 2016/17 crop.

World 2017/18 production is increased 636,000 bales, despite the lower expected U.S. crop, mainly on increased area expectations for India. Production is also raised for Turkey, but is lowered for Pakistan and Mexico. World consumption is also forecast higher in both 2016/17—up nearly 200,000 bales—and 2017/18—up more than 500,000 bales.

World 2017/18 ending stocks are now projected at 88.7 million bales, an increase of 1.0 million from the June forecast.

Ernst Undesser
From USDA July 14, 2017