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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA August 11, 2017

Weekly Cotton Market Review – USDA

©Debra L Ferguson Stock Images

Average quotations were 28 points higher 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 68.36 cents per pound for the week ending Thursday, August 10, 2017.

The weekly average was up from 68.08 last week, but down from 72.06 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 69.19 cents Tuesday, August 8 to a season low of 66.94 cents Thursday, August 10.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended August 10 totaled 3,563 bales. This compares to 2,088 bales reported last week and 4,061 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 5,651 bales compared to 6,064 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 69.26 cents, compared to 71.55 cents last week.

Southeastern Markets Regional Summary

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

Widespread thunderstorms moved across the lower Southeast during the week and moderately heavy rainfall was received in areas from the Gulf to Atlantic coastal regions. Hot and muggy conditions abated during the week as slightly cooler daytime highs were observed in the low 80s to low 90s.

Weekly accumulated precipitation totals measured from 1 to 3 inches in areas of Alabama, the Florida panhandle, and south Georgia. Although much of south Alabama has received heavy moisture in recent weeks, reports indicated the rainfall was mostly beneficial and will enhance boll-setting and plant development.

In Georgia, local experts reported that recent weather conditions were very favorable for development of target spot. Producers were encouraged to monitor plants and apply fungicides in fields where the disease was becoming established. Producers scouted fields for whiteflies and applied treatments to fields that met threshold limits.

In the Carolinas and Virginia, day-to-day scattered thundershowers brought around 1 to 2 inches of accumulated moisture to coastal areas. Local experts reported light insect pressure and most fields were sub-threshold for pests. However, some fields were sprayed for stink bugs and the application of growth regulators was underway. Squaring neared completion across the region, but boll-setting was slightly behind the normal pace in all states except Virginia.

Cotton Commentary


According to the National Agricultural Statistics Service’s Crop Progress report released August 7, boll-setting reached 78 percent in Georgia, 75 in Alabama and Virginia, 74 in North Carolina, and 67 percent completed in South Carolina.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2017-crop cotton, color 51 and better, leaf 5 and better, and staple 34 and longer for fourth quarter 2017 through second quarter 2018 delivery. Demand was also good for color 41, leaf 4, and staple 34 and longer for December/January 2018 delivery. No sales were reported. Most mills operate five to seven days.

Demand through export channels was moderate. Representatives for mills in Peru purchased a moderate volume of 2017-crop cotton, color 41 and 42, leaf 4, and staple 35 and 36 for January 2018 shipment.

Trading

  • A light volume of 2015-crop and 2016-crop cotton, color 42-62, leaf 4-6, staple 33-36, mike 43-52, strength 27-31, and uniformity 78-81 sold for around 60.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of 2015-crop and 2016-crop cotton, color 53 and 63, leaf 4 and 5, staple 33-35, mike 43-52, strength 28-31, and uniformity 78-81 sold for around 55.00 cents, same terms as above.
  • A heavy volume mixed lot of 2014-crop and 2015-crop cotton, color 84 and better, leaf 3-5, staple 33 and longer, mike mostly 48-53, strength 26-30, and uniformity 78-82 sold for around 54.00 cents, same terms as above.

South Central Markets Regional Summary

North 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. No forward contracting was reported.

Mostly clear to partly cloudy and warm conditions characterized the weather pattern during the week. A few pop-up thunderstorms brought less than one-quarter of an inch of measurable precipitation to the Memphis territory. Daytime temperatures were in the 80s and overnight lows were in the 70s.

Cotton extension specialists reported that boll loads were heavy in most cases and retention was very good. Producers were advised to closely scout fields for bollworm infestations and spray to control outbreaks where necessary in late-maturing cotton fields. The crop made excellent progress and boll-setting surged across the region.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 7, boll-setting reached 97 percent in Arkansas, 69 in Missouri, and 88 percent in Tennessee. NASS also reported that the condition of the crop in Arkansas was unchanged at 51 percent good, compared with 47 percent in Missouri and 56 percent in good condition in Tennessee.

South 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. No forward contracting was reported.

Mostly cloudy and warm conditions characterized the weather pattern during the week. A series of heavy thunderstorms brought several inches of precipitation to the area. Flash-flooding was reported in parts of Mississippi. The moisture was generally beneficial to the cotton crop, but hindered the efforts of producers to harvest corn.

Producers were hoping for clear weather to allow the crop to finish well. Daytime temperatures were in the 80s and overnight lows were in the 70s. The crop made excellent progress and boll-setting surged across the region. Local experts reported that boll loads were heavy and retention was very good in most cases.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 7, boll-setting reached 94 percent in Louisiana and 81 percent in Mississippi. NASS also reported that 73 percent of the crop was in good condition in Louisiana, compared with 47 percent in Mississippi.

Trading

North Delta

  • A light volume of color 63 and better, leaf 6 and better, staple 33 and longer, mike averaging 49.3, strength averaging 27.9, and uniformity averaging 80.8 sold at around 54.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

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

In Corpus Christi and surrounding counties, harvesting made good progress with daytime temperatures in the low to mid-90s early in the reporting period. Untimely rainfall was received in the Upper Coast and parts of the Rio Grande Valley where cotton was open and exposed to the elements. Most gins were operating at capacity.

