Weekly Cotton Market Review – USDA

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Spot cotton quotations were unchanged from 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 62.01 cents per pound for the week ended Thursday, December 24, 2015.

The weekly average was higher than the 60.49 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 62.42 cents Friday, December 18 to a low of 61.48 cents Wednesday, December 23. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 24 totaled 74,618 bales.

This compares to 54,208 bales reported last week and 138,927 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 660,324, bales compared to 993,763 bales the corresponding week a year ago.  The ICE March settlement prices ended the week at 63.66 cents, compared to 62.99 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #20 FOR UPLAND COTTON December 24, 2015

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 December 24, 2015, allowing importation of 15,287,174 kilograms (70,213 bales) of upland cotton.

Quota number 19 will be established as of December 24, 2015, and will apply to upland cotton purchased not later than March 22, 2016, and entered into the U.S. not later than June 20, 2016.  The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period April 2015 through June 2015, 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.

Regional Summaries

Southeastern Markets

Spot cotton trading was moderate.  Supplies and producer offerings were moderate. Demand was good for color 31 and staple 36 and long.  Average local spot prices were steady. Trading of CCC-loan equities was inactive.  No forward contracting was reported.

Partly cloudy to cloudy conditions prevailed throughout the Southeast during the period. Daytime temperatures in the mid-70s to low 80s were unseasonably warm in the lower Southeast. The warm, moist air combined with strong sheer winds, prompting severe storm warnings from the National Weather Services.  Rain showers hampered efforts to complete harvesting and other field activities in South Carolina, Georgia, and Alabama. Flood watches were in effect in low-lying areas in the Carolinas and Georgia.

Module haulers struggled with wet soil conditions. Ginning continued at gins that had backlogs of modules on their yards. The Macon Classing Office continued to operate three shifts to handle the steady flow of cotton samples; an estimated 500,000 samples remained to be classed.

Unusually warm and moist air flow resulted in dense fog and light-to-moderate rainfall in Virginia and North Carolina, creating a hazard for motorists.  Limited fieldwork was performed as producers attempted to shred stalks before winterizing their equipment. Producers made plans to attend local and regional industry meetings.

South Central Markets

North Delta

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

Unseasonably warm conditions coupled with a moisture-laden storm system brought severe weather to the region late in the period.  Record daytime temperatures in the low 70s combined with strong shear winds resulted in a rare, “Particularly Dangerous Situation” Tornado Watch for most of the region.  One fatality was reported in Arkansas as a result of a severe wind storm.  Wind gusts of up to 70 miles per hour were recorded, which caused damage to structures in several counties in Arkansas and Tennessee.

Thunderstorms brought up to three inches of rain to some areas; flood watches were in effect in low-lying areas of the Bootheel of Missouri and in western Tennessee.

Producers made plans to attend local, regional, and national industry events.  The Memphis Classing Office ceased day-to-day operations, in favor of operating every other day as all but a couple of gins had finished for the season.

South Delta

Spot cotton trading was slow.  Supplies were moderate.  Producer offerings were light. Demand was good for color 31 and better.  Average local spot prices were lower.  Trading of CCC-loan equities was inactive.  No forward contracting was reported.

Dry, cool conditions early in the period gave way to unseasonably high temperatures in the upper 70s mid-week.  Daytime temperatures were in the low 60s to upper 70s.  Overnight temperatures were in the mid-to-upper 60s.

A rare, “Particularly Dangerous Situation” Tornado Watch was issued for Louisiana and Mississippi. A flow of warm, moist air combined with strong sheer winds to spawn several severe storms and tornados in northern Mississippi.  Seven fatalities were reported; an additional 40 individuals sustained non-life threatening injuries.  Extensive damage was reported in at least six counties, including several crop dusting aircraft and numerous structures in Mississippi. Damage assessments were still underway.

Producers were hoping for much colder temperatures in order to prevent the overwintering of insect pests.  No fieldwork was reported. Producers made plans to attend industry meetings.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate.  Supplies and producer offerings were light.  Demand was moderate. Average local spot prices were higher.  Trading of CCC-loan equities was inactive.  Foreign mill inquiries were light.  Interest was best for color 31 and better, leaf 3 and better, staple 36 and longer.

Temperatures were mild in East Texas, South Texas, and the Rio Grande Valley.  No moisture was recorded in the period.  Limited ginning continued in East Texas.  A few East Texas fields remained to be harvested, due to previous wet conditions. Some producers were considering if the remaining crop was worth harvesting.  Dry, clear conditions advanced harvesting and ginning in Kansas and Oklahoma.

Local sources reported that harvesting reached 70 percent completed, and ginning was estimated at 50 percent completed in Kansas.  Cloudy conditions and recent snowfall delayed module transportation to gins.  All Kansas gins were closing for one day on Christmas.

