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Weekly Cotton Market Review – USDA

Ernst Undesser
From USDA November 17, 2017

Weekly Cotton Market Review – USDA

©Debra L Ferguson Stock Images

Average quotations were 46 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 67.40 cents per pound for the week ending Thursday, November 16, 2017.

The weekly average was up from 66.94 last week, but down from 69.64 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 67.18 cents Tuesday, November 14 to a high of 67.61 cents Thursday, November 16. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended November 16 totaled 57,873 bales.

This compares to 62,244 bales reported last week and 94,905 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 237,824 bales compared to 245,900 bales the corresponding week a year ago.

The ICE December settlement prices ended the week at 69.21 cents, compared to 68.29 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were firm. Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures to book a moderate volume of 2017-crop cotton during the period.

Mostly sunny to partly cloudy conditions were observed across the lower Southeast region, with seasonably cool daytime highs in the low 60s to mid-70s. Harvesting made good progress in most areas as ideal weather conditions allowed fieldwork to advance without interruption.

In Alabama, fieldwork remained one to two weeks behind in some areas. Producers mowed stalks and prepared fields for winter cover crops. Mostly average yields were reported on dryland and irrigated acreage. Modules continued to accumulate on gin yards and gins operated at capacity.

More Cotton Commentary


Damp, overcast conditions halted fieldwork in portions of the Carolinas and Virginia over the weekend and early in the week as many areas received light rain and drizzle. Dry, sunny weather late in the period helped soft soils to firm. Producers attempted to get as much cotton off of the stalk, where conditions allowed, before wet weather returned.

According to the National Agricultural Statistics Service’s Crop Progress report released November 13, cotton harvested reached 82 percent completed in Virginia, 78 in North Carolina, 72 in South Carolina, 69 in Georgia, and 65 percent completed in Alabama.

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 first through third quarter delivery 2018. No sales were reported. The undertone from mill buyers was mostly steady with most interest focusing on scheduling delivery of previously booked 2017-crop cotton from domestic cotton shippers.

Most mills operated five to seven days. Demand for open-end and ring-spun yarn was moderate; demand for denim was lackluster.

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

Trading

  • Even-running lots containing color 31, leaf 2 and 3, staple 37-40, mike 43-49, strength 29-32, and uniformity 81-83 sold for around 500 to 525 points on ICE December futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • Mixed lots containing color mostly 21 and 31, leaf 4 and better, staple 35 and longer, mike 43-49, strength 28-31, and uniformity 81-83 sold for around 400 points on ICE December futures, same terms as above.
  • A moderate volume of color 31 and 41, leaf 2-4, staple 34 and longer, mike 37-49, strength 28-31, and uniformity 81-83 sold for 300 to 350 points on ICE December futures, same terms as above.

South Central Markets Regional Summary

North Delta

Spot cotton trading was slow. Supplies of available cotton were light. Demand was moderate. Average local spot prices were firm. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts.

Cold, partly cloudy climatic conditions prevailed during the week. Daytime temperatures were in the 50s and 60s. Overnight lows were in the 30s and 40s. A cold front brought sporadic rain showers, which delayed outdoor activities in most areas. Producers were harvesting, where the lint was sufficiently dry and fluffy and fields were firm enough to support equipment.

Yields varied from 900 to 1,400 pounds per acre. Regrowth on defoliated cotton plants was observed in a few unharvested fields in Arkansas. Stalks were shredded and fields prepared for spring planting. Ginning continued without interruption, since most gins were maintaining large backlogs of modules on their yards.

According to the National Agricultural Statistics Service’s Crop Progress report released November 13, harvesting in Arkansas was 93 percent completed, 92 in Missouri, and 72 percent in Tennessee.

South Delta

Spot cotton trading was slow. Supplies of available cotton were light. Demand was moderate. Average local spot prices were firm. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts.

Clear, cold weather prevailed early in the period. A storm front brought more rain showers during the week. Daytime temperatures were in the 60s. Overnight lows were in the 30s and 40s. Harvesting activities were delayed in some late-planted fields; producers were concerned about the effect of the moisture on cotton still in the field. The cold, wet weather inhibited the effectiveness of defoliants in a few fields; regrowth was observed in a few unharvested fields in Mississippi.

Producers reported yields from 900 to 1,300 pounds per acre. Ginning progressed slowly in gins that were only operating one shift, due to a lack of available workers. Producers were harvesting and shredding stalks in fields where soils were firm enough to support equipment and the lint was sufficiently dry and fluffy.

According to the National Agricultural Statistics Service’s Crop Progress report released November 13, the crop had been 100 percent harvested in Louisiana, compared to 93 percent in Mississippi.

Trading

North Delta

  • A light volume of color 31 and better, leaf 3 and better, staple 36 and longer, mike averaging 45.8, strength averaging 31.1, and uniformity averaging 81.6 traded at around 73.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of color 41 and better, leaf 4 and better, staple 37 and longer, mike averaging 45.6, strength averaging 30.1, and uniformity averaging 83.3 traded at around 70.75 cents, same terms as above.

South Delta

  • A moderate volume of color 31 and better, leaf 3 and better, staple 36 and longer, mike averaging 45.8, strength averaging 31.1, and uniformity averaging 81.6 traded at around 73.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of color 41 and better, leaf 5 and better, staple 37 and longer, mike averaging 43.9, strength averaging 31.4, and uniformity averaging 81.8 traded at around 275 points on ICE March 2018 futures, same terms as above.

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 firm. Producer interest in forward contracting was light. Trading of CCC-loan equities was slow. Foreign inquiries were heavy. Interest was best from Pakistan, Taiwan, and Turkey.

