Weekly Cotton Market Review – USDA

Photo: Clemson University Public Service and Agriculture

Spot quotations averaged 18 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 75.37 cents per pound for the week ending Thursday, December 13, 2018.

The weekly average was up from 75.19 last week and 71.72 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 75.66 cents Friday, December 7 to a low of 74.98 cents Thursday, December 13.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 13 totaled 35,255 bales. This compares to 70,174 reported last week and 107,687 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 211,040 bales compared to 624,027 bales the corresponding week a year ago.

The ICE March settlement prices ended the week at 79.41 cents, compared to 79.08 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #8 FOR UPLAND COTTON December 13, 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 December 20, 2018, allowing importation of 12,334,220 kilograms (56,650 bales) of upland cotton.

Quota number 8 will be established as of December 20, 2018, and will apply to upland cotton purchased not later than March 19, 2019, and entered into the U.S. not later than June 17, 2019. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period July 2018 through September 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 slow. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

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Fieldwork was interrupted early in the period as mostly overcast conditions prevailed and widespread rain showers brought moderate to heavy moisture to areas across the lower Southeast region. Daytime high temperatures varied from the upper 40s to the mid-60s, with nighttime lows in the low 30s to mid-50s.

Areas from the Gulf to Atlantic coastal regions received around one-half of an inch to one inch of moisture over the weekend. Heavier accumulations in excess of 2 inches were received in portions of north Alabama and north Georgia. Clear and sunny conditions returned mid-week, which helped lint that remained on the stalk to dry out and soft soils to firm.

Fieldwork resumed in areas where soils were firm enough to support equipment. Producers attempted to complete field activities ahead of wet weather forecast to return over the weekend. Harvesting remained weeks behind, due to the excessive rainfall received during the harvest season; yield and lint quality continued to be negatively impacted by the wet weather.

Ginning continued, but had slowed at some locations due to wet conditions; some gins also waited for modules to accumulate on gin yards. Sample receipts at the Macon Classing Office remained slow to build and some shifts were curtailed. Ginning will continue into the early spring.

A similar weather pattern was observed across the Carolinas and Virginia during the week as widespread storms interrupted fieldwork over the weekend. Daytime high temperatures varied from the mid-30s to low 60s and nighttime lows were in the upper 20s to low 40s. Rainfall brought outside activities to a halt early in the period as areas throughout the upper Southeastern region received around 1 to 2 inches of moisture, with locally heavier accumulations of 4 inches observed in portions of eastern North Carolina and Virginia.

Harvesting and fieldwork remained weeks behind, due to continued rainfall during the harvest season. Fair to sunny conditions returned mid-week and allowed producers a brief window of opportunity to resume fieldwork in areas where soils were firm enough to support equipment. Producers eyed wet weather, which was forecast to return over the weekend. Ginning continued, but had slowed at some locations due to wet conditions.

Textile Mill

Inquiries from domestic mill buyers was light. No sales were reported. Reports indicated most mills have covered their raw cotton needs through first quarter 2019. Demand for open-end and ring-spun yarn was moderate. Most mills operated five to seven days.

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

Trading

  • Even-running lots containing color 41 and 42, leaf 3, 4, and 5, staple 38, mike 35-49, strength 28-31, and uniformity 80-83 sold for around 77.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of color 41 and 42, leaf 3 and 4, staple 36-38, mike 43-49, strength 28-30, and uniformity 81-83 sold for around 76.25 cents, same terms as above.
  • A light volume of mostly color 41 and 42, leaf 6 and better, staple 36 and longer, mike 35-48, strength 27-32, and uniformity 79-83 traded for around 74.00 cents, same terms as above.

South Central Markets Regional Summary

North Delta

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

A typical winter weather pattern has set-in throughout the region. Widely fluctuating temperatures, intermingled with varying amounts of precipitation, have prevailed for the past few weeks. Snow was reported in northern areas during the week, with heavy rain elsewhere. Daytime highs fluctuated from the 30s to 50s. Overnight lows were in the 20s and 30s.

Harvesting was virtually completed; a few producers may or may not attempt to salvage unharvested fields. A few more gins had completed pressing operations. Larger gins were expected to operate into January. According to the U.S. Drought Monitor, adequate-to-surplus soil moisture existed throughout the region.

South Delta

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

Harvesting was virtually completed. Persistent rain showers continued to hamper efforts to complete field activities as a winter weather pattern settled in. Nearly 3 inches of rain were report in some areas. Daytime highs dropped into the 40s and 50s. Overnight lows varied widely from the 30s to 50s in most areas. Some gins reported difficulty in retrieving modules from saturated fields.

Field operations have ceased; local experts reported that a few producers may attempt to harvest rain-damaged fields if soils dry out enough to support machinery. Several more gins had completed pressing operations. One or two large gins could operate into January. According to the U.S. Drought Monitor, adequate-to-surplus soil moisture existed throughout the region.

Trading

North Delta

  • A heavy volume of color 41 and 42, leaf 5 and better, staple 35 and longer, mike 39-51, strength 26-34, and uniformity 80-84 traded for around 75.50 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 active. Supplies and producer offerings were heavy. Demand was good. Average local spot prices were steady. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were light.

