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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA October 20, 2017

Weekly Cotton Market Review – USDA

Photo: Denise Attaway, Clemson University

Average quotations were 108 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 65.96 cents per pound for the week ending Thursday, October 19, 2017.

The weekly average was down from 67.04 last week, and 69.47 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 66.69 cents Friday, October 13 to a low of 65.61 cents Thursday, October 19. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 19 totaled 5,235 bales. This compares to 6,513 bales reported last week and 18,347 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 55,675 bales compared to 62,548 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 67.31 cents, compared to 67.84 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON October 19, 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 October 26, 2017, allowing importation of 12,803,341 kilograms (58,805 bales) of upland cotton.

Quota number 26 will be established as of October 26, 2017, and will apply to upland cotton purchased not later than January 23, 2018, and entered into the U.S. not later than April 23, 2018. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period June 2017 through August 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.

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.

Harvest activity progressed at a rapid pace across the entire Southeast as mostly ideal weather conditions prevailed. Light, scattered rainfall was received in localized areas over the weekend, but soils were firm enough to support equipment during the week and fieldwork continued. Daytime high temperatures were in the lower 70s to mid-80s across Alabama, the Florida panhandle, and Georgia, with slightly cooler temperatures observed across the upper Southeast.

In the lower Southeast, producers were attempting to get as much cotton off of the stalk as possible ahead of wet weather. Modules were accumulating on gin yards and ginning expanded. Producers were also busy mowing stalks in harvested fields.

In Florida, increased feeding damage to root systems from nematodes has been observed and local experts encouraged producers to consider rotation and planting options next season.

More Cotton Commentary


In the Carolinas, harvesting has been delayed in some fields due to recent wet weather. In addition, some fields will require a second defoliation application due to regrowth. In South Carolina, lint quality was negatively affected in some fields due to recent wet weather and sunshine was welcomed during the week to help bleach discolored lint.

According to the National Agricultural Statistics Service’s Crop Progress report released October 16, cotton harvested reached 33 percent in Alabama, 29 in South Carolina, 27 in Georgia, 20 in North Carolina, and 19 percent harvested in Virginia.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 51 and better, leaf 5 and better, and staple 34 and longer for January through October shipment. No sales were reported. Reports indicated most mills have covered their raw cotton needs through first quarter 2018. Yarn demand was moderate-to-good; denim demand remained lackluster. Most mills operated five to seven days.

Demand through export channels was moderate. Agents for mills throughout the Far East inquired for any discounted styles of cotton.

Trading

  • No trading activity was reported.

South Central Markets Regional Summary

North 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.

Cool, mostly clear weather prevailed during the period. Only trace amounts of rain were reported. Daytime temperatures were in the 70s and 80s. Overnight lows were mostly in the 50s, but another cold front brought lows in the 40s late week. Harvesting activities advanced steadily. Some fields remained to be defoliated as producers continued their careful monitoring of temperatures in order to properly time the application of defoliants to ensure complete effectiveness.

Ginning was in full swing in the Memphis territory and most gins had large backlogs of modules on their yards. Producers were shredding stalks and preparing fields for the spring planting season. The Memphis Classing Office added a third shift to keep pace with sample receipts. According to the National Agricultural Statistics Service’s Crop Progress report released October 16, harvesting in Arkansas was 52 percent completed, 42 in Missouri, and 39 percent 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.

Sunny to partly cloudy skies characterized the weather pattern during the week. Daytime temperatures were in the 70s and 80s. Overnight lows dropped into the 40s and 50s. Harvesting activities were in full swing throughout the region. Most cotton acreage had been defoliated. Producers reported widely varying yields of 500 to 1,400 pounds.

Ginning was well underway as the number of modules on gin yards increased. Several gins in Louisiana were only running one shift, due to a lack of available skilled workers. Producers shredded stalks and prepared fields for next season. According to the National Agricultural Statistics Service’s Crop Progress report released October 16, the crop had been 76 percent harvested in Louisiana, compared to 46 percent in Mississippi.

Trading

North Delta

  • No trading activity was reported.

