Weekly Cotton Market Review – USDA

Photo: Josh McGinty, Texas A&M AgriLife

Spot quotations averaged 61 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 54.76 cents per pound for the week ending Thursday, August 22, 2019.

The weekly average was up from 54.15 last week, but down from 78.73 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 55.40 cents Friday, August 16 to a low of 54.19 cents Thursday, August 22. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended August 22 totaled 9,726 bales.

This compares to 5,407 reported last week and 917 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 18,752 bales compared to 8,547 bales the corresponding week a year ago. The ICE October settlement price ended the week at 58.87 cents, compared to 59.66 cents last week.

Southeastern Markets Regional Summary

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

In the lower Southeastern region, sunny conditions over the weekend gave way to overcast and cloudy conditions as the week progressed. Seasonably hot daytime high temperatures in the upper 90s to low 100s early in the period moderated into the mid-80s to low 90s later in the week. Scattered thunderstorms brought moisture to areas from the Gulf to Atlantic Coasts during the period.

Weekly accumulated rainfall totals measured from 2 to 4 inches in much of south Alabama, the Florida panhandle, and south Georgia, with heavier accumulations recorded in some locations. Producers welcomed the moisture in areas that received rainfall. However, many areas missed significant precipitation in recent weeks and dry conditions began to stress some dryland fields.

Bolls were popping open in the earliest-planted fields; some fields could be defoliated in the weeks ahead. Insect pressure was generally light and easily controlled. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 19, cotton bolls opening advanced to 22 percent in Georgia and 12 percent in Alabama.

Partly cloudy conditions prevailed across the upper Southeastern region during the period, with seasonably warm daytime high temperatures in the upper 80s to mid-90s. Scattered thunderstorms brought light to moderate showers to much of the cotton growing areas of the eastern and coastal Carolinas and Virginia throughout the week.

Weekly accumulated precipitation totals measured from one-quarter of an inch to one inch of moisture, with heavier downpours approaching two to four inches in some areas. The producers welcomed the moisture which relieved drought-stressed plants.

In South Carolina, square and boll-shedding was reported in some dryland fields that have missed significant precipitation in recent weeks. Producers scouted fields and treated some hot spots for stink bugs. Pressure from bollworms was reported as light. According to NASS, cotton bolls opening had reached 10 percent in South Carolina, 8 in North Carolina, and 1 percent in Virginia.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 36 for nearby delivery. Mill buyers also inquired for a moderate volume of color 41, leaf 4, and staple 35 and longer for delivery January through October 2020. No sales were reported. Most mills have covered their raw cotton needs through December 2019. Demand for open-end and ring-spun yarn was moderate.

Demand through export channels was moderate. Indonesian mill buyers inquired for a moderate volume of recaps containing color mostly 41, leaf 4, and staple 35 and longer for nearby shipment. No sales were reported.

Trading

  • No trading activity was reported.

South Central Markets Regional Summary

North Delta

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

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Extreme heat prevailed during the week. Daytime highs were in the mid-90s, but the heat index soared as high as 110 degrees in parts of the Memphis territory. Overnight lows eventually dropped to the low 70s, but temperatures remained very high during the evening hours. The National Weather Service maintained its heat advisories for many communities. All residents were reminded to spend as little time as possible in the heat, limit or avoid strenuous outdoor activities all together, and stay hydrated.

A cold front, accompanied by high winds, brought some relief in the form of brief, intense rain showers late in the period. Accumulated moisture measured less than 1 inch in the few places that received any rain. The crop made good progress under hot and mostly dry growing conditions.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released August 19, boll opening advanced to 7 percent in Arkansas, 7 in Missouri, and 4 percent in Tennessee. The high temperatures experienced over the past two weeks have helped push crop development in Missouri, where it had been lagging well behind the five-year average. NASS rated the crop condition good-to-excellent in Arkansas and Tennessee, and fair-to-good in Missouri.

South Delta

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

Very hot daytime temperatures were experienced during the week. Daytime highs were in the upper 90s, with the heat index in the 110s. Early morning lows were in the upper 70s. Heat advisories issued by the National Weather Service remained in effect for much of the region. Scattered showers brought up to 1 inch of rain to most of the region. Late-planted fields were irrigated wherever possible to maintain good moisture conditions.

Plants continued to throw off immature bolls, due to the excessive heat. Infestations of spider mites were easily controlled in dry fields. Many fields exhibited open bolls in Louisiana. According to the National Agricultural Statistics Service’s Crop Progress report released August 19, boll opening reached 23 percent in Louisiana and 8 percent in Mississippi. Both figures lagged about one week behind the five-year average.

Trading

North Delta

  • A light volume of mostly color 41 and 42, leaf 4 and better, staple 36 and longer, mike 47-51, strength 27-31, and uniformity 80-84 traded for around 58.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A moderate volume of mostly color 41 and 42, leaf 5 and better, staple 34 and longer, mike 37-54, strength 27-32, and uniformity 79-83 traded for around 56.50 cents, same terms as above.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

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

In the Rio Grande Valley, dryland yields were reported up to two and three-fourths bales per acre, according to industry sources. Irrigated yields were reported up to three and one-half bales per acre. The deadline for stalk destruction is September 1. Harvesting continued. Daytime temperatures were in the low 100s. Droughty conditions expanded, and some counties implemented burn bans.