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In south Texas, final ginning continued. Rainfall was received that will benefit the 2019-crop. In the Blackland Prairies, rain events stopped all harvesting activities. Producers expect to finalize harvesting at the end of the month if weather permits. Ginning continued uninterrupted. Harvesting continued in the Brazos bottoms, according to local reports.

Approximately 95 percent of irrigated fields and 75 percent of dryland have been harvested in southwest Oklahoma. Irrigated yields varied from 750 to 2,000 pounds per acre. Dryland yields showed more variance at 250 to 900 pounds per acre, according to local reports. No snowfall was reported in southwest Oklahoma. Harvesting and ginning continued in Kansas.

West Texas

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

Harvesting made slow progress during the reporting period and was estimated at more than 75 percent completed. Winter Storm Diego entered Texas on December 8, and brought 10 plus inches of snow in Lubbock, and 4 inches in Abilene. The snowfall in Lubbock was the 3rd snowiest December, the 12th snowiest month, and the 41st snowiest season documented since complete records were kept in 1914, according to KCBD, a local news source.

Fields were muddy and hampered transporting modules out of the fields to the gin yards. Some soggy gin yards also impeded module movement. A second round of disruptive weather on December 13 brought wind gusts between 50 and 60 miles per hour, light snow, and rainfall, further delaying final harvesting activities.

Trading

East Texas

  • In Texas, a moderate volume of mostly color 42 and better, leaf 3 and better, staple mostly 35 and 36, mike averaging 49.2, strength 26-29, and uniformity averaging 81.1 sold for around 65.75 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a heavy volume of color 31, leaf 4, staple 37-40, mike 36-49, strength averaging 31.7, and uniformity 78-84 sold for around 76.50 cents, FOB car/truck (compression charges not paid).
  • A moderate volume of color 31 and 41, leaf 3-5, staple 35-37, mike 35-48, strength 27-31, uniformity 77-81, and 50 percent extraneous matter sold for around 72.00 cents, same terms as above.
  • A light volume of mostly color 31, leaf 2 and 3, staple 33 and 34, mike averaging 47.1, strength 28-31, and uniformity 79-81 sold for around 70.25 cents, same terms as above.
  • A light volume of mostly color 31, leaf 2 and 3, staple 33, mike 42-50, strength 29-30, and uniformity 79-80 sold for around 68.72 cents, same terms as above.

West Texas

  • A heavy volume of mostly color 31 and 41, leaf 2 and 3, staple 37 and longer, mike 35-48, strength 29-34, and uniformity 79-82 sold for around 76.25 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of mostly color 41, leaf 3 and 4, staple 37 and longer, mike averaging 38.8, strength 31-34, and uniformity 78-82 sold for around 75.00 cents, same terms as above.
  • A light volume of color 32 and better, leaf 3 and 4, mostly staple 37, mike 35-43, strength 29-33, and uniformity 80-83 sold for around 72.00 cents, same terms as above.
  • A moderate volume of mostly color 41, leaf 4 and 5, staple 36 and 37, mike 36-46, strength 29-34, and uniformity 79-83 sold for around 71.25 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies and demand were moderate. Producers delivered previously contracted cotton or delivered cotton to merchant and cooperative marketing pools. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Mostly clear conditions advanced harvesting in central Arizona. Ginning was steady as more gins added night shifts. Stalk destruction continued. Light showers moved through New Mexico and El Paso, TX early in the reporting period. Harvesting was nearly completed. Ginning continued. Modules were transported to gin yards. Warehouses were busy shipping and receiving cotton. The Visalia Classing Office estimated that approximately 35 percent of the Far West Upland crop was classed.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Producers delivered previously contracted cotton or delivered cotton to merchant and cooperative marketing pools. Average local spot prices were steady. No forward contracting or domestic mill activity was reported.

Fog and cloudy skies kept the sun hidden for most of the period. No rainfall was recorded. Ginning was steady and modules filled gin yards. Producers shredded stalks and prepared fields for winter plantings. The Visalia Classing Office estimated that approximately 35 percent of the Far West Upland crop was classed. Industry representatives and producers attended annual gin meetings.

American Pima (AP)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate. China was an active, but light volume buyer. Interest was best from India. Sources indicated that higher U.S. production and the on-going trade/tariff dispute have kept mills on the sidelines.

Mostly dry conditions early in the period allowed harvesting and ginning to advance without interruptions in the Far West. Modules were transported to gin yards. Warehouses were busy shipping and receiving cotton. Fieldwork was active with shredding of stalks and prepping fields for winter. The Visalia Classing Office estimated that approximately 50 percent of the American Pima crop was classed.

Trading

Desert Southwest

  • A moderate volume of mostly color 41, leaf 3 and better, staple 36 and longer, mike averaging 47.2, strength averaging 30.8, and uniformity averaging 82.0 sold for around 550 points off ICE March futures, uncompressed FOB warehouse.
  • A light volume of color 31, leaf 2 and better, staple 35 and longer, mike 50-53, strength 29-30, anD uniformity 79-81 sold for around 200 points off ICE March futures, same terms as above.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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