Weekly Cotton Market Review – USDA

Cotton bales in gin warehouse. ©Debra L Ferguson Stock Images

Average quotations were 275 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 82.94 cents per pound for the week ending Thursday, May 24, 2018.

The weekly average was up from 80.19 last week and 75.22 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 82.32 cents Friday, May 18 to a season high of 83.87 cents Monday, May 21. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 24 totaled 34,977 bales. This compares to 33,669 bales reported last week and 2 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,981,127 bales compared to 1,560,876 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 87.46 cents, compared to 85.03 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #5 FOR UPLAND COTTON May 24, 2018

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 May 31, 2018, allowing importation of 13,123,605 kilograms (60,276 bales) of upland cotton.

Quota number 5 will be established as of May 31, 2018, and will apply to upland cotton purchased not later than August 28, 2018, and entered into the U.S. not later than November 26, 2018. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period January 2018 through March 2018, 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 were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. A light volume of forward contracting was reported.

Cloudy conditions prevailed across most of the lower Southeast during the period. Daytime high temperatures were in the mid-80s. Several showers and thunderstorms brought around 3 inches of moisture to areas throughout Alabama, portions of south Georgia, and the Gulf and Atlantic coastal regions. While wet conditions hampered fieldwork and delayed planting, the rainfall was desperately needed.

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Mostly wet and cloudy conditions were observed across the Carolinas and Virginia during the period with daytime high temperatures in the 80s. Low temperatures were in the 60s. Rain shower activity brought up to 8 inches of accumulated moisture to some areas of Virginia during the period, bringing planting to a standstill. Planting advanced slowly during the period in most areas.

According to the U.S. Drought Monitor report released May 24, significant reductions to drought coverage and intensity resulted from the recent precipitation. Producers are hoping to make rapid progress once soft soils firm enough to support equipment.

Textile Mill

Domestic mill buyers inquired for a light volume color 41 and 42, leaf 4 and better, and staple 35 and longer for January through March 2019 delivery. No sales were reported. Most mills have covered their immediate-to-nearby raw cotton needs. Yarn demand was light. The undertone from mill buyers was cautious.

Demand through export channels was moderate. Mill buyers in the Far East inquired for a light volume of color 41 and better, leaf 4 and better, staple 34 and longer, and mike averaging 30.0 for January through March 2019 shipment. No sales were reported.

Trading

  • A light volume of color 41, leaf 8, staple 36 and longer, mike 34-41, strength 27-34, and uniformity 81.0-85.0 traded for around 46.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • Producers booked a light volume of 2018-crop bales at around 175 points on ICE December futures, with additional premiums for long and strong cotton.

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 higher. Trading of CCC-loan equities was inactive. A light volume of forward contracting was reported.

Mostly favorable climatic conditions allowed producers to make excellent progress with planting. Daytime high temperatures in the mid-90s were a few degrees above average for this time of the year. Overnight temperatures in the 70s were also several degrees above the seasonal average. Isolated thunder showers, some of which brought marble-sized hail and up to 2 inches of precipitation, were reported.

No damage to newly-planted fields was reported. Planting advanced rapidly and was well ahead of schedule in all areas, in spite of a few weather-related delays. Producers were hoping to complete planting over the next few days.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. A light volume of forward contracting was reported.

Dry weather delayed planting in some areas. Daytime highs temperatures in the 90s were above average for this time of the year. Overnight temperatures in the 70s were also above the seasonal average. No rainfall was reported. Most producers with unplanted acreage reported that they were hoping for rain showers to restore soil moisture before planting.

No emerged cotton was reported. Some producers reported that conditions changed very quickly from too wet to too dry due to localized weather patterns. Some producers resorted to irrigation to promote seed germination.

Trading

North Delta

  • A light volume of mixed lots, mostly color 51 and better, leaf 6 and better, staple 34 and longer, mike 41-51, strength 29-34, and uniformity 80-83, with 100 percent extraneous matter traded for around 83.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • Producers booked a light volume of CCC-loan equities for 25.00 to 26.00 cents.

South Delta

  • Producers booked a light volume of 2018-crop bales for around 175 points off ICE December futures.
  • Producers booked a light volume of CCC-loan equities for 25.00 to 26.00 cents per pound.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was moderate. Supplies were moderate. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was moderate. Foreign inquiries were light and were mostly for new-crop price discovery and any discount cotton qualities.

Very welcomed and much needed rains were received across east, south Texas, and the lower Rio Grande Valley (RGV) early in the period. Mostly spotty showers with some areas receiving around two-tenths of an inch up to 3 inches of moisture. The recent rainfall was beneficial to most irrigated and dryland RGV acreage, but some dryland acreage was lost to droughty conditions prior to the rain event and were zeroed out by insurance adjusters.

The Texas Boll Weevil Eradication Foundation had mapped approximately 212,000 acres in the RGV as of May 13. Sources estimated 35-45 percent of dryland acreage may have been lost. Local RGV experts reported that cotton plants were in various stages of development, with some of the more advanced fields producing bolls. Insect pressure was typical and producers treated as necessary.

