Weekly Cotton Market Review – USDA

Cotton bales in gin warehouse. ©Debra L Ferguson Stock Images

Spot quotations averaged 261 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 66.07 cents per pound for the week ending Thursday, February 14, 2019.

The weekly average was down from 68.68 last week and from 73.69 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 67.98 cents Friday, February 8 to a season low of 65.15 cents Wednesday, February 13.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 14 totaled 25,185 bales. This compares to 50,215 reported last week and 54,051 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 537,993 bales compared to 1,394,763 bales the corresponding week a year ago. The ICE May settlement prices ended the week at 71.71 cents, compared to 73.92 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #17 FOR UPLAND COTTON February 14, 2019

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 February 14, 2019, allowing importation of 12,619,815 kilograms (57,962 bales) of upland cotton. Quota number 17 will be established as of February 21, 2019, and will apply to upland cotton purchased not later than May 21, 2019, and entered into the U.S. not later than August 19, 2019.

The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period October 2018 through December 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 Market Regional Summary

Spot cotton trading was slow. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Mostly cloudy and overcast conditions dominated the weather pattern across the lower Southeast during the period. Daytime high temperatures varied from the upper 50s to mid-70s.

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Heavy early morning fog was also present during the week. Scattered showers brought around one-half of an inch to one inch of moisture to areas throughout central and north Alabama and north Georgia early in the week. A line of severe thunderstorms moved across central and north Georgia on Tuesday bringing damaging wind that toppled trees and at least one EF-0 tornado associated with the storms was confirmed in Clayton County, GA.

No fieldwork was reported. Unharvested cotton remained in low-lying areas where soggy conditions persisted. Ginning was winding down; most gins had gone to gin days as they waited for backlogs of modules to build on gin yards. The Macon Classing Office had a single shift operating as needed.

Sunny to cloudy conditions were observed across the Carolinas and Virginia throughout the week. Daytime high temperatures varied from the mid-40s to the low 60s. Scattered shower activity brought light precipitation to portions of the upper Southeastern region early in the week. Rainfall totals measured from trace amounts to around one-quarter of an inch of moisture.

No fieldwork was reported. Ginning was nearing completion in the Carolinas and Virginia; some gins remained on gins days as they waited for the backlogs of modules to accumulate on gin yards. The Florence Classing Office had a single shift operating as needed. Producers attended regional meetings and considered planting options for the 2019-crop season.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2019-crop cotton, color 41, leaf 4, and staple 34 for October through December delivery. No sales were reported. No additional inquiries were reported. Most mills operated five to seven days. Yarn demand was moderate. Demand through export channels was moderate. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A light volume of mostly color 41, leaf 3 and 4, staple 36 and 37, mike 37-42, strength 27-29, and uniformity 80-83 sold for around 1`75 points off ICE MArch futures, FOB car/truck, Georgia terms (Rule 5, compression charges apid, 30 days free storage)..
  • A moderate volume mixed lot containing color mostly 51, leaf 3-5, staple 35-37, mike 37-49, strength 27-29, uniformity 79-82, and containing approximately 50 percent extraneous matter sold for around 900 points off ICE March futures, same terms as above.
  • A light volume of color 42, leaf 3 and 4, staple 32 and 33, mike 40-42, strength 23-26, and uniformity 77-79 sold for around 50.00 cents per pound, same terms as above.

South Central Markets Regional Summary

North Delta

Spot cotton trading was slow. Supplies and demand of available cotton was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported; no new sales were reported. Producers were carefully watching ICE cotton futures prices; the current March 2019 contract dropped by nearly 2 cents, which was partly attributed to the release of the National Cotton Council’s producer survey.

The report indicated that as many as 22.5 million bales could be harvested in 2019. On-going trade negotiations with China, among other political events, were also seen as factors to lower prices.

A cold front early in the week brought overnight temperatures in the 20s. More rain showers continued to dominate the weather pattern during the week. Daytime highs were in the 40s to 60s. The Memphis territory received about 3 inches of rain and flood warnings were in effect throughout the region. Both the Dumas and Memphis Classing Offices were working as necessary as sample receipts slowed to a trickle.

A few gins remained in operation because wet weather and soft soils have hampered the timely retrieval of modules still in the field. Producers attended regional industry meetings to stay current with new technologies and other issues affecting the agricultural community. No fieldwork was reported.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported; no new sales were reported. Producers were carefully watching ICE cotton futures prices; the current March 2019 contract dropped by nearly 2 cents, which was partly attributed to the release of the National Cotton Council’s producer survey.

The report indicated that as many as 22.5 million bales could be harvested in 2019. On-going trade negotiations with China, among other political events, were also seen as factors to lower prices.

A cold front early in the week brought overnight temperatures in the 20s. More rain showers continued to dominate the weather pattern during the week. Daytime highs were in the 40s to 60s. Rain showers brought nearly 3 inches of precipitation to most areas; river flood warnings remained in effect for parts of Louisiana. Producers attended regional industry meetings to stay current with new technologies and other issues affecting the agricultural community. No fieldwork was reported due to wet conditions.

Trading

North Delta

  • A light volume of mostly color 43, leaf 3 and 4, staple 35-37, mike 49-56, strength 28-33, and uniformity 80-84 traded for around 53.00 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 moderate. Demand was moderate. Producers continued to deliver previously contracted cotton to merchant and cooperative marketing pools. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was slow. Foreign inquiries were light-to-moderate. Interest was best from Mexico, Pakistan, and Turkey.

