Weekly Cotton Market Review – USDA

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Spot quotation averages were 142 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, and uniformity 81.0-81.9) in the seven designated markets averaged 74.67 cents per pound for the week ending Thursday, October 18, 2018. The weekly average was up from 73.25 last week and from 65.96 cents reported the corresponding period a year ago.

Daily average quotations ranged from a high of 75.11 cents Monday, October 15 to low of 74.31 cents Wednesday, October 17. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 18 totaled 4,808 bales. This compares to 1,783 reported last week and 5,235 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 27,380 bales compared to 55,675 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 78.05 cents, compared to 76.81 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON October 18, 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 October 25, 2018, allowing importation of 12,807,185 kilograms (58,822 bales) of upland cotton.

Quota number 26 will be established as of October 25, 2018, and will apply to upland cotton purchased not later than January 22, 2019, and entered into the U.S. not later than April 22, 2019. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period June 2018 through August 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 higher. Trading of CCC-loan equities was inactive.

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Harvesting gained momentum across the lower Southeastern region as fair to sunny conditions prevailed early in the period. Daytime high temperatures were in the upper 70s to mid-80s, with nighttime lows in the mid-50s to mid-60s. The clear and warm weather helped soft soils to firm and bleach out lint that was soaked from Hurricane Michael.

Initial assessments from local experts indicated that yield losses could range from 50 to 90 percent in some fields of the Florida panhandle, south Georgia, and the Wiregrass region of Alabama that were in the direct path of the storm as it made landfall and maintained hurricane strength as it tracked inland. No significant damage to gins was reported, but pressing operations remained idle at some locations until power is restored to the area.

The Georgia Cotton Commission encouraged producers to document damage and losses before, during, and after cleanup; as well as financial records of cleanup and repair related costs in preparation for filing for crop insurance and/or assistance.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 15, cotton harvested in Alabama reached 28 percent and 20 percent in Georgia.

Mostly sunny to partly cloudy conditions prevailed across the Carolinas and Virginia early in the period. Daytime high temperatures varied from the mid-60s to low 80s. Harvesting advanced across the region as producers continued to deal with the after effects by heavy rainfall and high winds. According to the NASS Crop Progress report released October 15, cotton harvested reached 18 percent in South Carolina, 17 in North Carolina, and 12 percent in Virginia.

Textile Mill

Inquiries from most mill buyers were light as reports indicated most mills have covered their raw cotton needs through the first quarter of 2019. Demand was moderate for color 41, leaf 4, and staple 34 for second quarter 2019 delivery. No sales were reported. 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 higher. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Harvesting advanced normally early week, then stalled as a cold front brought heavy rain and much cooler temperatures to the region mid-week. Local experts reported almost 3 inches of moisture in some parts of Tennessee, while the Bootheel of Missouri received about one-quarter of an inch. Daytime highs remained in the mid-60s. Overnight lows were in the low 40s. Outdoor activities were delayed in fields with saturated soil. Low-lying areas were flooded.

Most gins had sufficient modules on their yards to continue pressing operations without any interruption. According to the National Agricultural Statistics Service’s Crop Progress report released October 15, harvesting jumped to 67 percent in Arkansas, 70 in Missouri, and 50 percent in Tennessee.

Producers have reported a sharp increase in the number of light-spotted bales in their classing results compared to last season’s crop, but yields have generally been good.

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. No forward contracting was reported.

Producers made excellent progress harvesting during the period. A cold front brought cooler temperatures to the region late in the week. Less than 1 inch of moisture was reported in localized places. Daytime highs dropped into the mid-60s. Overnight lows were in the 50s in most areas. Outdoor activities were briefly suspended due to wet lint and soft soils in isolated areas. Most gins had an adequate supply of modules on their yards to maintain operations without any delays.

According to the National Agricultural Statistics Service’s Crop Progress report released October 15, harvesting had reached 65 percent in Louisiana and 60 percent in Mississippi. Producers reported yields of up to 1,800 pounds in a few fields. Producers have noticed more light-spotted bales among the samples submitted for classing compared to last year.

Trading

North Delta

  • A light volume of color 41 and 42, leaf grade 4 and better, staple 37 and longer, mike averaging 46.5, strength averaging 28.5, and uniformity averaging 83.0 traded for around 75.25 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

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

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Gins in the Rio Grande Valley were finished. Ginning continued in the Upper Coast and in the Blackland Prairies (BP). Some gins in the northern BP slowed ginning because of lightening and excessive rainfall. Local reports indicated that some areas received as much 12 inches of precipitation. Harvesting was around 60 percent completed. Producers were eager for fields to dry so they could resume harvesting. They were hopeful that the quality would be preserved.

