Weekly Cotton Market Review – USDA

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Average quotations were 622 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 61.23 cents per pound for the week ending Thursday, May 16, 2019.

This is the lowest weekly average since week ending May 26, 2016 when the average was 60.90. The weekly average was down from 67.45 last week and from 80.19 cents reported the corresponding period a year ago.

Daily average quotations ranged from a high of 62.91 cents Friday, May 10 to a low of 59.91 cents Monday, May 13. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 16 totaled 1,905 bales. This compares to 21,210 reported last week and 33,669 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,164,230 bales compared to 1,946,150 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 66.80 cents, compared to 70.23 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #4 FOR UPLAND COTTON May 16, 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 23, 2019, allowing importation of 12,041,208 kilograms (55,304 bales) of upland cotton.

Quota number 4 will be established as of May 23, 2019, and will apply to upland cotton purchased not later than August 20, 2019, and entered into the U.S. not later than November 18, 2019. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period January through March 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 inactive. Supplies and producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

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Mostly cloudy conditions prevailed over the lower Southeast over the weekend, but sunny skies dominated the weather pattern entering the week. Daytime high temperatures averaged slightly cooler than the previous period and were mostly in the upper 70s to low 80s.

Widespread thunderstorms brought moderately heavy rainfall to much of west-central Alabama and the Florida panhandle early in the period. Precipitation totals measured from three-quarters of an inch to four inches in isolated areas. Lesser accumulations from one-quarter of an inch to one inch of moisture was received in much of east Alabama and areas throughout Georgia.

Producers welcomed the moisture which helped alleviate dry conditions. The wet weather curtailed planting and fieldwork activities over the weekend. However, as sunny conditions returned, activities resumed at a rapid pace during the week in fields that were firm enough to support equipment.

In Georgia, local experts reported good, uniform emergence in many early planted fields. According to the National Agricultural Statistic Service’s (NASS) Crop Progress report released May 13, cotton planted was ahead of the five-year average in Alabama at 49 percent and also in Georgia at 42 percent planted.

A mix of clear to cloudy conditions prevailed throughout the period in South Carolina. In North Carolina and Virginia, mostly cloudy conditions were observed during the week. Daytime high temperatures averaged cooler than the previous period and varied from the upper 60s to low 80s. Scattered showers brought light moisture to much of western North Carolina and portions of South Carolina and Virginia throughout the period.

Weekly precipitation totals measured from trace amounts to around one-inch in localized areas. Despite cooler temperatures delaying planting in some areas, overall, planting and fieldwork advanced at a rapid pace. According to NASS, in North Carolina cotton planted reached 40 percent, South Carolina 39, and in Virginia 36 percent – at or well ahead of the five-year average in all areas.

Textile Mill

Domestic mill buyers purchased a light volume of color 41, leaf 4, and staple 34 and 35 for June/July fill-in needs. Mill buyers purchased a light volume of color 52, leaf 5, and staple 32 and longer for nearby delivery. Mill buyers also booked a moderate volume of 2019-crop cotton, color 41, leaf 3, and staple 36 and 37 for November 2019 through March 2020 delivery. No additional inquiries or purchases were reported; reports indicated most mills have covered their raw cotton needs through the fourth quarter of 2019.

Demand through export channels was moderate, but had increased as ICE futures trended lower. Chinese mill buyers purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 37 for June/July shipment. Agents for mills in India purchased a moderate volume of USDA Green Card Class, color 31, leaf 4, and staple 37 for nearby shipment. Pakistani mill buyers purchased a moderate volume of color 41, leaf 4, and staple 35 for June/July shipment.

Trading

  • No trading activity was reported.

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 to 60s. Thunderstorms brought hail to isolated areas, but no crop damage or structural damage was reported. Approximately 1 inch of rain was reported generally, with up to 2 inches reported in some places.

River flood warnings issued by the National Weather Service remained in effect for many river systems. Producers continued to hope for a satisfactory conclusion to the on-going trade talks between China and the U.S. Since May 1, the ICE July futures contract has dropped by 11.00 cents. Field activities were hampered due to saturated soils in some unplanted fields.

According to the National Agricultural Statistics Service’s Crop Progress report released May 13, planting had reached 25 percent in Arkansas, 22 in Missouri, and 35 percent in Tennessee. Planting in Arkansas and Missouri was well behind the five-year average; planting in Tennessee was slightly ahead of the five-year average as a result of more favorable weather compared to the rest of the region.

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.

Severe weather during the week brought more rain showers, thunderstorms, and strong winds to the region. Daytime temperatures were in the 70s and 80s. Overnight lows were in the 50s to 70s. Approximately 3 inches of rain was reported generally, with heavier amounts of up to 6 inches reported in a few places in Mississippi. River flood warnings and flash flood watches issued by the National Weather Service remained in effect 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. The ICE July futures contract has dropped by approximately 11.00 cents over the past two weeks. According to the National Agricultural Statistics Service’s Crop Progress report released May 13, planting had reached 38 percent in Louisiana and 17 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. Local experts reported that some fields in both Louisiana and Mississippi will not be planted before the insurance deadline; producers have taken steps to mitigate their losses through prevented planting crop insurance.

