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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA September 22, 2017

Weekly Cotton Market Review – USDA

Average quotations were 224 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 67.71 cents per pound for the week ending Thursday, September 21, 2017.

The weekly average was down from 69.95 last week, and from 68.60 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 68.16 cents Friday, September 15 to a low of 66.89 cents Thursday, September 21. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 21 totaled 3,280 bales. This compares to 2,403 bales reported last week and 5,901 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 30,478 bales compared to 27,198 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 68.25 cents, compared to 69.12 cents last week.

Southeastern Markets Regional Summary

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.

Fair-to-partly cloudy weather conditions prevailed across Georgia, Alabama, and the Florida Panhandle during the period. Daytime high temperatures were in the upper 80s to lower 90s, while nighttime temperature were in the low to mid-60s. Less than one-quarter of an inch of precipitation was recorded during the period.

Reports estimated the crop in the lower Southeast maybe at a 10 to 15 percent loss from the damage caused by Hurricane Irma. Twisted, tangled stands are a main concern, which will complicate picking. Defoliation was well underway in most of the region and harvesting has begun on a limited scale. In Georgia, one gin has multiple modules on the yard waiting to be ginned. Harvesting and ginning are expected to ramp up in the next two weeks.

Throughout the Carolinas and Virginia, daytime temperatures ranged from the mid-80s to mid-90s. No rainfall was recorded. Defoliation had begun in some areas, while others are slightly behind schedule. In the Carolinas, some fields have already been picked and filled with modules to be taken to gin yards. Harvesting and ginning are expected to be in full force in the next two weeks.

According to the National Agricultural Statistics Service’s Crop Progress report released September 18, cotton bolls opening in Georgia had reached 65 percent, South Carolina 63, North Carolina 55, Alabama 52, and Virginia 40 percent.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for December delivery. No sales were reported. Yarn demand was moderate-to-good. Demand for denim continues to be slow in the retail sector. Most mills operated five to seven days.

Demand through export channels was good. Representatives for mills in Taiwan purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for December shipment. Representatives from Turkey purchased a moderate volume of USDA Green Card Class, color 41, leaf 4, and stable 37 for November 2017 through May 2018 shipment.

Trading

  • A light volume mixed lot of 2016-crop cotton, color 53 and better, leaf 2-5, staple 31-37, mike 38-54, strength 25-32, and uniformity 78-84 sold for around 63.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Central Markets Regional Summary

North Delta

More Cotton Commentary


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

Hot, mostly dry weather prevailed during the week throughout the region. Afternoon thundershowers brought light amounts of precipitation to localized areas. Reported accumulations were less than two-tenths of an inch of moisture. Daytime temperatures were in the low 90s and overnight lows were in the 70s. The crop made excellent progress thanks to the high temperatures and mostly clear skies. Defoliation is underway, and harvesting is expected to begin shortly.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 18, open bolls reached 70 percent in Arkansas, 62 in Missouri, and 50 percent in Tennessee. NASS reported the crop condition in Arkansas was rated at 81 percent good-to-excellent, compared with 57 percent in Missouri and 86 percent in good-to-excellent condition in Tennessee.

South Delta

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

Clear skies and high temperatures dominated the weather pattern during the week. Pop-up thundershowers brought less than one-ten of an inch to isolated areas. Daytime temperatures were in the low 90s and overnight lows were in the 70s. Defoliation expanded under good weather conditions. Harvesting activities gained momentum. Ginning had begun on a very limited basis in Louisiana and continued slowly in Mississippi. Fall tillage and field preparation for next season was underway.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 18, open bolls reached 93 percent in Louisiana, compared to 61 percent in Mississippi. NASS reported 48 percent of the crop was in good to excellent condition in Louisiana, compared to 66 percent in Mississippi.

Trading

North Delta

  • A light volume of 2016-crop cotton, color 41 and better, leaf 5 and better, staple 33-41, mike 35-49, strength 25-33, and uniformity 77-83 traded at around 66.25 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 active. Supplies and producer offerings were moderate. Demand was very good. Average local spot prices were lower. 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 Pakistan.

Ginning continued in the Rio Grande Valley; although, some gins had completed operations for the season. Stalks were shredded. Reports from the Gulf Coast indicated that Hurricane Harvey losses were not as great as originally thought. Some parts of modules that were damaged were able to be ginned.