Defoliants were applied in the Upper Coast and south Texas. Harvesting had reached the 50 percent mark in some counties, but had just begun in other counties. Areas affected by severe drought expanded in south Texas. Some fields were defoliated in the southern Blackland Prairies. Most producers will complete corn and sorghum harvest before turning their focus to cotton harvesting. Earlier-planted fields have begun to shed bolls.

In Kansas, the last effective bloom date was August 18, according to local experts. Most of the fields have reached cut-out. Bolls have begun to pop open.

In Jackson County Oklahoma, a storm brought up to 3 inches of rainfall that helped ease dryland heat stress and gave the wells a rest from pumping water to the irrigated stands. A light amount of hail damage was reported. Stands in the Lugert-Altus irrigation district advanced. Producers were encouraged by the irrigated stands. Beneficial insects have kept plant pests under control.

West Texas

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

Daytime high temperatures were in the low 100s, with overnight lows in the upper 60s to low 70s. Hot, dry conditions persisted during the period, with a temperature of 105 degrees in Lubbock on August 18. Droughty conditions expanded, and some counties implemented burn bans. Wildfires were on the rise. Although fields were at varying progress levels, lots of stands were able to catch-up to normal progress under the hot conditions.

Some fields were at peak bloom, and others had reached cut-out. A few afternoon storms moved from New Mexico across the territory, bringing beneficial rain to some select fields. Mostly, the summer storms brought windy conditions and blowing dirt. The dryland is stressed and rainfall is needed. Irrigation water was applied. Some wells had to be rested for a week so the water table could rebuild. Hoe teams were busy removing weeds. Careful monitoring for aphids, bollworms, and stink bugs continued.

Trading

East Texas

  • In Kansas, a mixed lot containing a light volume of mostly color 21 and 31, leaf 3 and 4, staple 32 and longer, mike 24-46, strength 25-30, and uniformity 76-81 sold for around 50.00 cents per pound, FOB car/truck (compression charges not paid).
  • In Oklahoma, a mixed lot containing a light volume of mostly color 41 and 51, leaf 5-7, staple 37, mike 38-40, strength 30-32, and uniformity 79-81 sold for around 45.50 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for 44.00 to 59.00 cents.

West Texas

  • A light volume of mostly color 31 and better, leaf 3 and better, staple 38 and longer, mike averaging 40.9, strength averaging 31.4, and uniformity averaging 81.1 sold for around 58.50 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of mostly color 31 and 41, leaf 2 and 3, staple 34 and 35, mike averaging 45.0, strength 28-33, and uniformity 78-82 sold for around 51.50 cents, same terms as above.
  • A light volume of mostly color 31 and better, leaf 2 and 3, staple 38 and longer, mike averaging 30-42, strength 30-32, and uniformity 80-82 sold for around 48.25 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for 53.50 to 57.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Mills remained on the sidelines as the US/China trade stalemate, fluctuating market prices, and light demand continued to create uncertainty. Some merchants offered cotton for prompt shipment. No new sales were reported.

Temperatures were mostly in the high 100s, but by mid-week excessive heat warnings were issued as temperatures rose to the mid-110s in central Arizona. Monsoon activity was mostly inactive for August. Areas of central Arizona recorded no heat stress or had Level 1 heat stress for a couple of days early in the period. Safford Valley recorded no heat stress. Overall, the crop made good progress in Arizona. Yuma area producers prepared equipment for harvest. The local gin made final gin repairs.

Temperatures were in the high 90s to low 100s in New Mexico and El Paso, TX. Afternoon thunderstorms brought light, scattered rainfall, but registered less than one-tenth of an inch. No hail was reported. Sources reported that ideal hot and dry August weather helped advanced the crop. Some cotton and chili fields were sprayed for stink bugs.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Mills remained on the sidelines as the US/China trade stalemate, fluctuating market prices, and light demand continued to create uncertainty.

Weather conditions were hot and dry. Sources reported the crop as a mixed bag. North Valley producers were optimistic about their crop. Boll-setting advanced. The crop made good progress. Some fields in the south Valley sprayed for aphids.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2018-crop cotton were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Merchant offering prices for 2018-crop were firm. Foreign mill inquiries were light. Mills remained on the sidelines.

Hot, dry temperatures advanced the crop in the Far West. No rainfall was recorded for Arizona and California. Afternoon thunderstorms brought light, scattered precipitation, but registered less than one-tenth of an inch in New Mexico and El Paso, TX. Defoliation activities continued in Yuma, AZ. Sources estimated the FW crop was a little behind normal in progress, due to late spring weather.

Recent heat helped the crop advance and gain some ground. Producers monitored for late season pests. Some treatments were made for aphid and whitefly. Near normal yields were anticipated as August weather conditions were optimal. Producers are hoping for a clear, open fall to finish the crop.

Trading

Desert Southwest

  • A light volume of New Mexico cotton containing color 41 and 32, leaf 4 and 5, and staple mostly 37 sold for around 50.00 cents per pound, FOB car/truck, and compression charges not paid.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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