Weekly Cotton Market Review – USDA

Photo by Larry Stalcup

Average spot quotations were 288 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 76.10 cents per pound for the week ending Thursday, September 20, 2018.

The weekly average was down from 78.98 last week, but up from 67.71 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 78.19 cents Friday, September 14 to a season low of 74.79 cents Thursday, September 20.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 20 totaled 3,016 bales. This compares to 216 reported last week and 3,280 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 15,143 bales compared to 30,478 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 78.47 cents, compared to 81.51 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #22 FOR UPLAND COTTON September 20, 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 September 27, 2018, allowing importation of 13,296,430 kilograms (61,069 bales) of upland cotton.

Quota number 22 will be established as of September 27, 2018, and will apply to upland cotton purchased not later than December 25, 2018, and entered into the U.S. not later than March 25, 2019. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period May 2018 through July 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.

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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.

Hurricane Florence made landfall along the North Carolina coast as a Category 1 storm early morning on Friday, September 14. Florence brought devastating storm surge flooding, heavy rain, and damaging winds. The areas most affected include the Pee Dee region of South Carolina northward to the central Coastal Plains region of North Carolina. Some areas experienced accumulated rainfall totals measuring up to 36 inches during the week before the storm blew north.

Hurricane-force winds battered plants laden with bolls and cotton had strung out in some fields that received heavy rainfall. Damage assessments were underway; estimates on crop losses were not immediately available, but catastrophic losses were anticipated in areas directly in the path of the storm. The sun was shining by early week, but fields remained saturated with low-lying areas flooded.

In addition, flooding is expected to worsen over the weekend in areas of southeast North Carolina and northeast South Carolina as major waterways continue to rise above flood stage before they crest. Remnants of the storm brought an inch or more of moisture to areas of Virginia late week. Producers welcomed warm and sunny conditions following the storm and defoliants were being applied in areas that were accessible. According to the National Agricultural Statistics Service’s (NASS) crop progress report released September 17, cotton bolls opening reached 59 percent in North Carolina, 43 in Virginia, and 37 percent in North Carolina. In North Carolina, the percentage of the crop rated good-to-excellent declined 14 percentage points from the previous period.

Mostly sunny to partly cloudy conditions prevailed over the lower Southeast during the period, with warm daytime high temperatures in the low to mid-90s. Spotty shower activity brought very light precipitation to some areas throughout the week. Full irrigation schedules were maintained in areas where soil moisture conditions had deteriorated due to dry conditions. The crop advanced at a rapid pace. Defoliation was getting underway in the earliest-planted fields. Gins prepared machinery for the beginning of the ginning season.

Harvesting was underway in some of the earliest-planted fields in north Alabama and south Georgia; a few gins plan to start pressing operations within the next week. According to NASS, cotton bolls opening reached 67 percent in Alabama and 55 percent in Georgia.

Textile Mill

Buyers for domestic mills inquired for a moderate volume of color 42 and 52, leaf 5 and better, and staple 35 and longer for January through March 2019 delivery. No sales were reported. Reports indicated most mills have covered their raw cotton needs through the fourth quarter 2018. Demand for open-end and ring-spun yarn was moderate. Most mills operated five to seven days.

Demand through export channels was moderate. Representatives for mills throughout the Far East inquired for any discounted styles of cotton.

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.

The crop made excellent progress under clear skies, accompanied by unseasonably hot temperatures. Daytime highs were in the upper 90s, with the heat index reported at 103 in some places. Overnight lows were in the upper 60s in most areas. The heat is expected to generate afternoon pop-up thunderstorms in the week ahead, which may delay outdoor activities. Producers were hopeful that a good top crop will result thanks to the additional heat units.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 17, the crop condition in Arkansas was rated 96 percent fair-to-excellent, 88 in Missouri, and 96 percent in Tennessee. NASS also reported that harvesting had reached 1 percent in Arkansas and 2 percent in Missouri and Tennessee. Ginning is expected to begin as soon as gins have sufficient modules on their yards for steady operations.

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 slow. No forward contracting was reported.