In central Texas, beneficial rainfall was received in the northern Blackland Prairies. Approximately 50 percent of the stands had open bolls and initial defoliation treatments had been applied, according to local reports. Preliminary harvesting was expected to begin in about two weeks.

The rain was untimely for fields in the southern Blackland Prairies that had already been treated with defoliants and pre-harvest aid chemicals. The rain, along with humid conditions, added to excessive moisture and created more difficulties for the plant to dry before harvest. Dry, open weather is needed in areas where harvesting was beginning to get underway.

In Kansas, a slow-soaking general rainfall helped advance the crop. Fields were blooming. Industry experts suggested some fields had the potential to yield as much as 3 bales per dryland acre.

In Oklahoma, producers were encouraged with progress. Local reports indicated that some unofficial counts had enough fruit to yield 4 bales per acre in dryland fields. The plants are expected to shed some fruit as they mature, which is normal.

The Oklahoma Boll Weevil Eradication Organization released information that harvesting equipment coming from two eradication areas in Texas (lower Rio Grande Valley eradication zone and east Texas maintenance area) has to be certified as boll weevil free prior to moving into the state.

The equipment must be inspected and a USDA-APHIS phytosanitary certificate issued before equipment can be transported from these areas. The combined effort continues to help keep the boll weevil from reemerging in Oklahoma.

West Texas

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

A timely, slow-soaking rainfall was received that greatly benefited the crop. The stands were mostly in the blooming stages and the rain came during a period when the plants were in a high water use pattern. Producers were very encouraged with the additional precipitation. Irrigation wells were turned off.

Fieldwork was stalled as rainy conditions prevailed throughout the reporting period. Daytime temperatures were in the upper 80s to mid-90s, and in the lower 70s at night.

Insect pests varied; controls will be applied once threshold levels are met. Meetings and teleconferences were attended to discuss current crop and market conditions. The Lubbock Cotton Exchange, Fiber & Biopolymer Research Institute, and Texas Tech University are hosting the 37th session of the Texas International Cotton School (TICS) on August 7-18.

TICS provides a unique educational opportunity to gain knowledge about the Texas cotton industry and how it interfaces with global cotton and textile markets.

Trading

East Texas

  • In Texas, a light volume of new-crop mostly color 22 and better, leaf 2 and better, staple 34 and 35, mike 37-41, strength 25-29, and uniformity 78-81 sold for around 70.00 cents per pound, FOB warehouse (compression charges not paid).
  • Mixed lots containing a light volume of mostly color 22 and 32, leaf 2 and 3, staple 33 and 34, mike 37-40, strength 26-27, and uniformity 79-80 sold for around 66.75 cents, same terms as above.
  • A light volume of color 31 and 41, leaf 2 and 3, staple mostly 34, mike 35-50, strength 27-31, and uniformity 79-82 sold for around 66.25 cents, same terms as above.

West Texas

  • A mixed lot of 2016-crop cotton containing mostly color 41 and better, leaf 4 and better, staple 32, mike averaging 47.2, strength averaging 27.5, and uniformity averaging 78.7 sold for around 68.25 cents per pound, FOB car/truck (compression charges not paid).

Western Markets Regional Summary

Desert Southwest (DSW)

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.

Hot, dry conditions advanced defoliation activities in Yuma, Arizona. Harvesting gained momentum. Modules were stored in fields and some were moved to the gin. No ginning was reported. The crop made good progress in central Arizona and the Safford Valley. Some fields were defoliated in central Arizona. No rainfall was recorded in the period.

Thunderstorms produced around one-half of an inch of rainfall early in the period for New Mexico and around one-tenth of an inch in El Paso, Texas. The crop made good progress.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Some merchants were busy managing south Texas cotton interests.

Humid conditions were prevalent early in the period, as monsoon moisture entered the state. No rainfall was received on the Valley floor. The crop made good progress, but varied, with some fields in full bloom. The crop is considered to be about 10 to 14 days behind schedule.

Concerns about yields mount as some sources reported insect damage occurred on bottom bolls and overall lateness of some plantings. Significant insect pressure throughout the growing season has made this an expensive crop to manage.

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, India, and Pakistan. According to the Foreign Agricultural Service’s Export Sales report, approximately 185,700 bales of 2017-crop AP was committed for the week ending August 3, 2017.

New Mexico and El Paso, Texas received one-half of an inch to one-tenth of an inch; respectively. Hot, dry conditions advanced fieldwork in Yuma, Arizona. Monsoonal humidity produced no rainfall in the San Joaquin Valley (SJV). No rainfall was received in cotton-growing areas of western and central Arizona.

Fields were defoliated in Yuma, Arizona. Harvesting gained momentum. Modules were stored in fields or transported to the gin yard. Ginning was expected to begin in early September. Limited defoliation began in fields in central Arizona. Industry sources were concerned about yield potential in the SJV. Pesticide treatments continued as pressure from lygus and aphid mounted.

The crop made good progress in New Mexico, and El Paso, Texas.

Trading

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 August 11, 2017