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 slow. 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 inactive. Foreign inquiries were moderate to heavy. Inquiries were best from India, Mexico, and Turkey.

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In the Rio Grande Valley, more fields had begun to square and some of the older stands neared bloom, according to the Pest Cast newsletter published on May 10. Insect pressure mounted and applications for fleahoppers and cotton aphids were applied. In the Upper Coast, all of the planting and replanting was finished, according to local reports. Rainfall is in the nearby forecast.

Scouting was underway for thrips, fleahoppers, and aphids. Additional precipitation and cooler than normal temperatures hampered progress on some stands at the 4-true leaf stage in south Texas. Generally, stands had begun to square.

In the Blackland Prairies, rain events were unrelenting, and caused continued flooding. Seeding was on hold until soils firmed enough to support planters. Fields were flooded at the Brazos River Bottom.

In Kansas and Oklahoma, soggy soil from recent rainfall caused planting to be stalled early in the period, but planting re-started mid-week after sunny conditions dried fields. Producers were eager to get seed in the ground ahead of the next forecasted thunderstorms. According to the U.S. Drought Monitor map that was published on May 16, Kansas was 99.85 percent drought free and Oklahoma was 100 percent drought free.

West Texas

Spot cotton trading was inactive. 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 inactive. Foreign inquiries were moderate to heavy. Inquiries were best from India, Mexico, and Turkey.

Daytime high temperatures were in the mid-50s to upper 80s, and overnight lows were in the low 40s to low 60s. Rainy, cloudy conditions interfered with planting activity early in the period, but mid-week sunshine dried soggy fields and producers were able to resume planting in the High Plains. Local sources indicated that producers need only about 10 days of clear weather to get the crop planted.

Some fields in the Rolling Plains were too soggy to support equipment. The precipitation has spurred weed growth, prompting some producers to apply herbicide at planting time. According to the U.S. Drought Monitor’s map released on May 16, west Texas was 100 percent drought free.

Trading

East Texas

  • In Texas, a light volume of mostly color 52, leaf 4, staple 35, mike averaging 46.3, strength averaging 27.1, and uniformity averaging 78.8 sold for around 50.75 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a mixed lot containing a light volume of mostly color 42 and better, leaf 4 and better, staple 34 and longer, mike 29-52, strength 26-32, and uniformity 78-82 sold for around 52.00 cents, FOB car/truck (compression charges not paid).
  • In Kansas, a light volume of color 21 and 31, leaf 3, staple 37, mike 28-37, strength 30-33, and uniformity 79-81 sold for around 55.75 cents, same terms as above.

West Texas

  • 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 57.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 31 and 41, leaf 2 and 3, staple 36 and 37, mike averaging 30.4, strength averaging 31.0, and uniformity averaging 80.0 sold for around 55.00 cents, same terms as above.
  • A light volume of mostly color 41 and 42, leaf 6-8, staple 35 and longer, mike averaging 27.3, strength averaging 26.4, uniformity averaging 80.1, and 100 percent extraneous matter sold for around 45.00 cents, same terms as above.

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, as ICE futures dropped 10 cents since May 1. The breakdown of US/China trade negotiations weighed heavily on the market. No inquiries for 2019-crop cotton were reported. Mills remained on the sidelines and anxiously watched fluctuating ICE future prices.

Temperatures were in the high 80s to mid-90s in Arizona. The Yuma crop made good progress. Windy conditions and cooler temperatures slowed progress of the central Arizona crop.

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, as ICE futures dropped 10 cents since May 1. The breakdown of US/China trade negotiations weighed heavily on the market. No inquiries for 2019-crop cotton were reported. Mills remained on the sidelines and anxiously watched fluctuating ICE future prices.

Mostly clear, sunny conditions were the norm. Temperatures were mostly in the mid-80s. A late-season cold front moved into the state bringing scattered showers late in the period. The crop made good progress. No insect pressure was reported. Ginners, producers, and industry representatives attended the California Cotton Growers/Ginners Association meeting in Pismo Beach on May 15-17.

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 and new sales were slow. The breakdown of US/China trade negotiations weighed heavily on the market. New-crop inquiries were best from Indonesia and Japan.

Spring temperatures varied from the mid-70s to high 90s in the Far West. Overall, the San Joaquin Valley (SJV) crop had a good start and made good progress. Some reports indicated the crop was a little behind schedule compared to this time last year. Planting was virtually completed in New Mexico and El Paso, TX. Unpredictable spring weather brought cool, damp conditions, which slowed crop progress early in the period. Mid-week, warm conditions boosted seedling emergence and growth. Little to no re-planting was necessary.

Save the date: The Visalia Classing Office will host the annual American Pima Guide Box Matching on July 10.

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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