Hot and clear weather allowed the crop to make excellent progress during the week. Daytime high temperatures were in the upper 90s. Overnight lows were in the low 70s. Defoliation gained momentum as fields reached full maturity. A few fields in Mississippi were too soft to support equipment after heavy rainfall last week. Producers in Louisiana and Mississippi commenced harvesting cotton in areas not affected by excessive precipitation.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 17, the crop condition in Louisiana was rated at 97 percent fair-to-excellent and 95 percent in Mississippi. NASS also reported that harvesting had reached 6 percent in Mississippi and 14 percent in Louisiana. Ginning was underway in a few areas.

Trading

North Delta

  • No trading activity was reported.

South Delta

  • A light volume of old-crop CCC-loan equities traded for around 14.50 cents per pound.

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 to moderate.

The Upper Coast and Coastal Bend received around 10 to 14 inches of rainfall early in the reporting period, according to local experts. Harvesting problems persisted with soggy fields and rainy conditions. Lots of modules were transported ahead of the storms to gin yards, but some modules remained in wet fields. Intermittent thunderstorms delayed field activities in central and eastern Texas.

Most of the fields had been harvested in the southern Blackland Prairies, but only about half are completed in the northern parts. Gin yards were loaded and ginning continued uninterrupted.

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In Kansas, stands progressed, but fields were muddy from recent rainfall. Producers looked forward to warmer and drier conditions to help bolls fill ahead of harvest. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on September 17, bolls opening was 38 percent, ahead of 28 last year and the five-year average of 24 percent. The condition was rated 25 percent fair, 55 good, and 17 percent excellent.

In Oklahoma, producers were encouraged with late-season sunny conditions, daytime high temperatures in the low 90s, and overnight temperatures in the low 70s. Dryland is expected to make 2 plus bales per acre. Harvest aids have been applied to some fields. Bolls opening was 49 percent, ahead of 42 last year and the five-year average of 40 percent. The condition was rated 15 percent poor, 52 fair, and 28 percent good, according to NASS.

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 to moderate.

Intermittent rain showers delayed field progress in some locations early in the reporting period. Daytime temperature highs were in the mid-70s to mid-80s, and overnight lows were in the upper 50s to low 60s. Generally, the crop is two weeks ahead of schedule and some fields have had boll openers and defoliants applied.

Some dryland fields that have short plants are expected to yield less than 2 bales per acre. Dryland fields that received rainfall are expected to produce yields above 2 bales per acre. Irrigated fields are expected to yield 3 or more bales per acre. Thunderstorms entered the region overnight on September 20 and brought additional precipitation to some locations.

Trading

East Texas

  • In Texas, a moderate volume of even-running lots containing mostly color 31 and better, leaf 1 and 2, staple 37 and longer, mike 41-45, strength 28-31, and uniformity 80-83 sold for around 79.00 cents per pound, FOB warehouse (compression charges not paid).
  • A mixed lot containing a moderate volume of mostly color 41 and better, leaf 3 and better, staple 35 and longer, mike 38-49, strength 27-32, and uniformity 77-82 sold for around 75.50 cents, FOB car/truck (compression charges not paid).

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 lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the mid-to-high 100s in Arizona. Cloudy and humid conditions entered the state late in the period. Approximately one-quarter of an inch of scattered rainfall was received. Defoliation and harvesting was active in Yuma. Ginning continued. Producers shredded stalks and some rood cotton was harvested. Some fields near the Colorado River on the California side received the last irrigation of the season. The crop quickly approached cut-out in central Arizona, New Mexico, and El Paso, TX. Producers prepared equipment for harvest.

San Joaquin Valley (SJV)

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

Temperatures were in the high 80s. Industry experts reported that the crop had a good boll load. The crop continued to make good progress as it approached cut-out stage.

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 remained light.

Temperatures were in the 80s to100s in the Far West. The crop made good progress throughout the region. The crop approached cut-out stage. In the San Joaquin Valley, the first shot of defoliants were applied in  the most mature fields. Ginning is expected to begin in October after the lower fall electrical rates become available.

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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