Weekly Cotton Market Review – USDA

Cotton planting. ©Debra L Ferguson Stock Photography

Average quotations were 378 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 67.45 cents per pound for the week ending Thursday, May 9, 2019.

The weekly average was down from 71.23 last week and from 81.53 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 70.14 cents Friday, May 3 to a low of 64.69 cents Thursday, May 9.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 9 totaled 21,210 bales. This compares to 32,665 reported last week and 35,776 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,162,325 bales compared to 1,912,481 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 70.23 cents, compared to 75.45 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #3 FOR UPLAND COTTON May 9, 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 May 16, 2019, allowing importation of 12,157,032 kilograms (55,836 bales) of upland cotton.

Quota number 3 will be established as of May 16, 2019, and will apply to upland cotton purchased not later than August 13, 2019, and entered into the U.S. not later than November 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 December 2018 through February 2019, 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. Producer offerings were moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

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A mix of cloudy to sunny conditions prevailed across the lower Southeastern region during the period. Daytime high temperatures were in the upper 70s to mid-80s with nighttime lows in the upper 60s. Scattered thundershowers brought around one-quarter of an inch of moisture to portions of northwest Alabama, with slightly heavier accumulations observed in some locales. Planting advanced at a rapid pace and producers in Alabama continued fieldwork until wet weather disrupted field activities.

In Georgia, planting expanded without interruption and producers dusted in dryland fields, applied fertilizers, and herbicides. Some irrigated fields were watered ahead of planting due to dry conditions. Cotton seedlings were emerging in the earliest planted fields. Moderate drought shifted in coverage in parts of south-central and southwest Georgia, according to the U.S. Drought Monitor. Producers would welcome a soaking rainfall in these areas to fortify soil moisture.

In Alabama, planting was 3 points ahead of the five-year average at 28 percent completed. In Georgia, planting was 8 points ahead at 23 percent completed, according to the National Agricultural Statistics Service (NASS).

Isolated thundershowers brought soaking rainfall to portions of the central and eastern Carolinas over the weekend. Day-to-day accumulated rainfall totals measured from one-quarter of an inch to around two and three quarter inches of moisture. Average high temperatures were in the upper 70s to upper 80s.

Producers welcomed the rainfall, which benefitted early planted fields and alleviated dry conditions. Fieldwork was interrupted in areas that received the heaviest rainfall. In between rain events producers applied herbicides and fertilizer. Planting expanded at a good pace. According to NASS, planting was at or ahead of the five-year average at 22 percent completed in South Carolina, 17 in North Carolina, and 15 percent completed in Virginia.

Textile Mill

Domestic mill buyers inquired for a light volume of 2019-crop cotton, color 41, leaf 3, and staple 36 for November 2019 through March 2020 delivery. No sales were reported. No additional inquiries were reported; most mills had covered their immediate-to-nearby raw cotton needs.

Demand through export channels was moderate, but had increased as ICE futures trended lower. Indonesian mill buyers purchased a light volume recap containing mostly color 42 and 52, leaf 4, and staple 36 and 37 for nearby shipment. Turkish mill buyers inquired for low grade styles of cotton. Buyers for mills in Mexico inquired for a moderate volume of color 42 and 52, leaf 5 and better, and staple 32 and longer for January 2020 through September 2020 delivery.

Trading

  • A moderate volume of color 41, leaf mostly 5, staple 35 and 36, mike 43-49, strength 30-32, and uniformity 81-82 sold for around 65.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A heavy volume mixed lot containing color 51 and better, leaf 5 and better, staple 35-37, mike 43-49, strength 30-33, and uniformity 81-83 sold for around 66.50 cents, same terms as above.

South Central Markets Regional Summary

North Delta

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

Severe weather late in the reporting period brought more rain showers to the region. Daytime temperatures were in the 70s and 80s, but dropped into the 60s behind the front. Overnight lows were in the 50s. Thunderstorms and high winds were also prevalent, but no structural damage was reported. Approximately 2 inches of rain were reported, with heavier amounts reported in localized places. River flood warnings were issued by the National Weather Service for many river systems.

Producers were hoping for a swift conclusion to the on-going trade talks between China and the U.S. to stimulate demand and prices for commodities. Field activities were at a standstill, due to saturated soils in many unplanted fields. According to the National Agricultural Statistics Service’s Crop Progress report released May 6, planting had reached 15 percent in Arkansas, 19 in Missouri, and 12 in Tennessee. Except for Tennessee, these figures were well behind the five-year average.

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.

Late in the period, severe weather brought rain showers, thunderstorms, and strong winds to the region. Daytime temperatures were in the 70s and 80s. Overnight lows were in the 60s. Approximately 3 inches of rain were reported generally, with heavier amounts reported in localized places. River flood warnings and flash flood watches were issued by the National Weather Service for many areas.

Producers were hoping for a swift conclusion to the on-going trade talks between China and the U.S. to stimulate demand for commodities. According to the National Agricultural Statistics Service’s Crop Progress report released May 6, planting had reached 29 percent in Louisiana and 11 in Mississippi. These figures were well behind the five-year average. Planting was delayed as producers continued to struggle with wet soil conditions, especially in low-lying fields.

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 active. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was active. Foreign inquiries were moderate to heavy. Inquiries were best from Indonesia, Turkey, and Vietnam.

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In the Rio Grande Valley, stands began to square. Heat units accumulated with temperatures warming into the upper 80s to mid-90s, according to expert reports. Plant pest are present, but so are beneficial insects. Some fields were treated for plant pests.

