Weekly Cotton Market Review – USDA

Cotton modules in picked field. Mature soybean field nearby. ©Debra L Ferguson

Average spot quotations were 38 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 58.81 cents per pound for the week ending Thursday, October 10, 2019.

The weekly average was up from 58.43 last week, but down from 73.25 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 58.46 cents Tuesday, October 8 to a season high of 59.23 cents Wednesday, October 9.

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Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 10 totaled 13,540 bales. This compares to 15,300 reported last week and 1,783 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 130,033 bales compared to 22,572 bales the corresponding week a year ago. The ICE December settlement price ended the week at 61.42 cents, compared to 61.60 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

Mostly clear to fair conditions were observed in areas from the Gulf Coast into central Georgia during the week. A mix of clear to overcast conditions prevailed over north Alabama and localized showers brought moderate moisture to portions of the area over the weekend and early week. Precipitation totals measured from one-half of an inch to three-quarters of an inch of moisture. A cold front entered the region during the period and daytime high temperatures in the 90s cooled into the low to upper 80s during the week.

In areas of Alabama, the Florida Panhandle, and Georgia that missed moisture, moderate-to-extreme drought conditions expanded, according to the U.S. Drought Monitor. In Georgia, the dry conditions negatively impacted dryland fields and local experts reported that bolls appeared to be withering on the top of the crop in some areas.

Defoliation was also hampered by lack of moisture in some fields. In many areas producers would welcome a timely rainfall to invigorate late-planted fields and relieve heat stressed plants. Harvesting was uninterrupted and advanced at a rapid pace.

The Macon Classing Office added a second shift and planned to begin operating 24 hours the week of October 14. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 7, harvesting advanced to 28 percent completed in Georgia and 25 percent completed in Alabama.

Sunny and warm conditions across the Carolinas and Virginia gave way to cloudy weather and cooler temperatures in the mid-80s to upper 70s as a cold front entered the region over the weekend. Very localized shower activity brought trace amounts to around one-half of an inch of precipitation to areas of the Pee Dee region and coastal Carolinas. Despite the rainfall, most cotton growing areas have received little to no moisture in recent weeks.

Areas of moderate-to-extreme drought conditions expanded in the Carolinas, and abnormally dry conditions developed in cotton growing areas of eastern Virginia, according to the U.S. Drought Monitor. The dry conditions stressed plants, decreased plant vigor, and delayed maturity of bolls on the top of the crop. Defoliation and harvesting expanded rapidly without interruption.

The Florence Classing Office added a second shift and planned to begin operating 24 hours over the weekend. According to NASS, cotton harvested had reached 25 percent in South Carolina, 18 in Virginia, and 16 percent in North Carolina.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 34 for first and second quarter 2020. No sales were reported. Reports indicated most mills have covered their raw cotton needs through fourth quarter 2019. Demand for open-end and ring-spun yarn was moderate, but had tapered.

Demand through export channels was moderate. Vietnamese mill buyers purchased a moderate volume of color 31, leaf 3, and staple 36 for November/December shipment. Indonesian mill buyers inquired for a moderate volume of color 31, leaf 3, and staple 36 and 37 for November shipment. Pakistani mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 36 for November through January 2020 shipment. No additional sales were reported.

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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported.

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A cold front brought heavy rain showers and cooler temperatures to the region early in the week. Up to 3 inches of precipitation were reported. Daytime highs dropped into the 70s before rebounding into the upper 80s. Overnight lows were in the 50s. Low temperatures in the 40s were in the forecast for the week ahead.

Harvesting activities were delayed in many areas due to wet conditions; but fields dried sufficiently to allow harvesting to resume late in the week. Producers were concerned about re-growth in fields that had been previously defoliated and unharvested before the rains arrived. Ginning proceeded without weather delays, but a few gins reported mechanical problems.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 7, harvesting had reached 41 percent completed in Arkansas, 7 in Missouri, and 22 percent in Tennessee. NASS continued to rate the crop condition mostly good-to-excellent in Arkansas and Tennessee, and fair-to-good in Missouri. Producers reported that yields ranged from 1,100 to 1,800 pounds per acre.

South Delta

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

A cold front brought widespread rain showers and welcomed relief from hot temperatures early in the week. Up to 3 inches of moisture were reported. Daytime highs dropped into the 70s before returning to the upper 80s. Overnight lows were in the 50s. Low temperatures in the 40s and several days of rain were in the forecast. Harvesting activities were delayed in most places due to wet conditions; but fields firmed sufficiently to support harvesting equipment late in the week.