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 moderate to heavy. Interest was best from China, Pakistan, and Turkey.

Harvesting was completed in the Upper Coastal Bend. Modules were transported to gin yards. Ginning continued uninterrupted. Harvesting and ginning continued in central and eastern Texas. Harvesting was estimated at 65 to 85 percent done. Corn and cotton are being harvested; some will complete harvesting corn and then move to cotton.

Producers were encouraged with yields that were reported at 750 to 1,000 pounds per acre. Some gins reported difficulties with transporting bales off the yard, citing a lack of available trucks. Gin managers were making decisions on how to manage cottonseed piles, since the seed storage bins were filled to capacity.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on October 16, Kansas bolls opening had reached 72 percent, down 3 points from average, and harvesting had reached 7 percent, up 2 points from average. Defoliants and boll openers were applied to some fields.

In Oklahoma, bolls opening had reached 91 percent, up 3 points from average, and harvesting had reached 11 percent, up 2 points from average, according to NASS. Harvesting expanded and modules had begun to accrue on gin yards. Some gins started a night shift to keep pace with module increases.

West Texas

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

Picker and stripper harvesting expanded with daytime temperatures in the upper 70s to upper 80s. More gins initiated ginning services and modules had begun to accumulate on gin yards. Some gins began night shifts to keep pace with the influx of modules. Boll openers and defoliants were applied to fields by plane and spray rigs. Field days and meetings were held around the region.

Trading

East Texas

  • A light volume of mostly color 21 and 31, leaf 2 and 3, staple mostly 36 and longer, mike 41-49, strength 27-33, and uniformity 79-82 sold for around 67.75 cents per pound, FOB warehouse (compression charges not paid).
  • A mixed lot containing a light volume of mostly color 32 and better, leaf 3 and better, staple 35 and longer, mike 43-50, strength 24-31, and uniformity 78-82 sold for around 63.75 cents, same terms as above.
  • A light volume of color mostly 31 and 32, leaf 3 and 4, staple 34-36, mike 30-37, strength 25-30, and uniformity 78-81 sold for around 61.00 cents, same terms as above.

West Texas

  • A light volume of mostly color 11 and 21, leaf 3 and better, staple mostly 36 and longer, mike 37-49, strength 28-30, and uniformity 80-81 sold for around 71.25 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a light volume of mostly color 53 and better, leaf 3 and better, staple 34 and longer, mike 35-49, strength 28-29, and uniformity 78-82 sold for around 62.50 cents, same terms as above.
  • A light volume of color mostly 43 and better, leaf 5 and better, staple 34 and longer, mike 43-52, strength 30-31, and uniformity 81-82 sold for around 60.75 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Producers delivered 2017-crop cotton to the co-op, merchant marketing pools, or into the CCC loan program. Average local prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Interest was best from India and Peru.

Clear, warm weather allowed harvesting and defoliation activities to advance in Arizona. Modules accumulated on gin yards. A couple of central Arizona gins began operations in the period. Harvesting was initiated in New Mexico and El Paso, Texas. Modules were transported to gin yards. No ginning was reported.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Competitive foreign growths such as Australian and Brazilian cotton were attractive to foreign mill buyers.

Hazy sunshine continued as wildfires burned in northern California. Air quality alerts were in place for most of the period. Defoliation and harvesting activities expanded. Ginning was active as more gins began pressing operations. The Visalia Classing Office conducted several tours for local shippers, international mills, and local high school students throughout the week.

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 light. Shippers offering prices remained firm. According to the Foreign Agricultural Service U.S. Export Sales report, 354,500 bales of 2017-crop AP was committed to export for week ending October 12. This represents nearly 50 percent of the estimated U.S. production.

Temperatures were in the 70s to 90s in Arizona, California, New Mexico, and El Paso, Texas. Air quality alerts continued for the San Joaquin Valley of California, due to wildfires. Harvesting and defoliation activities advanced in Arizona and California. Modules accumulated on fields and gin yards. Ginning was active in Arizona and California. Early quality results were typical.

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 October 20, 2017