Weekly Cotton Market Review – USDA

Photo: Chuck Wilbur, Crop Consultant, Texas-Oklahoma

Spot quotations averaged 60 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 60.50 cents per pound for the week ending Wednesday, July 3, 2019.

The weekly average was up from 59.90 last week, but down from 80.42 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 60.04 cents Friday, June 28 to a high of 60.86 cents Tuesday, July 2.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 4 totaled 8,371 bales. This compares to 21,086 reported last week and 2,460 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,260,426 bales compared to 2,048,086 bales the corresponding week a year ago. The ICE Oct settlement prices ended the week at 66.55 cents, compared to 65.99 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive.

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Fair to mostly cloudy conditions dominated the weather pattern across the lower Southeastern region during the week. Hot daytime high temperatures were in the upper 80s to mid-90s. Spotty shower activity brought light, localized moisture to areas throughout Alabama, the Florida Panhandle, and central and south Georgia.

Precipitation totals measured from trace amounts to one inch of weekly accumulated moisture. The crop progressed well; fields were blooming and squaring was well underway. Boll-setting had begun in the earliest-planted fields. Plant maturity continued to be reported as varied within the same fields due to late-emerging cotton. Moderate to severe drought conditions persisted across portions of south Alabama and Georgia in areas that have missed beneficial precipitation in recent weeks. Additional moisture will be needed to relieve drought stressed plants and enhance fruit setting in the weeks ahead.

Producers applied plant growth regulators and nitrogen to cotton fields. Fields were scouted and treatments were applied for plant bugs and brown and green stink bugs. Pressure from aphids was also heavy in some fields. Spider mites were also present at low levels. According to the National Agricultural Statistic Service’s (NASS) Crop Progress report released July 1, cotton squaring advanced to 64 percent in Alabama and 58 percent in Georgia. The crop condition was fair to mostly good.

Mostly sunny to fair conditions prevailed across the Carolinas and Virginia over the weekend, with partly cloudy skies observed later in the week. Daytime high temperatures were in the low to mid-90s. Localized shower activity brought light, spotty moisture to areas along the Atlantic coast, but mostly dry conditions prevailed. The crop made good progress and squaring advanced.

In the Carolinas, boll-setting was getting underway in the earliest-planted fields. Producers scouted fields for plant bugs and treated fields that met threshold levels. Aphids and spider mites were also present in some fields at treatable levels.

In Virginia, local experts reported plant bug populations were spotty with overall pressure from pests lower than at the same time last year. According to NASS, cotton squaring reached 55 percent in North Carolina, 53 in South Carolina, and 43 percent in Virginia. The crop condition was fair to mostly good.

Textile Mill

Domestic mill buyers purchased a light volume of color 42, leaf 4, and staple 37 for prompt fill-in needs. Mill buyers also inquired for a moderate volume of 2019-crop cotton, color 41, leaf 4, and staple 34 for fourth quarter 2019 through third quarter 2020. No additional inquiries were reported. Most mills have their raw cotton needs covered through fourth quarter 2019. Most mills planned a week of down time for the Fourth of July holiday.

Demand through export channels was moderate. Vietnamese mill buyers purchased a mixed lot recap containing color mostly 31, leaf 4, and staple 34 and longer for July shipment. Agents for mills in Thailand inquired for a moderate volume of 2019-crop cotton, color 31, leaf 3, and staple 36 for September through November shipment. Agents for mills in Turkey inquired for any low-grade or discounted styles of cotton for nearby shipment.

Trading

  • An even-running lot containing color 31, leaf 3 and 4, staple 36, mike 37-42, strength 28-29, and uniformity 79-81 sold for around 67.75 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

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 higher. Trading of CCC-loan equities was slow. No forward contracting was reported.

Sunny to overcast conditions were observed during the period. Daytime high temperatures were in the upper 80s to low 90s. Nighttime lows were in the 70s. Scattered rainfall received throughout the period brought around one-half of an inch to three quarters of an inch of weekly accumulated rainfall to areas across the region. Producers were applying herbicide to control weeds and fertilizer applications were also underway. The crop made good progress; blooming and squaring was well underway. Producers applied growth control regulators.

Local experts reported increasing pressure from plant bugs. Aphids and spider mites were also present at treatable levels in some fields. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released July 1, squaring reached 78 percent completed in Arkansas, 45 in Tennessee, and 12 percent completed in Missouri.

South Delta

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

A mix of sunny to cloudy conditions prevailed across the region during the period. Daytime high temperatures were in the upper 80s to low 90s. Overnight lows were in the 70s. Scattered showers brought around one-quarter of an inch to one inch of weekly accumulated moisture during the period. The crop made good progress and producers applied plant growth regulators.

Local experts reported that plant maturity varied, due to erratic emergence in fields. Producers applied fertilizer and herbicide to fields. Plant bug pressure was increasing and producers were scouting fields and applying control measures. Treatments were also underway for aphids and thrips in fields that met threshold limits. According to NASS, cotton squaring reached 60 percent completed in Louisiana and 30 percent completed in Mississippi.

Trading

North Delta

  • A heavy volume old-crop CCC-loan equity traded for around 15.00 cents per pound.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light.