Re-planting continued in south Texas, where an estimated 20 to 30 percent of fields had to be replanted because of damage caused by blowing sand. Producers ran rotary hoes across fields to help prevent blowing sand.

In the Blackland Prairies, daytime temperature highs were in the low 70s to mid-80s. Overnight lows were in the mid-40s to low 60s. Intermittent rainfall was received that delayed planting. Some fields were flooded and weeds have become concerning. Producers are eager for fields to dry so planting can start again.

In Kansas, several storms during the reporting period brought up to 10 inches of rainfall, high-winds, and tornado activity. Flooding was reported on May 7, which will halt all field activity. Producers received seed orders, and some planting was reported ahead of the storms. Ginning continued. Planting is 4 percent complete, compared to 2 last year, and 3 percent for the five-year average, according to the National Agricultural Statistics Service’s Crop Weather report released on May 6. Topsoil and subsoil moisture was adequate to surplus.

Cooler temperatures persisted in Oklahoma and has shortened the planting window. Storms brought up to 6 inches of precipitation and hail. Planting will begin after the fields dry.

West Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was moderate. Foreign inquiries were moderate to heavy. Inquiries were best from Indonesia, Turkey, and Vietnam.

Daytime high temperatures were in the mid-50s to upper 80s, and overnight lows were in the low 40s to low 60s. Intermittent thunderstorms during the reporting period brought tornadoes and large hail to the area. Tornado activity in Lynn County caused damage to homes, barns, and twisted irrigation pivots. Winds were reported at 75 miles per hour on May 5 in O’Donnell. Planting had begun in some areas even though ground temperatures were cool.

Final planting dates to ensure full coverage insurance for some counties is May 31. Other counties have a final plant date of June 5 and June 10. Some producers opted to wait until the soil temperatures were in the 65 to 70 degree range. Weeds were managed. Planters were rolling in eastern New Mexico, and some stands were at the cotyledon stage. Meetings were attended.

The research community published information regarding Fusarium wilt caused by the fungus Fusarium oxysporum f. sp. vasinfectum Race 4 (FOV4), in some American Pima (AP) planting seed. The bulletin can be accessed online here. Although this market is not recognized as an AP production area, a few AP fields have been planted in recent years.

Trading

East Texas

  • In Texas, a light volume of mostly color 52, leaf 4, staple 30 and 31, mike averaging 48.0, strength averaging 26.1, and uniformity averaging 78.3 sold for around 50.75 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a light volume of mostly color 22 and 23, leaf 2 and 3, staple 33 and longer, mike 38-49, strength 27-30, and uniformity averaging 78.6 sold for around 57.50 cents, FOB car/truck (compression charges not paid).
  • In Kansas, a moderate volume of color 32, leaf 5, staple 35, mike 35-45, strength 27-31, uniformity 79-81, and 75 percent extraneous matter sold for around 63.00 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 7.00 to 13.00 cents.

West Texas

  • A heavy volume of color 31, leaf 2-4, staple 35, mike 37-52, strength 26-32, uniformity 79-82, and 100 percent extraneous matter sold for around 69.00 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a heavy volume of mostly color 42 and better, leaf 6 and better, staple 34 and longer, mike 30-52, strength 27-33, uniformity 77-83, and 25 percent extraneous matter sold for around 64.00 cents, same terms as above.
  • A light volume of mostly color 31 and 44, leaf 5 and better, staple 36 and 37, mike averaging 36.6, strength averaging 31.0, uniformity averaging 79.7, and 50 percent extraneous matter sold for around 50.00 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 0.10 to 13.00 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

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

In Safford, AZ, planting continued two weeks behind schedule because of rainfall and cooler conditions. Industry reports indicated that more dicamba technology is being used. Planting was 60 percent completed and 48 percent had emerged, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report published on May 6. Topsoil and subsoil moisture was mostly adequate.

Planting continued in central Arizona under cloudy, cooler conditions. Stands made good progress in Yuma, AZ and were at the 4-true leaf stage.

In New Mexico, planting advanced to 37 percent planted for the week, compared to 20 the previous week, and 48 for the five-year average, according to NASS. Topsoil and subsoil moisture were rated mostly short to adequate.

Planting was ongoing in El Paso, TX. Some producers opted to initiate sowing activities in May with short season varieties to minimize water needs.

San Joaquin Valley (SJV)

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

In the SJV, daytime high temperatures were in the mid-70s and 80s, and overnight lows were in the 50s. Rainfall is in the nearby forecast. Stands had emerged and were at the 3 and 4-true leaf stages. Local sources indicated that the crop is approximately 10 days behind schedule. Heat units would be beneficial for early season growth.

American Pima (AP)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate.

Planting neared completion in the San Joaquin Valley. Stands progressed to the 4-true leaf stage. Early plant development was hindered by cooler growing conditions coupled with daytime highs in the mid-70s and 80s.

In Safford, AZ, planting continued behind schedule, due to recent rainfall and cooler conditions. Stands had emerged and some were at the cotyledon stage. Stands in Yuma made good progress.

In New Mexico, planting advanced to 37 percent planted for the week, compared to 20 the previous week, and 48 for the five-year average, according to the National Agricultural Statistics Service’s Crop Progress report published on May 6. Topsoil and subsoil moisture were rated mostly short to adequate.

In El Paso, TX, planting was almost completed. Stands had germinated and began to pop out of the ground. Cooler temperatures were a limiting factor for early plant development. Some replanting was underway.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A light volume of 2018-crop was sold to India for prompt shipment.
  • A moderate volume of new-crop business was done by Indonesia.

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