Producers were concerned about re-growth in defoliated fields that remained unharvested due to the rain. Ginning proceeded without weather delays, but some gins were slowed due to mechanical breakdowns.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 7, harvesting had reached 51 percent completed in Louisiana and 37 percent in Mississippi. NASS rated the crop condition mostly fair-to-good in Louisiana and Mississippi. Reported yields ranged from 1,300 to 1,700 pounds per acre.

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 moderate. Supplies and producer offerings were heavy. Demand was moderate. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was active. Foreign inquiries were light. Interest was best from Pakistan and Thailand.

Less than optimal harvesting conditions continued in the Blackland Prairies (BP), and the Edwards Plateau as intermittent rainfall was received. Lots of acres had received defoliant applications, and around 60 percent was harvested in the northern BP. Ginning could be finalized as soon as late November, according to local reports. Yields were discouraging and lower than expected.

Transporting modules from fields to gin yards resumed as soils firmed enough to support heavy equipment. Not all of the gins were opened for the season in the BP. Some gins in south Texas had finished pressing services, and other gins had 20-60 percent of ginning completed. Ginning in the Upper Coast is expected to continue into January. Modules were transported to the gin yards in the Coastal Bend. Stalk destruction was ongoing.

In Kansas, bolls opening was 65 percent, behind 72 last year and ahead of the five-year average of 59 percent, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on October 7. Several dry cold fronts moved in and daytime high temperatures varied in the high 50s to low 70s. Overnight lows were in the mid-40s to mid-50s in southwestern Kansas.

In Oklahoma, bolls opening reached 77 percent, up 5 from the previous year and up 2 percent from the five-year average, according to NASS. Harvesting was initiated and the Abilene Classing Office picked up the first sample receipts to be graded.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were firm. Producer interest in forward contracting was light. Trading of CCC-loan equities was moderate. Foreign inquiries were light. Interest was best from Pakistan and Thailand.

Daytime temperature highs were in the mid-60s to low 80s, and nighttime lows were in the upper 40s to low 60s. Sunny, windy conditions dried soggy fields from last week’s rainstorms and fieldwork resumed. A series of cold fronts brought cooler conditions. A possible frost or freeze is in the nearby forecast. Re-growth was a concern and could require a second or third application of defoliants.

Local reports indicated that lots of acres were ready to be harvested. Ginning activity increased as more gins began to offer pressing services. Warehouses received cotton bales. Regional field days and meetings were held.

Trading

East Texas

  • In Texas, a mixed lot containing a moderate volume of mostly color 31 and better, leaf 3 and better, staple 37 and longer, mike 37-52, strength 25-33, and uniformity 77-83 sold for around 61.00 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of mostly color 11 and 21, leaf 2 and 3, staple 35 and longer, mike 43-52, strength 26-33, and uniformity 79-84 sold for around 59.25 cents, same terms as above.
  • A mixed lot containing a heavy volume of mostly color 41 and better, leaf 2-4, staple 35-39, mike 42-53, strength 26-32, and uniformity 79-84 sold for around 57.25 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for -1.01 to 3.69 cents.

West Texas

  • A light volume of new-crop cotton, mostly color 12 and 22, leaf 1, staple 30 and 31, mike averaging 40.9, strength averaging 24.5, and uniformity averaging 78.8 sold for around 47.50 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for -0.02 to 0.66 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. CCC-loan equity trading was slow. Merchants indicated with ICE futures prices so low; offerings were at a physical price level. Foreign mill inquiries were light.

Temperatures were in the mid-to-high 90s in Arizona. Defoliation activities progressed in central Arizona. Harvesting continued in Yuma. Yields averaged two and one-half bales to two and three-quarter bales per acre. Ginning neared the halfway mark in Yuma. Temperatures continued to be mild in New Mexico and El Paso, TX. Bolls were cracking open. The crop made good progress to cut-out stage. Producers prepared equipment for harvest.

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. Merchants indicated with ICE futures prices so low; offerings were at a physical price level. Foreign mill inquiries were light.

Unseasonably warm temperatures gave way to a cool down late in the period. Temperatures were in the high 70s. Harvesting had begun in Kern and Tulare Counties. A couple of gins began pressing operations early in the reporting period. Producers debated whether to saw or roller gin save seed program cotton.

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. Foreign mill inquiries were light. Most mills remained on the sidelines. Shippers continued to offer 2018-crop cotton. Shipper prices remained firm.

Temperatures were mostly in the 90s in the Far West for most of the week. Defoliation activities commenced in the San Joaquin Valley of California. No ginning was reported.

Trading

Desert Southwest

  • A light volume of CCC-loan equities traded for 50 points per pound.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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