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Hot, dry conditions advanced the crop in the Rio Grande Valley, Coastal Bend, Upper Coast, and Blackland Prairies. The crop was in full bloom in the Rio Grande Valley and Coastal Bend. Some fields quickly approached cut-out stage. Producers prepared equipment for defoliation activities to begin soon. The first bale of the nation was delivered in Willacy County on June 21. The first bale will be auctioned on September 12 and the proceeds used for educational purposes. Crop progress in the Upper Coast and Blackland Prairies was good.

Cotton progress in Kansas and Oklahoma made tremendous improvements in the past 7 to 10 days; as sunny, dry weather gave the crop what it needed. Light insect pressure was reported and cotton extension specialists advised producers to remain vigilant in monitoring. Two Kansas gins continued pressing bales and will continue for another couple of weeks. Grading services were provided by the Lamesa, TX Classing Office.

Ground breaking to begin building the new warehouse in Wichita, KS was delayed as intended acreage plantings were decreased, due to spring weather conditions. Because of the less than optimal planting conditions, Kansas may be hard pressed to reach average yields of 1,000 pounds. Private sources estimated that Kansas acreage was less than 150,000 planted.

The Oklahoma dryland crop was in various stages. Overall, the crop appeared to be about two weeks later than normal. Industry experts indicated that the Oklahoma crop still has the potential to yield near 800 pounds, with timely rainfall. Oklahoma remained in drought free status for the last two weeks, according to the U.S. Drought Monitor. Local sources reported the Lugert-Altus Irrigation district began releasing water into irrigation ditches mid-week.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light.

On July 1, Under Secretary for Marketing and Regulatory Programs Greg Ibach signed a historic cooperative agreement with Texas Tech and the USDA’s Agricultural Marketing Service Cotton and Tobacco (C&T) Program that will establish a new cotton classing facility on the Texas Tech campus. It is the first collaboration on a cotton classing facility between the C&T Program and an institution of higher learning.

The crop is getting just what it needs the most, hot and dry conditions. The crop made good progress; although it was in various growth stages. Producers controlled weeds and sprayed for grasshoppers. Dryland cotton fields had good soil moisture. Overall, the crop was about two weeks behind. Timely rainfall is needed during the growing season and will keep the potential of a good yielding harvest for west Texas.

Local industry and merchants shifted attention to actual plantings in the Texas Panhandle. Sources estimated 50 to 70 percent of the crop was lost to unfavorable spring weather conditions at planting time. Afternoon thunderstorms brought scattered rainfall late in the period. According to the U.S. Drought Monitor, the west Texas region remains drought free.

Trading

East Texas

  • In Texas, a light volume mixed lot of color 51, 32, and 42, leaf 4 and better, staple 34 and 35, mike averaging 46.0, strength averaging 29.2, and uniformity averaging 79.2 sold for around 53.75 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a moderate volume of mostly color 41 and better, leaf 4 and better, staple 35-38, mike averaging 41.5, strength averaging 29.3, and uniformity averaging 80.8 sold for around 52.50 cents, FOB car/truck (compression charges not paid).
  • Mixed lots of a moderate volume of mostly color 53 and 44, leaf 7 and 8, staple 35-38, mike averaging 37.4, strength averaging 27.8, uniformity averaging 80.5, with 100 percent extraneous matter sold for around 35.00 cents, same terms as above.

West Texas

  • A light volume of mostly color 31 and better, leaf 3 and better, staple 38, mike averaging 43.1, strength averaging 32.2, and uniformity averaging 80.9 sold for around 56.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 31 and 41, leaf 5 and better, staple 36 and 37, mike averaging 41.3, strength averaging 32.1, uniformity averaging 82.2, with 75 percent extraneous matter sold for around 51.00 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 higher. Producer interest in forward contracting was non-existent as ICE December futures trended lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Hot and dry conditions advanced the Arizona crop. Crop progress was good throughout the state.

Boll-setting was reported at 18 percent, slightly behind the five-year average of 23 percent, according the National Agricultural Statistics Service’s (NASS) report released on July 1. The NASS Acreage report released June 28 reported Arizona Upland acreage at 155,000. Industry experts were in general agreement with the estimated acreage. New Mexico and El Paso, TX crops made tremendous improvement with increased heat units for the week. Squaring was reported.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Producer interest in forward contracting was non-existent as ICE December futures trended lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Temperatures were mostly in the high 80s to 90s. The crop made good progress. Blooming advanced. Producers sprayed insecticides. Pressure from lygus and aphids were reported.

The National Agricultural Statistics Service’s Acreage report released June 28 reported California Upland acreage at 40,000. Local sources estimated around 60,000 planted acres for California. The difference may be attributed to increased participation in Upland ‘save seed’ programs and less than optimal spring planting conditions for American Pima.

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. Daytime high temperatures were mostly in the low 100s for the Far West. No rainfall was recorded in the period. The crop made excellent progress.

Blooming began in central Arizona and advanced in the San Joaquin Valley of California. Boll-setting advanced in Yuma, AZ. Producers monitored and sprayed for insect pests. The National Agricultural Statistics Service’s Acreage report released June 28 reported California AP acreage at 240,000. Private sources estimated around 201,000 planted acres for California.

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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