Weekly Cotton Market Review – USDA

Cotton planting. ©Debra L Ferguson Stock Photography

Average quotations were 33 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 79.22 cents per pound for the week ending Thursday, April 19, 2018.

The weekly average was down from 79.55 last week and up from 75.49 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 79.58 cents Friday, April 13 to a low of 78.86 cents Wednesday, April 18. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended April 19 totaled 44,912 bales.

This compares to 39,459 bales reported last week and 14,531 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,816,728 bales compared to 1,550,304 bales the corresponding week a year ago.

The ICE July settlement prices ended the week at 82.82 cents, compared to 83.00 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON

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 April 26, 2018, allowing importation of 13,170,669 kilograms (60,492 bales) of upland cotton.

Quota number 26 will be established as of April 26, 2018, and will apply to upland cotton purchased not later than July 24, 2018, and entered into the U.S. not later than October 22, 2018. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period December 2017 through February 2018, the most recent three months for which data are available.

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Future quotas, in addition to the quantity announced, will be established if price conditions warrant.

2018 CCC Loan Rate Differentials

On April 16, 2018, the U.S. Department of Agriculture’s Farm Service Agency (FSA) announced the 2018-crop loan rate differentials for upland and extra-long staple cotton.

The differentials, also referred to as loan rate premiums and discounts, have been calculated based on market valuations of various cotton quality factors for the prior three years. This calculation procedure is identical to that used in past years, with the exception of a reduced discount applied to color white, leaf 8 upland cotton.

The Commodity Credit Corporation adjusts cotton loan rates by these differentials so that cotton loan values reflect the differences in market prices for color, staple length, leaf, extraneous matter, micronaire, length uniformity and strength.

The 2018-crop differential schedules are applied to 2018-crop loan rates of 52.00 cents per pound for the base grade of upland cotton and 79.77 cents per pound for extra-long staple cotton. The 2014 Farm Bill stipulates that the upland cotton loan rate range between 45-52 cents per pound based on the simple average of the Adjusted World Price for the 2 marketing years preceding sowing of the ensuing year’s crop.

The loan rate provided to an individual cotton bale is based on the quality of each individual bale as determined by Agricultural Marketing Service classing measurements.

Southeastern Markets Regional Summary

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

Tornado watches and severe storm advisories were in effect from the central Gulf Coast to the Mid-Atlantic region over the weekend as a line of storms spawned tornadoes, hail, and heavy rain across the Southeast. Most areas across the region received around one-half of an inch to one and one-half inches of moisture.

Flash flood watches were also in effect in portions of central Alabama, North Carolina, and Virginia as heavier downpours brought around 2 to 4 inches of moisture. The strong storms damaged homes, downed trees, and left thousands without power from Alabama to the Carolinas and Virginia.

Daytime high temperatures were predominately in the low 70s to upper 80s, but briefly dipped into the 50s early in the week as a cold front moved across the region.

Fieldwork was interrupted due to the wet and cool conditions early in the period, but advanced later in the week. Planting activity was getting underway across the lower Southeast as dry and warm conditions prevailed. In Georgia, seedlings had emerged in some of the earliest-planted fields.

In the Carolinas and Virginia, producers were completing burndown and pre-plant herbicide applications ahead of planting, which should begin in the next week or two.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2018-crop cotton, color 41, leaf 4, and staple 34 and longer for fourth quarter 2018 and first quarter 2019 delivery. No sales were reported. Additional inquiries were light as most mills had covered their immediate-to-nearby raw cotton needs. Yarn demand was moderate. Most mills operated five to seven days. Load out dates at most warehouses were reported at 8 to 10 weeks.

Demand through export channels was moderate. Indonesian mill buyers purchased a moderate volume of color 41 and better, leaf 4 and better, staple 34 and longer, and mike averaging 30.0 for nearby shipment.

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 light. Average local spot prices were weak. Trading of CCC-loan equities was slow. No forward contracting was reported.

Unsettled springtime climatic conditions were observed during the week. A storm front early week brought severe weather to parts of the Memphis territory. Nearly 3 inches of rain was reported throughout the region. Unseasonably cold, overnight temperatures were in the low 30s. Daytime highs were in the 40s and 70s.

The Memphis territory remained under a river flood watch due to heavy rains in the Midwest. Producers reported that recent rainfall and cold temperatures delayed fieldwork, including burndown and fertilizer applications. Planting is still expected to get underway in the next week or two in some areas.

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South Delta

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

Typical springtime weather was observed during the period. Daytime temperatures were in the upper 60s to the 80s. Overnight lows were in the 30s and 60s. A storm front brought approximately 2 inches of rain in most areas; localized amounts as high as 3 inches were also reported. Outdoor activities were delayed by recent rainfall and cold temperatures, except in a few areas.

Soil temperatures were below the optimal range for good germination; planting was expected to begin soon, once fields dried sufficiently to support equipment and soil temperatures improved.

Trading

North Delta

  • A moderate volume of CCC-loan equities traded for around 26.00 cents per pound.

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 good. Average local spot prices were weak. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was active. Foreign inquiries were light.

Stands progressed in the Rio Grande Valley and benefited from last week’s rainfall. Stands had begun to square. Aphid populations have increased, but so have natural predators, according to the Pest Cast newsletter released on April 13. Monitoring was underway for fleahoppers and other plant pests.

Planting continued in the Upper Coast and Coastal Bend. Some fields were replanted from damage sustained from high winds. Sowing expanded in the Blackland Prairies. Some fields were planted earlier, but those stands struggled to establish.