Harvesting was over 90 percent completed and ginning neared 70 percent completion in Oklahoma.  Some gins worked a half-day on Christmas Eve; all gins were closed on Christmas day.  Warehouses reached their peak receiving period.  Shipping was light.

West Texas

Spot cotton trading was active.  Supplies and producer offerings were heavy.  Producers  price ideas were holding firm.  Demand was heavy.  Average local spot prices were lower.  Trading of CCC-loan equities was inactive.  Foreign mill inquiries were light.  Interest was best for color 31 and better, leaf 3 and better, and staple 37 and longer.  Interest was best from Mexico.

Clear, dry conditions prevailed in areas south of Lubbock during the period.  Temperatures were in the mid-to-high 60s.  Winter storm warnings were in effect for late in the period.  The Panhandle and areas north of Lubbock were bracing for inclement weather, which was forecast in the near term.  Harvesting was virtually completed.  Ginning advanced.  Some gins were closing half-day on

Christmas Eve, with all gins closed on Christmas day.  Warehouses reached their peak receiving period. Shipping was light.  The Lamesa Classing Office will continue to operate two full shifts.  The Lubbock Classing Office maintained a three-shift operation.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was slow.  Supplies and producer offerings were moderate. Demand was light. Average local spot prices were lower.  Merchants were busy preparing paperwork for producer deferred payments into the New Year.  No forward contracting or domestic mill activity was reported.  Foreign mill inquiries were light.

Daytime temperatures were in the low-to-mid 60s in Arizona.Nighttime lows were in the mid-to-high 40s. No moisture was recorded in the period.  Ginning continued.  Most gins were operating on a half-day schedule for Christmas Eve and closed on Christmas day. High volume gins will resume ginning on December 26. Warehouses were busy receiving cotton. Daytime temperatures were mostly in the 60s for New Mexico and El Paso, Texas.

Several New Mexico gins completed their season this week.  Ginning continued uninterrupted. A couple of larger gins in New Mexico and El Paso, Texas worked an abbreviated schedule on Christmas Eve and were closed on Christmas.  Ginning resumed on December 26.

San Joaquin Valley (SJV)

Spot cotton trading was inactive.  Supplies were moderate.  Demand was light.  Average local spot prices were higher.  Merchants were busy preparing paperwork for producer deferred payments into the New Year. No forward contracting or domestic mill activity was reported.  Foreign mill inquiries were light.

A couple of cold storms moved into the area and kept daytime temperatures into the low-to-mid 50s. Overnight lows were in the high 30s to mid-40s. Beneficial rain and snow was received for the week ending December 25. The SJV received one-third to two inches of rainfall in the period. The state Department of Water Resources reported the Sierra Nevada snowpack was still below average in some locales, but building especially in the northern Sierra range. Winter storm warnings remained in effect for the Sierras. Saw and roller ginning continued.

Many gins were closed on Friday, December 25 and through the weekend.

American Pima (AP)

Spot cotton trading was inactive.  Supplies were moderate.  A moderate volume of 2015-crop cotton remained in producer hands.  Merchants were busy preparing paperwork for producer deferred payments into the New Year. DSW producers inquired for 2016 contracts.  No contracting was reported.  Demand was light.  Average local spot prices were steady. Foreign mill inquiries were light. Interest was best from Bangladesh and Switzerland.

Temperatures were in the 50s and 60s for Arizona, California, New Mexico, and El Paso, Texas.  No rainfall was recorded for Arizona, New Mexico, and El Paso, Texas in the period.  Beneficial rain and snow was received for the week ending December 25.  The SJV received one-third to two inches of rainfall in the period.  The state Department of Water Resources reported the Sierra Nevada snowpack was still below average in some locales, but building especially in the northern Sierra range.

Winter storm warnings remained in effect for the Sierras. A couple of larger gins in Arizona, New Mexico, and El Paso, Texas worked an abbreviated schedule on Christmas Eve and were closed on Christmas.  Ginning resumed on December 26.

Textile Mill

Domestic mill buyers purchased a light volume of color 41, leaf 4, and staple 34 and 35 for February and March 2016 delivery.  Mill buyers inquired for a moderate volume of color 53 and better, leaf 5 and better, and staple 32 and longer for June through December 2016 delivery.  No additional sales were reported.  Most mills had covered their immediate-to-nearby raw cotton needs.   The undertone from mill buyers remained cautious entering the New Year.

A few mill buyers have taken a conservative approach to purchasing raw cotton as a result of tapering finished product demand; some mill buyers planned to make fill-in purchases as needed if demand increases.  Demand for open-end and ring-spun yarn was moderate; denim demand was good. Most mills planned around seven to ten days of downtime for the Christmas and New Year’s holidays for routine maintenance.

