Weekly Cotton Market Review – USDA

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Average quotations were 22 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 87.39 cents per pound for the week ending Thursday, June 1, 2018.

The weekly average was up from 87.17 last week and 73.54 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 85.31 cents Tuesday, June 5 to a season high of 89.30 cents Thursday, June 7.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 7 totaled 14,843 bales. This compares to 29,269 bales reported last week and 1,344 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 2,025,239 bales compared to 1,562,413 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 93.72 cents, compared to 93.15 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #7 FOR UPLAND COTTON June 7, 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 June 14, 2018, allowing importation of 13,123,605 kilograms (60,276 bales) of upland cotton.

Quota number 7 will be established as of June 14, 2018, and will apply to upland cotton purchased not later than September 11, 2018, and entered into the U.S. not later than December 10, 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.

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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 steady. Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures to fix prices on a moderate volume of previously contracted 2018-crop cotton.

Planting advanced at a slower pace in many locales across the lower Southeastern region as soggy fields and wet conditions delayed fieldwork. Widespread rainfall brought moisture to areas across south Alabama, the Florida panhandle, and much of south Georgia early in the period. Precipitation totals measured from one-half of an inch to one inch of weekly accumulated rainfall.

Daytime high temperatures were in the upper 80s to lower 90s. Sunny and clear weather prevailed later in the week and planting rapidly resumed where soils were firm enough to support equipment. Weed pressure was building in some fields. Producers made aerial applications of fungicides in some areas.The hot and sunny weather invigorated emerging seedlings. Squaring was underway in some of the earliest-planted fields.

Clear to partly cloudy conditions prevailed over the Carolinas and Virginia with daytime high temperatures mostly in the mid-to-high 80s. Localized showers brought around one-quarter of an inch to one inch of moisture to coastal areas with heavier accumulations observed in central Virginia. Planting activity was delayed due to wet conditions and water logged soils, but fieldwork resumed at a swift pace later in the week as soils firmed.

In Virginia, local experts reported that recent excessive rainfall had stressed some fields, but sunny and warm conditions helped reinvigorate crops. Throughout the Southeast, some fields that have missed target planting dates will shift to competing crops.

Textile Mill

Domestic mill buyers purchased a light volume of 2018-crop cotton, color 41, leaf 3, and staple 36 for November through March 2019 delivery. No additional sales were reported. Mill buyers also inquired for 2018-crop cotton, color 41, leaf 4, and staple 34 and longer for first quarter 2019 delivery. Most mills operated five to seven days. The undertone from mill buyers remained cautious.

Demand through export channels was moderate and had tapered due to higher ICE futures prices. Some domestic cotton shippers also reported that inquiries had also slowed due to warehouse and transportation issues; many shipments remained six to eight weeks behind schedule.

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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported, but producers fixed prices on previously-booked cotton.

Ideal climatic conditions allowed the crop to make excellent progress during the week. Daytime high temperatures were in the mid-90s and overnight temperatures in the low 70s. Light, scattered showers brought less than one inch of rain to the region. Hail was reported in parts of Arkansas, which resulted in re-planting; some acreage intended for cotton in Tennessee was shifted to other crops.

A few producers continued struggling with weed control due to wet field conditions during the planting season, which prevented the application of pre-emergence herbicides. Insect pressure from thrips was reported in some late-planted fields. Pressure from plant bugs and bollworm moths was building. Squaring expanded rapidly as a result of the high temperatures.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported, but producers fixed prices on previously-booked cotton.

The crop made excellent progress during the week under favorable weather conditions. Daytime high temperatures were in the mid-90s and overnight temperatures in the low 70s. Light, scattered showers brought approximately one inch of rain to parts of the region. Some re-planting was reported in low-lying fields, and some acreage intended for cotton in Mississippi was shifted to soybeans.

A few producers continued struggling with weed control due to wet field conditions during the planting season, which prevented the application of pre-emergence herbicides. Insect pressure from plant bugs was reported in some fields. Plant growth regulators were applied to some early-planted fields in Louisiana. Squaring expanded rapidly.

Trading

North Delta

  • No trading activity was reported.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

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Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was inactive. Foreign inquiries were light.

Beneficial rainfall was received in areas of south Texas that spurred the need for plant growth regulators (PGR). Stands had begun to square in the Upper Coast. Local reports indicated that some stands struggled to advance, due to no rainfall in two weeks; these fields will likely not be harvested. Hot, dry conditions prevailed in the Rio Grande Valley with daytime highs in the upper 90s to low 100s.

Fieldwork was active with stand irrigation, PGR, or insecticide applications. According to the Pest Cast newsletter published on June 1, bolls developed in the lower canopy and late-planted fields had begun to set small bolls. Stands were variable in the northern Blackland Prairies from emerged to squared. Cotton advanced, but more rainfall will be needed.