Rainfall was received in Kansas and Oklahoma, which brought up to 10 inches. Field activity was limited. Approximately 75 percent of the fields have been defoliated, and about 25 percent were ready to be harvested. Kansas received a light dusting of snow. Oklahoma gins continued to submit samples to the Abilene Classing Office for grading services. Meetings were held.

West Texas

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

Cooler, wet conditions prevailed as remnants of the Tropical Storm Sergio and Canadian winter air moved into the region. Wintery precipitation was received in the north-western counties of the panhandle. Some areas received the first freezing temperatures of the season with daytime highs in the mid-30s to low 70s, and overnight lows in the upper 20s to mid-50s.

Some stands have been defoliated; while others still have full canopies with few open bolls. Harvesting and ginning were at a standstill until fields dried. More rain is in the nearby forecast. Producers are ready to start harvesting again as soon as conditions improve.

Trading

East Texas

  • A moderate volume of new-crop cotton containing color 31 and better, leaf 3 and better, staple 38 and long-er, mike averaging 46.4, strength averaging 30.4, and uniformity averaging 82.0 sold for around 77.00 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of new-crop cotton containing color 21 and 31, leaf 3 and 4, staple 36, mike averaging 43.6, strength averaging 31.3, and uniformity averaging 82.2 sold for around 74.50 cents, same terms as above.
  • A light volume of mixed-lots containing mostly color 31 and better, leaf 3 and better, staple 36 and longer, mike 43-39, strength averaging 30.5, and uniformity averaging 82.0 sold for around 74.00 cents, same terms as above.
  • A light volume of mostly color 21 and 31, leaf 2 and 3, staple 38 and longer, mike averaging 45.5, strength averaging 31.0, and uniformity averaging 81.2 sold for around 72.00 cents, same terms as above.

West Texas

  • A light volume of new-crop cotton containing color 21 and 31, leaf 2 and 3, staple 38 and longer, mike 39-44, strength 31-34, and uniformity 79-83 sold for around 76.00 cents per pound, FOB car/truck (compression charges not paid).

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was slow. Supplies and demand were light. Producers offered cotton early in the period. A few trades were reported. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries remained light.

Tropical Storm Sergio came through southern Arizona and produced localized soaking rainfall over a three-day period. Precipitation amounts ranged from 2 to 3 inches. Weather experts reported that this was one of the wettest October’s in recent memory, which was helped with two back-to-back Tropical Storms. Overcast, cloudy conditions with temperatures in the high 60s to mid-70s prevailed in Arizona. No damage was reported to cotton fields, as no strong winds were associated with the storm.

Harvesting was virtually completed in Yuma. Initial harvesting was underway in central and Safford Arizona, but was halted by steady rainfall. Locations in western Arizona need fields to dry out in order to re-apply defoliants. Some modules were moved to gin yards ahead of the rain, so some gins began ginning early in the period. Dry, sunny conditions are needed to resume harvesting. Breezy conditions entered the state late in the period. Temperatures dropped into the 50s and 60s in New Mexico and El Paso, TX. Scattered showers brought one-third of an inch to one inch of rainfall in the period. Overall, the crop needs dry, sunny conditions to resume harvesting. No ginning was reported.

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. Merchant offerings and foreign mill inquiries were light.

Sunny, dry conditions ruled, with temperatures in the high 70s to low 80s. Harvesting and ginning gained momentum.

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. According to the Foreign Agricultural Service export sales report approximately 295,700 bales of 2018-crop AP was committed for the week ending October 11.

Daytime high temperatures were in the high 60s to high 80s in Arizona and California. Cooler conditions were reported in New Mexico and El Paso, TX, with temperatures in the 50s to 60s. Weather systems brought rainfall to Arizona, New Mexico, and El Paso, TX. Arizona received 2 to 3 inches of rainfall throughout the week. Scattered showers brought one-third of an inch to one inch of rainfall to New Mexico and El Paso, TX. No rainfall was reported in California.

Very little AP acreage in central Arizona was ready for harvest prior to the rain events. Local sources estimated wet conditions will delay defoliation activities, and in turn harvest will be delayed up to three weeks or more. Sources in the Safford area estimated a delay of five to seven days, with some fields showing wet cotton stringing out. Breezy conditions entered the region and should help to dry field conditions.

Harvesting in the San Joaquin Valley of California made good progress. Ginning continued.

Trading

Desert Southwest

  • A light volume of color 11 and 21, leaf 2 and better, staple 36 and 37, mike 35-49, strength averaging 32.18, and uniformity averaging 81.52 sold for around 50 points on ICE December futures, uncompressed, FOB warehouse.
  • A light volume mixed lot containing mostly color 11 and 12, leaf 2 and better, staple 35 and longer, mike 38-52, strength averaging 29.86, and uniformity averaging 81.47 sold for around 200 points off ICE December futures, same terms as above.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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