Weekly Cotton Market Review – USDA

Photo by Larry Stalcup

Average quotations were 152 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, and uniformity 81.0-81.9) in the seven designated markets averaged 84.26 cents per pound for the week ending Thursday, August 9, 2018.

The weekly average was down from 85.78 last week, but up from 68.36 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 84.90 cents Monday, August 6 to a season low of 83.47 cents Thursday, August 9. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended August 9 totaled 4,113 bales. This compares to 1,248 reported last week and 3,563 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 4,631 bales compared to 5,651 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 87.26 cents, compared to 89.44 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #16 FOR UPLAND COTTON August 9, 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 August 16, 2018, allowing importation of 13,673,800 kilograms (62,803 bales) of upland cotton.

Quota number 16 will be established as of August 16, 2018, and will apply to upland cotton purchased not later than November 13, 2018, and entered into the U.S. not later than February 11 2019. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period March 2018 through May 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 and producer offerings were light. Demand was moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

Sunny to partly cloudy conditions prevailed across the lower Southeastern region during the period with seasonably hot daytime temperatures in the high 80s to mid-90s. Afternoon pop-up thundershowers brought moisture to south Alabama, the Florida Panhandle, and areas throughout Georgia.

The heaviest precipitation totals were observed along the Gulf and Atlantic coastal areas, with weekly accumulated totals measuring from 2 to 4 inches. There were reports of leaching fertilizers where heavy rainfall was received. Lesser accumulations from one-half of an inch to one inch were reported further inland.

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Dry conditions prevailed throughout portions of central Alabama and abnormally dry conditions were introduced in the central part of the state as rainfall deficits for the last 30 days have approached 5 inches, according to the U.S. Drought Monitor.

Local experts reported fruiting fields had begun to stress from the dry conditions and moisture is needed to advance maturity. In south Alabama and Georgia, fieldwork was interrupted due to damp conditions and the application of insecticides and plant growth regulators was delayed. Target spot disease had spread due to the wet conditions and aircraft were on standby to make aerial applications of fungicide as weather permits. Stink bug sprays continued to be applied. Whiteflies remained present in some areas.

Mostly cloudy conditions prevailed across the Carolinas and Virginia throughout the period with daytime high temperatures in the mid-80s to low 90s. Widespread shower activity was observed during the week with the heaviest accumulations observed along coastal areas and in central North Carolina. Precipitation totals measured from 1 to 2 inches along the Atlantic coastal regions, with heavier accumulations in excess of 4 inches in areas of central North Carolina.

The crop advanced and pressure from insects was spotty. Producers entered fields where soils were firm enough and applied growth regulators and insecticides for stink bugs and escaped worms; in wetter areas producers made aerial applications.

In Virginia, scouts were finding Tarnished plant bug populations that met threshold limits in some blooming fields. Squaring neared completion throughout the region and boll-setting advanced; bolls were cracking open in the earliest-planted fields in Alabama and Georgia.

According to the National Agricultural Statistics Service’s Crop Progress report released August 6, boll-setting had reached 77 percent in Alabama, 76 in Georgia, 69 in North Carolina, 60 in Virginia, and 59 percent in South Carolina.

Textile Mill

Domestic mill buyers purchased a moderate volume of color 41, leaf 4, and staple 34 for fourth quarter 2018 through first quarter 2019 delivery. No additional sales were reported. Demand of open-end and ring-spun yarn was moderate. Most mills operated five to seven days.

Demand through export channels was moderate. Agents throughout the Far East inquired for any discounted styles of cotton. No sales were reported.

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 lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Mostly hot and dry weather resulted in a slight deterioration in the condition of the crop in some areas of Arkansas and Tennessee. Daytime high temperatures were in the upper 90s. Overnight lows were in the 70s. Producers were irrigating to maintain adequate soil moisture levels to help maximize yield potential. Pop-up thunderstorms brought widely-scattered showers mid-week.

Localized downpours brought less than one-half of an inch of beneficial moisture; most areas received trace amounts of precipitation. Some boll shedding was reported in drier areas. Many fields have cut-out and crop protection measures have been terminated; some late-planted fields under irrigation continued to receive treatments as necessary, due to pressure from plant bugs and bollworms.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 6, the crop condition in Arkansas was rated at 83 percent good-to-excellent, Missouri 76 fair-to-good, and Tennessee 82 percent good-to-excellent. NASS also reported that boll-setting is well ahead of the five-year average in all areas. Open bolls were reported at 2 percent in Arkansas and 5 percent in Missouri; defoliation could begin within two to three weeks.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Good weather conditions allowed the crop to make normal progress during the week in most areas. Daytime high temperatures were in the mid-90s. Overnight lows were in the low 70s. Pop-up thunderstorms brought only trace amounts of moisture to the region. Producers were irrigating as necessary to maintain adequate soil moisture on late-planted fields. Insect pressure was light and fields were treated as necessary; many fields no longer required any crop protection measures.

Local experts indicated that boll retention and fruit development has been good, except on moisture-stressed fields where yield reductions were expected. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 6, the crop condition in Louisiana was rated at 93 percent fair-to-good and Mississippi 76 percent fair-to-good; these figures were somewhat lower than those reported the previous week.