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Initial planting in dryland fields was reported in the Rio Grande Valley. Most waited for the soil temperatures to reach optimal levels ahead of planting. Producers were encouraged with fall rains that had built good subsoil moisture. Most fields in the Coastal Bend were too soggy to support equipment. Local reports indicated that some producers decided to move from planting corn to cotton.

Some fields in south Texas were prepped for planting. Ginning continued in the Winter Garden area. Pockets of light, wintry precipitation and rainfall were received early in the reporting period in the northern Blackland Prairies. A few fields were plowed and fertilized. Some cotton was harvested during periodic warmer conditions.

Kansas producers were able to resume harvesting as soils began to firm enough to support equipoment. Gins continued processing modules without interruption. Producers attended growers meetings and booked seed for the 2019-crop.

West Texas

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was moderate. Producers continued to deliver previously contracted cotton to merchant and cooperative marketing pools. Producers monitored the market closely to determine in what way to market the remainder of their crop.

Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was slow. Foreign inquiries were light to moderate. Interest was best from Mexico, Pakistan, and Turkey. Blowing conditions depleted the soil moisture with daytime high temperatures in the mid-30s to low 80s, and overnight lows in the teens to low 50s.

Approximately 28 gins continued submitting samples for grading services to the Abilene, Lamesa, and Lubbock Classing Offices. Producers were actively shredding stalks, applying herbicide, fertilizer, and compost. Local producer meetings were attended.

Trading

East Texas

  • In Oklahoma, a light volume of color 31, leaf 3 and 4, staple 35 and 36, mike 42-46, strength 31-33, and uniformity 80-82 sold for around 68.00 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of mostly color 21, leaf 2, 3, and 4, staple 39 and 40, mike 29-33, strength 31-33, and uniformity 79-82 sold for around 63.00 cents, same terms as above.
  • A light volume of mostly color 31 and 41, leaf 3, staple 35 and 36, mike averaging 50.5, strength averaging 31.2, and uniformity averaging 80.7 sold for around 61.75 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for around 4.00 cents.

West Texas

  • A moderate volume of mostly color 31 and 41, leaf 3, 4, and 5, staple 37 and longer, mike 40-51, strength 30-33, and uniformity 80-82 sold for around 65.25 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of color 31, leaf 5 and better, staple 37 and 38, mike 31-35, strength 31-32, uniformity 79-80, and 50 percent extraneous matter sold for around 59.00 cents, same terms as above.
  • A mixed lot containing a light volume of mostly color 32, leaf 3 and 4, staple 35 and 36, mike 27-43, strength 27-34, uniformity 78-82, and 25 percent extraneous matter sold for around 52.50 cents, same terms as above.
  • A light volume of CCC-loan equities traded for around 4.75 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies were moderate. Demand was light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The on-going trade/tariff dispute between the US and China have kept most mills on the sidelines.

Daytime high temperatures were mostly in the high 60s. Flood watches were in effect for most of Arizona as rain moved through the area late in the period. Approximately one-quarter of an inch of moisture was received, but more was expected. Fields were ready for initial planting to begin in Yuma, Arizona. Ginning continued in Arizona and El Paso, TX.

Industry representatives were supportive of the reported Far West planting intentions released by the NCC. However, some producers in eastern New Mexico could be cutting back on planting cotton due to a declining labor force, as more of the labor pool goes into the oil industry. Limited irrigation water supplies will decrease acreage in El Paso, Texas. The Visalia Classing Office will celebrate 50 million bales classed at an open house on Wednesday, February 20 from 10:00 am to 2:00 pm.

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. The on-going trade/tariff dispute between the US and China continues to keep most mills on the sidelines.

Weekly shower activity and strong winds continued for the Valley. Precipitation amounts ranged from one-half of an inch to 2 inches. Some reservoirs reached capacity, and the Bureau of Reclamation began releasing water to some contractors, to prevent flooding. Heavy snowfall was received in the Sierra Nevada Mountain range. The statewide snowpack averaged 96 percent of the April 1 average. The statewide snowpack water equivalent is estimated to be around 27 inches. Wind advisories remained in effect.

The World Ag Expo in Tulare, with nearly 1,500 exhibitors, concluded its three-day run on February 14. Industry representatives were supportive of the reported Far West planting intentions released by NCC. The Visalia Classing Office will celebrate 50 million bales classed at an open house on Wednesday, February 20 from 10:00 am to 2:00 pm.

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 light. The on-going trade/tariff dispute between the US and China continued to keep some mills on the sidelines. Competition with Egyptian ELS cotton put pressure on US prices. Interest was best for any discounted qualities and for nearby shipment.

Daytime high temperatures were in the mid-50s to mid-60s in the Far West. Snow was received in higher elevations of Arizona and California. In the Sierra Nevada Mountain range of California, the statewide snowpack averaged 96 percent of the April 1 average. Precipitation amounts ranged from one-quarter of an inch to 2 inches for the region. The San Joaquin Valley reservoir storage capacity received a healthy increase with recent rains.

Fields were ready for initial planting to begin in Yuma, Arizona. Ginning continued in the region. Industry representatives were supportive of the reported Far West planting intentions released by NCC. Local contacts noted some acreage decline in Yuma, Arizona and El Paso, Texas. Ginning continued. The Visalia Classing Office will celebrate 50 million bales classed at an open house on Wednesday, February 20 from 10:00 am to 2:00 pm.

Trading

Desert Southwest

  • A moderate volume of mostly color 31, leaf 3 and better, staple 37 and longer sold for around 250 to 300 points on ICE March futures, uncompressed, FOB warehouse.
  • A moderate volume of mostly color 41, leaf 4 and better, and staple 37 and longer sold for around 500 to 600 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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