Ginning continued in Kansas and in Oklahoma, but a few gins completed the season. High winds and dry conditions increased the potential for bur, cottonseed, gin fires, and wildfires. Fires raged for more than five days in Oklahoma, leaving destruction in several communities. More than 300,000 acres were burned and at least 100 structures were lost.

The Florida Commissioner of Agriculture announced that the Florida Forest Service will send 28 firefighters to help fellow firefighters in Oklahoma, according to Oklahoma’s 4 News on April 16. Many producers in the affected communities have helped move bales, modules, and cottonseed piles away from the fires, and haul water in a consorted effort to contain the wildfires.

Kansas gins reported that modules were transported from the fields to the gin yards. Although outside conditions remained blustery cold most days, field preparation was underway. The ground temperatures were in the mid-40s. Daytime temperature highs were in the mid-30s to upper 80s, and overnight lows were in the mid-20s to low 40s.

West Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were lower. Producer interest in forward contracting was light, due to droughty conditions. Trading of CCC-loan equities was inactive. Foreign inquiries were light.

Droughty, windy conditions persisted early in the period with daytime temperature highs in the low 60s to low 90s and overnight lows in the low 30s to low 50s. Fire advisories continued with significant wildfires reported in the Texas and Oklahoma panhandles. Fieldwork was active depending on location and soil type. Some applied herbicide, built seed beds, and ran irrigation systems.

Several producers opted not to operate irrigation pivots because of the gusty winds. Producers stewarding sandy soils remained idle because those soils are so parched that, if disturbed, it would erode and blow worse in the current high wind patterns. Thunderstorms are in the nearby forecast, and hopes are high that widespread moisture will be received. Industry meetings were well attended.

Trading

East Texas

  • In Oklahoma, a moderate volume of mostly color 11 and 21, leaf 1 and 2, staple 36 and longer, mike 36-50, strength 27-31, and uniformity 78-83 sold for around 80.25 cents per pound, FOB car/truck (compression charges not paid).
  • Mixed lots containing a heavy volume of mostly color 11 and 21, leaf 1 and 2, staple 36 and longer, mike 31-49, strength 26-32, and uniformity 78-84 sold for 77.00 to 77.50 cents, same terms as above.
  • A moderate volume of mostly color 21 and 31, leaf 3 and better, staple 34 and 35, mike 35-47, strength 26-31, uniformity 77-81, and 25 percent extraneous matter sold for 69.00 to 69.75 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 18.75 to 22.75 cents.

West Texas

  • A light volume of color 21, mostly leaf 3, staple 37, mike averaging 30.0, strength averaging 30.7, uniformity averaging 78.8, and 25 percent extraneous matter sold for around 63.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 23 and better, leaf 4 and better, staple 35 and longer, mike 23-29, strength 23-29, uniformity 75-79, and 50 percent extraneous matter sold for around 50.25 cents, same terms as above.
  • A light volume of color 21 and 31, leaf 3, staple 36, mike 26-27, strength 28-29, uniformity 78-79, and 50 percent extraneous matter sold for around 50.00 cents, same terms as above.
  • A light volume of color 33 and better, leaf 5 and better, staple 35 and 36, mike averaging 25.4, strength averaging 32.3, uniformity 79-80, and 100 percent extraneous matter sold for around 45.00 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were weak. Producers contracted a light volume of cotton. No domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were mostly in the high 70s to mid-80s in Arizona. The Yuma crop made normal progress. Planting continued in central Arizona and the Safford Valley. Local experts estimated 25 percent of the crop was planted in the Safford Valley. The National Agricultural Statistics Service (NASS) Arizona Weekly Crop Progress and Condition for week ending April 15, indicated 37 percent of the Arizona crop has been planted.

Cotton planting was 15 percent completed in New Mexico. Topsoil moisture was rated 91 percent very short to short and subsoil moisture rated 85 percent very short to short, according to NASS. No moisture was recorded in the DSW for the period.

Dry conditions and strong winds intensified the threat of severe wildfire conditions throughout the DSW. Red flag warnings were in effect for central Arizona and fire watches were in effect for southwestern New Mexico, and El Paso, TX due to gusty winds and low humidity.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were light. Demand was moderate. Average local spot prices were weak. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Typical spring temperatures reached a high in the mid-80s early in the period. Daytime temperatures dropped into the low to mid-60s mid-week as a cold front from the Gulf of Alaska brought rain to the Valley floor and snow showers in the mountains. Precipitation amounts ranged from one-tenth to one-third of an inch. A weaker storm system moved through late in the period bringing mostly cloudy, windy conditions.

As of April 18, the snow water equivalent for the Sierra Nevada Mountain range was at 11 inches, which is 44 percent of normal. It is estimated that approximately 75 percent of the crop was planted. Local sources reported some cotton was up to a stand and most seedlings were at the cotyledon stage.

American Pima (AP)

Spot cotton trading was inactive. Supplies were light. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Spring temperatures were varied throughout the Far West. Daytime high temperatures were in the low 70s to high 80s in the Desert Southwest (DSW). No moisture was recorded in the DSW. Daytime highs were mostly in the mid-to-high 60s in California. Approximately one-quarter to one-third of an inch of rainfall was received in the San Joaquin Valley.

Planting was active throughout the region as weather conditions permitted. Local experts estimated 50 percent of the crop was planted in the Safford Valley of Arizona. It was estimated that approximately 80 percent of the crop was planted in the San Joaquin Valley of California. Reports indicated some cotton was up to a stand. Seedlings made good progress.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

 


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