In Oklahoma, planting neared completion with a final planting deadline on June 10. Approximately 65 to 70 percent had emerged. Most stands were at the cotyledon stage. Some fields were irrigated early due to droughty conditions. The dryland crop struggled and was on the verge of dying because of extremely dry conditions. Rainfall is urgently needed to help the crop progress and replenish the water districts’ resources so that irrigation water will be available in August.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was very light. Average local spot prices were higher. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was inactive. Foreign inquiries were light.

Dry, windy conditions prevailed with daytime highs in the triple digits in the High Plains. A significant amount of acres were planted in dry soils, hoping for a rain. Widespread planting rainfall was received on June 4. Lubbock received around three-fourths of an inch of needed moisture. Seminole received over an inch of precipitation that helped germination. Isolated, afternoon showers brought additional moisture to some areas.

The federal crop insurance planting deadline was June 5 for Cochran, Crosby, Gaines, Hale, Lubbock, Terry, and Yoakum Counties. Fieldwork was active with herbicide and insecticide applications. Occasional summer showers had brought good rain to the Panhandle and stands were up to the 6-true leaf stage.

Stands in eastern New Mexico, along the Texas border continued to make good progress. Beneficial rainfall brought 1 to 3 inches in the Rolling Plains. Some fields were too soggy to support equipment. Some stands suffered sand damage from high winds and will be replanted. The final planting deadlines in this area are June 20.

The Texas A&M Agrilife Extension continued to offer private pesticide applicator trainings as required by the Texas Department of Agriculture as a prerequisite to obtain a license. Monitoring for plant pests were focused on thrips and wire worms.

Trading

East Texas

  • In Oklahoma, a mixed lot containing a light volume of mostly color 23 and 22, leaf 2 and 3, staple 35 and 36, mike 35-41, strength 29-31, and uniformity 80-81 sold for around 81.00 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a light volume of mostly color 43 and better leaf 4 and better, staple 36 and 37, mike 38-42, strength 26-30, uniformity 79-83, and 25 percent extraneous matter sold for around 80.00 cents, same terms as above.
  • A mixed lot containing a light volume of mostly color 32 and 43, leaf 5 and better, staple 35 and longer, mike 33-39, strength 26-30, uniformity 77-81, and 75 percent extraneous matter sold for around 62.00 cents, same terms as above.
  • A light volume of CCC-loan equities traded for around 13.50 cents.

West Texas

  • A light volume of color 34 and better, leaf 2 and 3, staple 34 and longer, mike 29-37, strength 26-29, and uniformity 79-82 sold for around 58.25 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 12 and 22, leaf 2 and 3, staple 36, mike averaging 27.2, strength averaging 29.1, uniformity 77-79, and 25 percent extraneous matter sold for around 58.00 cents, same terms as above.
  • A light volume of CCC-loan equities traded for 11.75 to 12.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. Forward contracting was active as ICE December futures reached over 90.00 cents early in the period. No domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the low to high 100s in Arizona. Blooming and boll development advanced in Yuma. First blooms were sighted in the earliest-planted fields in central Arizona. No insect pressures were reported. Industry experts reported the crop continues to make good progress.

The San Carlos Irrigation and Drainage District is bracing for the likelihood, that San Carlos Lake will dry up sometime between June 10 and 15. This will effect some farms in Pinal County. Farms will all eventually run out, leaving nothing in the middle of their growing season; however, most producers were aware of this prior to planting season. This is unprecedented for the water district in recent times. Growers are hopeful for a strong monsoon season.

Hot, dry conditions dominated the weather pattern in New Mexico and El Paso, Texas. New Mexico producers in Hatch and Rincon Valley received notice that the 2018 irrigation season neared completion. Irrigation water was flowing through the Rio Grande River and El Paso, TX growers began irrigations. No moisture was recorded in the period for the region.

San Joaquin Valley (SJV)

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.

Daytime temperatures were mostly in the 90s, but several locales reached one-day highs of 104 to 106 degrees. The crop was in excellent condition. Fieldwork was active with fertilizing, cultivating, and irrigating the crop. Local sources reported that the crop looks good and had a great start. No significant insect pressures were reported. The Federal Central Valley Project raised allocations 5 percent to 45 percent for agricultural customers south of the Delta.

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 increased for 2018-crop cotton and were slow for 2017 crop. Interest was best from China.

The Far West crop advanced under daytime temperatures in the high 80s to high 100s for most of the period. The crop progressed normally, with little to no insect pressure reported. No heat stress was reported in the Desert Southwest (DSW). DSW producers were irrigating the crop. Irrigation water shortages were a concern for central Arizona as the San Carlos reservoir was well-below average. San Joaquin Valley producers were cultivating and irrigating. Cotton stands were very uniform and healthy.

Trading

Desert Southwest

  • A heavy volume of 2018-crop cotton for contract base quality color 31, leaf 3, and staple 35 was booked at around 100 points off ICE December futures. These contracts were subject to government discounts with no premiums paid for qualities better than the contract base quality.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A heavy volume of 2018-crop cotton was sold to mills in China.

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