NASS also reported that boll-setting was ahead of the five-year average in all areas and nearing completion. Open bolls had reached 11 percent in Mississippi and 17 percent in Louisiana; defoliation could begin within two weeks.

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Trading

North Delta

  • No trading activity was reported.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

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

Ginning was expanding and modules have begun to accumulate on gin yards in the Rio Grande Valley and the Coastal Bend. Harvesting expanded in the Upper Coast. The Corpus Christi Classing Office increased personnel on two shifts to pace with incoming sample receipts. The number of gins submitting samples is expected to double to near 30 next week. Intermittent, untimely showers interfered with harvesting activities. Some areas received up to 6 inches of rainfall.

Defoliation was underway in the Blackland Prairies and a few gins considered commencing pressing services later in the reporting period. Acreage losses were significant in the northern Blackland Prairies, but local experts expect an average production season; this would equate to about half of what was ginned last year.

Producers in Kansas were encouraged with the progress of the stands expecting that some dryland fields were estimated to produce 1,000 pounds of lint per acre. Some loss due to hail was reported but overall, the timely summer rainfall has helped progress the crop.

Oklahoma received beneficial scattered rainfall that eased watering efforts. Local reports indicated that about 30 percent of dryland abandonment had occurred. Industry members expect an above-average crop, with higher yields in areas that had received more rainfall around Carnegie.

West Texas

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

Beneficial widespread rainfall was received on August 9, with more rain chances in the nearby forecast. The precipitation will boost the dryland stands that had been struggling. Some irrigated fields continued to show vigor and were at peak bloom, and some reached cut-out with good yield potential.

Water resources were concentrated and decisions were made on which fields to irrigate as groundwater supplies dwindled. Some treatments were applied for plant pests where populations warranted. Daytime temperatures were mostly in the low to mid-90s.

Trading

East Texas

  • In Kansas, a mixed lot containing a heavy volume of mostly color 44 and better, leaf 6 and better, staple 34 to 36, mike 28-43, strength 24-30, uniformity 77-82, and 75 percent extraneous matter sold for around 60.25 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a light volume of mostly color 33, 34, and 44, leaf 4 and 5, staple 35 and longer, mike 30-32, strength 28-31, uniformity 77-79, and 25 percent extraneous matter sold for around 59.00 cents, same terms as above.
  • In Oklahoma, a mixed lot containing a light volume of color 43 and better, leaf 4 and better, staple 32 and longer, mike 44-50, strength 23-31, uniformity 76-82, and 75 percent extraneous matter sold for around 58.00 cents, same terms as above.
  • A light volume of CCC-loan equities traded for 13.50 to 15.25 cents.

West Texas

  • No trading activity was reported.

Western Markets Regional Summary

Desert Southwest (DSW)

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. Limited irrigation water resources in central Arizona discouraged 2019 contracting. Foreign mill inquiries were light and mostly for new-crop price discovery.

Daytime high temperatures were in the 110s. Nighttime lows were in the mid-80s, which did not give cotton plants a rest from the heat. Producers irrigated the crop to minimize heat stress. Scattered clouds and monsoon activity produced strong winds, light rainfall, and humid conditions in central Arizona. Less than one-tenth of an inch was received. Yuma area producers began defoliating the crop. Some will begin harvesting late in the week. Ginning was expected to begin in late August.

The crop made good progress in central and Safford, AZ. Local experts reported that shedding was moderate and some concern was expressed about yield potential. Afternoon thunderstorms produced one-tenth of an inch to just over one-half of an inch of moisture in New Mexico and El Paso, TX. Insect pressure was light and easily controlled.

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. Foreign mill inquiries were light. Mills remained on the sidelines as the tariff dispute between the US and China continued. No inquiries for new-crop were reported.

Daytime high temperatures were in the high 90s to mid-100s. Hazy, smoky conditions continued as smoke drifted into the Valley from a couple of wildfires. The crop was in good condition and made progress. Local sources reported that the crop looked to be the best in years. Some shedding was reported during the prolonged heat spell, but sources indicated that the boll load was above average. Producers irrigated the crop. Pressure from whitefly increased and measures were taken to control the pest.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. No domestic mill activity was reported. Foreign mill inquiries were light for 2017-crop cotton. Interest was best from Taiwan and the United Kingdom. No inquiries for new-crop were reported. Mills remained on the sidelines as the tariff dispute between the US and China continued. Some previously sold contracts were cancelled.

Daytime temperatures were in the high 90s to mid-110s for the Far West. Air quality remained a concern for the San Joaquin Valley (SJV) of California as smoke and ash continue to drift in from nearby wildfires. The Far West crop continued to make good progress under hot, dry conditions. Producers in Yuma, AZ began defoliating the crop. Some will begin harvesting late in the week.

Far West producers continued to irrigate and apply plant-growth regulators to the crop. In the SJV, sources reported the top crop was setting fruit. Boll-setting was good and some indicated that an above average boll load was possible. Pressure from whitefly increased and measures were taken to control the pest.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A moderate volume of 2018-crop cotton was contracted for around 135.00 cents per pound, UD free, FOB warehouse.

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