The Coastal Bend and Upper Coast cotton crops received a boost with recent rainfall. Irrigated fields made good progress. The most mature fields were producing blooms. Overall, a good general rainfall is needed throughout east and south Texas. Widespread rainfall in Oklahoma lifted burn ban restrictions for most of the state, with seven counties under restrictions.

Planting activities commenced as producers were waiting for planting rains. Warehouses were busy receiving cotton. Ginning continued in Oklahoma and Kansas. The Abilene Classing Office continued to class cotton from Kansas, Oklahoma, and Texas.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Producers inquired for forward contracts as price ideas adjusted to the 80.00 cents level. Shippers limited contracting to irrigated acres. No new contracts were signed. No domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign inquiries were light and mostly for discount quality cotton. Interest was best from Indonesia, Japan, and Taiwan for low micronaire.

Spotty showers were received in west Texas early in the period. Some locations received one-tenth of an inch, while others received up to 3 inches. For some locales, this was the first significant rainfall since last fall. The immediate forecast showed moisture every day for the region. Dryland planting on well-drained fields really took off the week of May 21 as producers took advantage of the moisture.

Sources reported seedling emergence in a few irrigated fields. A good general rainfall is still needed for all of west Texas. Federal crop insurance deadlines were approaching. The Northern High Plains deadline is May 31, for areas around Lubbock it is June 5, and June 10 for the Lamesa territory. Drought conditions remain a concern for the region.

Trading

East Texas

  • In Kansas, mixed lots containing mostly color 21 leaf 2 and better, staple 36 and 37, mike averaging 40.3, strength averaging 30.3, and uniformity averaging 81.5 sold for around 80.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 31 and better, leaf 4 and better, staple 36-38, mike 30-31, strength 22-29, uniformity 78-80 and 50 percent extraneous matter sold for around 64.00 cents, same terms as above.
  • In Oklahoma, a moderate volume of color 21 and 31, leaf 3 and better, staple 36-38, mike averaging 39.2, strength averaging 30.5, uniformity averaging 81.2, with 25 percent extraneous matter sold for around 82.00 cents, same terms as above.
  • A light volume of mostly color 22 and better, leaf 3 and better, staple 35 and longer, mike averaging 38.9, strength averaging 29.3, and uniformity averaging 80.5 sold for around 77.50 cents, same terms as above.
  • A moderate volume of mostly color 41 and 42, leaf 3 and better, staple 31-35, mike averaging 37.2, strength averaging 26.0, uniformity averaging 78.4, with 50 percent extraneous matter was sold for around 64.55 cents, same terms as above.
  • A light volume of mostly color 43, leaf 6 and better, staple 35-36, mike averaging 34.2, strength averaging 29.2, uniformity averaging 80.4, and 100 percent extraneous matter sold for around 55.00 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for 25.00 to 26.00 cents.

West Texas

  • A light volume of color 11 and 21, leaf 3 and better, staple 35-36, mike 25-30, strength averaging 31.1, and uniformity averaging 78.5 sold for around 62.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 32 and 42, leaf 5 and better, staple 34 and 35, mike averaging 27.6, strength averaging 27.6, uniformity averaging 79.9, with 100 percent extraneous matter sold for around 62.00, same terms as above.
  • A light volume of mostly color 13 and 23, leaf 3 and better, staple 35-36, mike averaging 24.9, strength averaging 27.5, uniformity averaging 78.0, and 75 percent extraneous matter sold for around 52.00 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 higher. No domestic mill activity was reported. Producers made initial inquiries for 2019-crop contracts. Foreign mill inquiries were light.

Mild temperatures in the 90s were the norm in Arizona. Nighttime lows were in the low 70s. Plenty of heat units helped the crop make good progress. Fields reached first bloom in Yuma. No pest pressures were reported. Beneficial rainfall was received mid-week in cotton-growing areas of New Mexico and El Paso, Texas. One-quarter to one-half of an inch was recorded. Local sources reported that the crop made normal progress.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. New-crop inquiries were made for the purpose of price discovery.

Temperatures were near normal mostly in the 80s and dropped into the 70s late in the period, as clouds moved into the Valley. The crop progressed normally. No insect pressures were reported. The California Department of Water Resources increased its projected 2018 deliveries of State Water Project water to 35 percent of contractors’ requests, up 5 percent from the April allocation.

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.

Mostly mild temperatures and conditions advanced the Far West crop. The crop progressed normally, with little to no insect pressure reported. Fields in Yuma, Arizona reached bloom stage.

Trading

Desert Southwest

  • A light volume of 2018-crop cotton, contract base quality of color 31, leaf 3, and staple 36 and longer was contracted at even ICE December futures.
  • A light volume of 2018-crop cotton, contract base quality of color 21, leaf 2, and staple 36 and longer was contracted at around 150 points on ICE December futures.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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