Weekly Cotton Market Review – USDA

Cotton picker and modules in picked field at sunset. ©Debra L Ferguson

Average spot quotations were 216 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 60.97 cents per pound for the week ending Thursday, October 17, 2019.

The weekly average was up from 58.81 last week, but down from 74.67 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 59.36 cents Monday, October 14 to a season high of 62.13 cents Thursday, October 17.

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Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 17 totaled 23,191 bales. This compares to 13,540 reported last week and 4,808 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 158,303 bales compared to 27,380 bales the corresponding week a year ago. The ICE December settlement price ended the week at 64.99 cents, compared to 61.42 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was slow. Supplies were moderate. Demand was very light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Mostly cloudy conditions were observed in areas from the Gulf Coast into central Georgia during the week.

A cold front brought overcast conditions, mixed with scattered rain showers, to north Alabama and adjacent areas. Precipitation totals measured up to 2 inches of moisture. The front brought daytime high temperatures in the 60s and 70s during the week. In areas of Alabama, the Florida Panhandle, and Georgia that missed the rain once again, moderate to extreme drought conditions persisted, according to the U.S. Drought Monitor.

In Georgia, the dry conditions negatively impacted yields in some areas. Defoliation was also hampered by lack of moisture in some fields. In many areas, producers continued to hope for rainfall to invigorate late-planted fields and to alleviate the dry and dusty harvest conditions. Harvesting was slowed in a few places due to inclement weather, but otherwise advanced at a steady pace.

The Macon Classing Office began operating 24 hours by adding a third shift mid-week. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 15, harvesting advanced to 40 percent completed in Georgia and 36 percent in Alabama.

The cold front that entered the region brought cool and overcast conditions across the Carolinas and Virginia. Temperatures were in the upper 60s to 70s. Widespread shower activity brought around one and one-half inches of precipitation to areas of the Pee Dee region and coastal Carolinas.

Despite the moisture, most cotton growing areas were plagued by expanding moderate-to-extreme drought conditions in the Carolinas; while abnormally dry conditions persisted 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 were delayed in areas impacted by the cold, wet conditions. The Florence Classing Office added a third shift and began operating 24 hours during the week. According to NASS, cotton harvested reached 38 percent in Virginia and South Carolina, and 29 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 light.

Demand through export channels was light. Indonesian mill buyers inquired for a light volume of color 31, leaf 3, and staple 36 and 37 for December shipment. Vietnamese mill buyers inquired for a light volume of color 31, leaf 3, and staple 36 for December/January 2020 shipment. Pakistani mill buyers inquired for a light volume of color 41, leaf 4, and staple 36 for November through January 2020 shipment.

No additional sales were reported.

Trading

  • A light volume of 2018-crop cotton, color 31 and better, leaf 3 and better, staple 36 and longer, mike 37-43, strength 26-31, and uniformity 79-83 traded for around 65.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume mixed lot of cotton, mostly color 43 and better, leaf 5 and better, staple 37 and longer, mike 32-47, strength 28-34, and uniformity 79-83, with 25 percent extraneous matter sold for 58.00 cents, same terms as above.

South Central Markets Regional Summary

North Delta

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

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Another storm front brought widespread rain showers and seasonably cool temperatures. Up to 2 inches of moisture were reported, which eliminated areas of abnormal dryness in eastern Arkansas and western Tennessee, according to the U.S. Drought Monitor. Some cotton production areas in Missouri remained abnormally dry. Daytime highs were in the 60s and 70s. Overnight lows were in the 40s.

Outdoor activities, including harvesting, defoliation, and stalk shredding were delayed in most places, due to wet conditions. Re-growth was observed in some defoliated fields. Ginning proceeded steadily. According to the National Agricultural Statistics Service’s Crop Progress report released October 15, harvesting reached 54 percent completed in Arkansas, 23 in Missouri, and 35 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 1,000 to 1,700 pounds per acre.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was very light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. A lingering storm front brought widespread rain showers and seasonably cool temperatures throughout the region.

Approximately 2 inches of moisture were reported in most areas, with higher amounts reported in localized places. Daytime highs were in the 60s and 70s. Warmer temperatures were in the forecast for the week ahead. Overnight lows were in the 60s and 70s.

Fieldwork was delayed in most places due to wet conditions. Re-growth was observed in some defoliated fields. Defoliation was delayed on a few late-planted fields due to inclement weather. The rainfall did contract areas of drought and abnormal dryness in Louisiana, according to the U.S. Drought Monitor.

Most of Mississippi remained abnormally dry, with pockets of moderate drought in cotton producing areas. Ginning proceeded steadily. According to the National Agricultural Statistics Service’s Crop Progress report released October 15, harvesting reached 72 percent completed in Louisiana and 51 percent in Mississippi. NASS rated the crop condition mostly fair-to-good in Louisiana and Mississippi. Reported yields ranged from 1,200 to 1,800 pounds per acre.

Trading

North Delta

  • A light volume of 2018-crop cotton, color 31 and better, leaf 3 and better, staple 36 and longer, mike 37-43, strength 26-31, and uniformity 79-83 traded for around 65.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of 2018-crop CCC-loan equities sold for 0 points.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary .

East Texas

Spot cotton trading was active. 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 moderate. Interest was best from Pakistan and Taiwan.

One to three and one-half inches of rain was received in south Texas and in the Winter Garden area. Harvesting continued, and ginning was expected to be completed in January. Intermittent rainfall in the Coastal Bend brought up to 2 inches of additional moisture. Harvesting neared completion and croplands were disked. Ginning was expected to continue into late November; although a few gins had finished.