Ginning continued in south Texas and some gins planned to operate through late-November to mid-December to process remaining modules. Most fields were prepped for winter and are in need of good rains ahead of spring planting. Rainfall was reported in the Blackland Prairies early in the reporting period. Some modules were transported to gin yards and ginning operations neared completion. Fertilizer was applied to fields.

In Kansas, harvesting slowly gained momentum with daytime temperatures in the low 50s to low 60s and nighttime lows in the mid-30s to mid-50s. Overcast conditions prevailed. Ginning steadily expanded. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on November 13, the crop was rated mostly fair-to-good. Harvesting was 25 percent completed compared to 33 percent the year before.

In Oklahoma, some irrigated fields yielded as much as 4 to 5 bales per acre, but dryland yields were mixed, according to local reports. Producers were encouraged with the quality results. Harvested fields had reached 48 percent completed  compared to 53 percent last year, according to NASS. The condition of the crop was rated 88 percent good.

West Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. 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 heavy. Interest was best from Pakistan, Taiwan, and Turkey.

Overcast, humid weather prevailed, which interrupted harvesting. Daytime high temperature were in the low 60s to upper 70s, with nighttime lows in the low 40s to mid-50s. Dense morning fog slowed module transportation from fields to gin yards. Harvesting made progress during periods of sunshine after the foggy conditions dissipated, which was mostly in the middle of the day.

Ginning made good progress and continued uninterrupted, except for a few gins that needed more modules transported to their yards. Some gins began initial operations. Industry was generally encouraged by the quality of the crop, but noted an increased amount of low micronaire.

Sample receipts continued to increase at the Abilene, Lamesa, and Lubbock Classing Offices. Meetings were held to discuss the progress of the crop.

Trading

East Texas

  • A moderate volume of mostly color 31 and better, leaf 3 and 4, staple 35-38, mike 42-49, strength 27-30, and uniformity 79-82 sold for around 64.75 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a heavy volume of mostly color 31 and better, leaf 3 and better, staple 36 and longer, mike 33-52, strength 27-33, and uniformity 77-83 sold for 70.25 to 71.00 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of color 41 and better, leaf 5 and better, staple 36 and longer, mike averaging 34.3, strength averaging 29.9, and uniformity averaging 81.4 sold for around 68.00 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for 13.50 to 14.00 cents.

West Texas

  • A moderate volume of color 21 and 31, leaf 2 and 3, staple 37, mike 35-38, strength averaging 31.6, and uniformity 81-82 sold for around 71.00 cents per pound, FOB car/truck (compression charges not paid).
  • A heavy volume of mostly color 41 and better, leaf 3 and better, staple 37 and longer, mike 33-52, strength 28-32, and uniformity 77-83 sold for around 70.25 cents, same terms as above.
  • A moderate volume of mostly color 31 and better, leaf 3 and better, staple 36 and longer, mike 24-29, strength averaging 29.9, and uniformity averaging 79.8 sold for around 58.00 cents, same terms as above.
  • A moderate volume of color 41 and better, leaf 4, and staple 33 and longer was sold to Turkish mills for January and February 2018 shipment.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were light. Demand was moderate. Producers delivered 2017-crop cotton to the co-op, merchant marketing pools, or into the CCC-loan program. Average local spot prices were higher. No domestic mill activity was reported. Foreign mill inquiries were light.

Sunny and mild conditions were the norm for Arizona. Harvesting and ginning were active in central Arizona and Safford. Most gins were in operation, with the exception of two. Some gins will process more cotton compared to last year, as increased plantings and good yields were reported. Quality results were good.

Producers were shredding stalks and prepared fields for winter plantings. Weather conditions were seasonable in New Mexico and El Paso, Texas. Temperatures were mostly in the 70s. Clear, open weather allowed harvesting and ginning to advance. Modules were transported to gin yards.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were light. Demand was moderate. Producers delivered 2017-crop cotton to the co-op, merchant marketing pools, or into the CCC-loan program. Average local spot prices were firm. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were slow. Interest was best for saw-ginned Acala. Shippers’ prices were firm.

Daytime temperatures were mostly in the high 60s to low 70s. No moisture was received in the period. Clouds moved into the Valley late in the period. Heavy rains are forecasted for northern California and snowfall in the Sierra Nevada Mountain range at elevations over 8,000 feet late in the period.

This is promising to be the first significant rain event for the Valley. Harvesting was virtually completed. All gins were operating in the SJV, with the exception of two. Producers shredded stalks and readied fields for winter plantings.

American Pima (AP)

Spot cotton trading was slow. Supplies and demand were moderate. Average local spot prices were higher. Forward contracting was active in the San Joaquin Valley (SJV). No domestic mill activity was reported. Foreign mill inquiries were moderate. Interest was best from China, India, Japan, Pakistan, and Peru. Shippers’ price ideas were higher.

According to the Foreign Agricultural Service Export Sales report, approximately 421,200 bales of 2017-crop AP were committed for the week ending November 9, 2017.

Temperatures were in the 70s to 80s in Arizona, California, New Mexico, and El Paso, Texas. Harvesting continued in Arizona, New Mexico, and El Paso, Texas. No rainfall was recorded in the period. First pick harvesting was completed in the SJV, and second pick harvesting neared completion. Ginning continued uninterrupted, with all AP gins in operation for the region.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A moderate volume of 2017-crop cotton, color 2, leaf 2, and staple 46 and longer was contracted for 145.00 to 150.00 cents per pound, UD free, FOB warehouse.
  • A light volume of 2017-crop cotton color 2, leaf 2, and staple 46 and longer, mike 35-49, and strength 38.0 and stronger sold for around 145.00 cents per pound, FOB West Coast.
Ernst Undesser
From USDA November 17, 2017