Decisions were made on a module by module basis, because of different factors including if the tarps blew off or held on, and how much water were the modules exposed to in the fields. Location and types of modules also played a role. Modules that were stored on higher ground were exposed to less standing water.

According to local reports, the round modules sustained less damage than the rectangular modules. Ginning was at a slower pace. The trucking infrastructure slowed the transportation of bales to shipping points. Different segments of the industry continued to meet and work together to resolve issues and move forward the 2017-cotton season of South Texas.

The Kansas crop continued to mature and bolls cracked open. Industry members prepared for processing a larger-than-normal crop. In eastern Kansas, producers began to apply boll openers and defoliants. The first modules were transported to a gin yard. Ginning was expected to begin next week or after October 1.

In western Kansas, the crop needed more heat units and time to finish. Ginning is expected to begin the first week of November. Field activity increased in Oklahoma and some modules were transported to the gin yards, but were not expected to be ginned until October 1 or later.

Applications of harvest aids and defoliants were applied. Harvesting was limited and expected to expand in 2 to 3 weeks. Some areas received as much as 2 inches of rainfall that brought high winds that were sustained for 15 minutes or longer. Some fields were damaged.

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 light to moderate. Interest was best from China, Indonesia, and Pakistan.

Boll openers and defoliants were applied on some fields. A few fields have been harvested, mostly in the Rolling Plains and Southern Low Plains. Modules had begun to accumulate on gin yards. Ginning was not expected to begin until after October 1. According to local reports, some late planted stands had irrigation water applied.

A wet macroburst on September 17, caused widespread loss north of Lubbock. Damage assessments were ongoing, but according to local reports, the leaves were stripped from the stands with some of the bolls left intact. The nearby forecast shows strong storm chances at a time when most fields no longer need rainfall. Industry meetings were attended.

Trading

East Texas

  • A light volume of mostly color 11, leaf 2 and 3, staple 38 and 39, mike averaging 42.9, strength averaging 31.0, and uniformity 81-83 sold for around 70.00 cents per pound, FOB warehouse (compression charges not paid).
  • A mixed lot containing a light volume of color 12 and better, leaf 2-3, staple 35, mike averaging 43.2, strength 26-35, and uniformity 78-81 sold for around 67.75 cents, same terms as above.
  • A light volume of color mostly 41 and 42, leaf 3-5, staple 35 and 36, mike 45-46, strength averaging 28.9, and uniformity 78-81 sold for around 64.25 cents, same terms as above.

West Texas

  • A light volume of 2013-crop cotton mostly color 21, leaf 2 and 3, staple 34 and 35, mike averaging 38.7, strength averaging 31.8, and uniformity 77-81 sold for around 63.25 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 lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the high 90s to low 100s. No moisture was recorded in the period. Ginning continued uninterrupted in Yuma, Arizona. Defoliation and harvesting activities were active in central Arizona. No ginning was reported. The crop made good progress in Safford. Producers attended annual meetings.

The crop advanced in New Mexico and El Paso, Texas. Local sources reported the area received too much moisture from monsoon activity during the growing season, which could push the crop a little later than normal. Producers readied equipment for harvest. Gin repairs continued.

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 and mostly for price discovery.

Temperatures were mild, mostly in the 80s early week. Partly cloudy skies and an off-shore low pressure system lowered daytime temperatures into the 70s late in the period. Overnight lows were in the 50s. Scattered showers brought less than one-tenth of an inch of rainfall to the Valley on Thursday, September 21.

The first snowfall was deposited above 8,000 feet in the Sierra Nevada Mountain range. Heat units were needed for late-planted fields as bolls needed additional heat to reach maturity. The effects of the first shot of defoliation were seen in several Tulare County fields. Ginning was not expected to begin until the second week of October.

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 slow. No new sales were reported.

Temperatures were mostly in the 80s and 90s for much of the far west. Daytime temperatures dropped into the 70s in California late in the period. A cold front brought gusty conditions and scattered showers to California. Defoliation and harvesting activities advanced in central Arizona. No ginning was reported.

Defoliation began in the most mature San Joaquin Valley fields, but was limited. Ginning was expected to begin around the second week of October. The crop in New Mexico and El Paso, Texas made good progress, with about three weeks of the growing season left.

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 September 22, 2017