Inquiries through export channels were moderate.  Agents for mills in the Philippines, Taiwan, and Indonesia inquired for a moderate volume of color 31, leaf 3, and staple 36 and longer for January through March 2016 shipment.   No sales were reported.

Regional Price Information

Southeastern Markets

  • A moderate volume of color mostly 41 and 42, leaf 3 and 4, staple 35-37, mike 43-49, strength 28-31, and uniformity 80-82 sold for around 66.25 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A moderate volume of color 41 and 42, leaf 3 and 4, staple 34-36, mike 43-49, strength 26-28, and uniformity 80-82 sold for around 150 points on ICE March futures, same terms as above.
  • A moderate volume of color mostly 52 and 53, leaf 4-6, staple 34-37, mike 43-52, strength 27-29, and uniformity 80-82 sold for around 700 points off ICE March futures, same terms as above.

South Central Markets

North Delta

  • No trading activity was reported.

South Delta

  • A moderate volume of color mostly 62 and 63, leaf 4 and better, staple 32 and longer, mike 50 and higher, strength 24-30, and uniformity 78-82 traded for around 57.75 cents for pound, FOB car/truck (Rule 5, compression charges paid).

Southwestern Markets

East Texas

  • In Texas, a heavy volume of color 11 and 21, mostly leaf 2 and better, staple 36 and 37, mike 35-49, strength 28-34, and uniformity 78-83 sold for around 65.00 cents per pound, FOB warehouse (compression charges not paid).
  • A mixed lot of moderate volume color 32 and better, leaf 3 and better, staple 30-33, mike 32-50, strength 21-31, and uniformity 75-81 sold for around 52.00 cents, same terms as above.
  • A light volume of mostly color 42 and 52, leaf 5 and 6, staple 38, mike 33-44, strength averaging 31, uniformity averaging 83, with 50 percent bark sold for around 52.50 cents, same terms as above.
  • In Oklahoma, a light volume of mostly color 32 and better, leaf 3 and better, staple 33-35, mike 41-45, strength 28-30, and uniformity 78-80 sold for around 56.00 cents, same terms as above.
  • A light volume of mostly color 31 and 41, leaf 4 and better, mike 34-42, strength 27-31, and uniformity 77-80 sold for around 57.00 cents, same terms as above.
  • A light volume of color 31, 41, 32, and 42, leaf 3 and 4, staple 33-35, mike averaging 43, strength averaging 30, and uniformity averaging 80 sold for around 56.25 cents, same terms as above.

West Texas

  • A moderate volume of color 11 and 21, leaf 3 and better, staple 37, mike averaging 38.0, strength averaging 32.2, and uniformity averaging 81.6 sold for around 63.50 to 65.00 cents per pound, FOB car/truck (compression charges not paid).
  • A heavy volume of mostly color 31, leaf 4, staple 37-38, mike averaging 41.1, strength averaging 32.0, and uniformity averaging 81.30 sold for around 63.50 cents, same terms as above.
  • A heavy volume of color 22, 32, and 42, leaf 2-4, staple 35-37, mike 34-49, strength 25-34, and uniformity  78-82 sold for around 58.50 cents, same terms as above.
  • A moderate volume of color mostly 31 and 41, leaf 3 and 4, staple 35-38, mike 36-46, strength 26-35, and uniformity 76-81 sold for around 62.00 cents, same terms as above.
  • A moderate volume of color 31 and 41, mostly leaf 3 and 4, staple 35 and 36, mike 42-46, strength 30-32, and uniformity averaging 80-81 sold for around 60.00 cents, same terms as above.
  • A light volume of color 31 and 41, leaf 3 and 4, staple 35-37, mike averaging 38, strength averaging 31, uniformity averaging 81, with 50 percent bark sold for around 55.50 cents, same terms as above.
  • Mixed lots of a light volume of color 32 and better, leaf 3 and better, staple 35-37, mike averaging 45, strength averaging 29, uniformity averaging 80, with 50 percent bark sold for around 58.25 cents, same terms as above.

Western Markets

Desert Southwest

  • A light volume of color 21 and better, leaf 3 and better, staple mostly 37 and longer, mike 35-49, strength averaging 31.0, and uniformity averaging 80.5 traded for around 150 to 175 points on ICE March futures, uncompressed, FOB warehouse.
  • A light volume of color 31, leaf 4 and 5, staple 36, mike 33-42, strength averaging 30.5, and uniformity averaging 80.5 traded for around 950 points off ICE March futures, same terms as above.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A light volume of 2015-crop AP was sold to domestic mills.

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