Slow, soaking rainfall was received in the Blackland Prairies. Harvesting continued in some counties, but was finished in other counties. Ginning continued. Crop meetings were held in the Rio Grande Valley.

All fields received defoliants and boll openers in Kansas, ahead of the freeze. Producers knew in advance of the upcoming freeze and were able to strategically manage defoliation applications to efficiently use the weather to enhance applications. This event was important because it saved on further defoliation costs, and gives opportunity for more profit.

In Oklahoma, producers experienced challenges killing the plants, and the freeze that occurred during the reporting period helped with defoliation efforts in some areas. There was some concern that the leaves were hanging onto the plants in localized areas. Elsewhere in the southwestern counties, harvesting expanded. The opportunity for large harvesting capacity exists in this area, and some of the gins were running 24 hours.

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 active. Foreign inquiries were moderate. Interest was best from Pakistan and Taiwan.

Arctic air moved into the region on October 11 and overnight low temperatures in the Texas Panhandle were in the 20s, with wind chills in the teens. Snow fell in Perryton. Warmer temperatures returned mid-week, with daytime high temperatures in the low 50s to upper 80s. Fieldwork continued.

The Arctic blast abetted defoliation, and the leaves had begun to fall away from the plants. According to local reports, the freeze was significant because it was forecasted about 5 days in advance, allowing producers to apply defoliants in a timely manner, thus eliminating additional applications.

Harvesting and ginning expanded. Approximately 30 percent of the gins in the Lubbock Classing Office territory have opened for the season. Industry meetings were held.

Trading

East Texas

  • In Texas, an even running lot containing a light volume of color 11 and 21, leaf 1 and 2, staple 37 and 38, mike 35-42, strength 31-35, and uniformity 81-83 sold for around 63.25 cents per pound, FOB warehouse (compression charges not paid).
  • 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, same terms as above.
  • A heavy volume of color 41 and better, mostly leaf 3 and better, staple 36 and longer, mike 40-53, strength 26-33, and uniformity 78-84 sold for 60.00 to 61.00 cents, same terms as above. A heavy volume of mostly color 11 and 21, leaf 1 and 2, staple 35 and 36, mike 35-42, strength 28-31, and uniformity 79-82 sold for around 59.50 cents, same terms as above.
  • A light volume of 2019-crop CCC-loan equities traded for 4.25 cents.
  • A heavy volume of 2018-crop CCC-loan equities traded for -1.00 to 2.50 cents.

West Texas

  • A light volume of 2018-crop cotton, mostly color 42 and better, leaf 6 and better, staple 35 and longer, mike averaging 41.6, strength averaging 31.3, uniformity averaging 81.3, and 50 percent extraneous matter sold for around 51.50 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of 2019-crop cotton, mostly color 21 and better, leaf 2 and 3, staple 33, mike 37-42, strength 25-26, and uniformity 77-78 sold for around 49.50 cents, same terms as above.
  • A light volume of new-crop cotton, mostly color 22, 32, and 33, leaf 3 and 4, staple 33, mike averaging 43.0, strength averaging 27.1, and uniformity averaging 80.2 sold for around 48.50 cents, same terms as above.
  • A heavy volume of 2018-crop CCC-loan equities traded for 0.00 to 2.25 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. Temperatures were in the 80s and 90s in Arizona. Harvesting neared completion in Yuma. Yuma ginning was halted by a gin fire early in the reporting period. No injuries were reported. Ginning resumed after repairs were made.

Defoliation activities progressed in central Arizona. Harvesting gained momentum. No ginning was reported. Safford Valley producers applied defoliants to the crop. Ginning was expected to get underway in about 5 days. Temperatures continued to be mild in New Mexico and El Paso, Texas.

Visit the My Market News portal to view the latest Classing Office weekly statistics for each office, which are updated every Friday morning during the active classing season.

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. Temperatures were in the 70s and 80s. Harvesting gained momentum throughout the Valley.

Industry representatives were concerned about yields, due to cold spring temperatures and early lygus infestations. Producers hoped for near average yields. More gins began pressing operations in the period. A few saw gins started up this season that did not operate last year ginning lint from the save seed program.

Visit the My Market News portal to view the latest Classing Office weekly statistics for each office, which are updated every Friday morning during the active classing season.

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. Shippers offered 2018-crop cotton.

A few new-crop sales were reported. Interest was best for color 2, leaf 2, and staple 46 and better. Some mills requested prompt shipments. Interest was best from India, Pakistan, and Peru.

Conditions were partly cloudy and temperatures dropped nearly 10 degrees as a cold front entered the region. Defoliation activities commenced in the Safford Valley of Arizona. Ginning was expected to begin in 5 to 7 days. Boll openers and defoliants were applied in the San Joaquin Valley (SJV) of California.

Sources reported that the crop was a little on the immature side. Ginning began in the SJV, but is a slow start. The Visalia Classing Office received the first new-crop samples in the period.

Visit the My Market News portal to view the latest Classing Office weekly statistics for each office, which are updated every Friday morning during the active classing season.

Trading

Desert Southwest

  • A light volume of mostly 2017-crop Texas cotton, color 21 and better, leaf 2 and better, staple 35-38, mike averaging 44.9, strength averaging 29.1, and uniformity averaging 81.5 sold for around 54.00 cents per pound, FOB warehouse (compression charges not paid).

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A moderate volume of 2019-crop cotton was sold to mills in Pakistan.

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