Weekly Cotton Market Review – USDA

Photo: Fred Miller, University of Arkansas

Spot quotations averaged 27 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 61.36 cents per pound for the week ending Thursday, November 14, 2019.

The weekly average was up from 61.09 last week, but down from 72.84 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 61.67 cents Tuesday, November 12 to a low of 61.11 cents Wednesday, November 13.

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Spot transactions reported in the Daily Spot Cotton Quotations for the week ended November 14 totaled 34,069 bales. This compares to 22,261 reported last week and 5,379 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 271,345 bales compared to 56,240 bales the corresponding week a year ago. The ICE December settlement price ended the week at 64.27 cents, compared to 64.35 cents last week.

Southeastern Markets Regional Summary

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

Fair to partly cloudy conditions prevailed over Alabama, the Florida Panhandle, and Georgia over the weekend, with daytime high temperatures in the upper 60s to mid-70s. Mid-week, a strong cold front moved across the Southeastern region and daytime high temperatures dipped into the upper 40s to mid-50s. Overnight lows were below freezing in many areas. Scattered rain showers brought around one-half of an inch to one inch of moisture to portions of central and south Alabama, and the Florida Panhandle.

In Georgia, weekly precipitation totals measured from trace amounts to around one-quarter of an inch in most cotton growing areas. Defoliation and harvesting continued, but wet conditions limited the number of days for fieldwork. In some fields, low-lying areas remained too soft to support equipment. In areas where soils remained firm, producers shredded stalks and disked fields to kill weeds that have emerged since harvest. Backlogs of modules were accumulating on gin yards and gins operated at capacity.

The Macon Classing Office continued around the clock classing operations. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released November 12, harvesting advanced to 79 percent completed in Alabama and 74 percent completed in Georgia.

Similar conditions were observed across the upper Southeastern region during the period. Clear and sunny conditions over the weekend gave way to colder temperatures and overcast skies as a strong cold front moved across the Carolinas and Virginia later in the week. Daytime high temperatures dipped into the low-to-mid 40s and overnight lows were below freezing in many areas.

Light precipitation was received in most areas with portions of the coastal Carolinas receiving up to 1 inch of weekly accumulated moisture. Defoliation and harvesting continued as dry conditions allowed. Morning dew delayed harvesting in some areas. In Virginia and North Carolina, freezing temperatures and frost helped the final leaves to drop off late-planted cotton fields. Producers shredded stalks.

Gins continued to operate at capacity as they processed backlogs of modules on gin yards. The Florence Classing Office continued around the clock classing operations. According to NASS, harvesting advanced to 79 percent completed in South Carolina, 77 in Virginia, and 73 percent completed in North Carolina.

Textile Mill

Buyers for domestic mills purchased a moderate volume of color 31, leaf 4, and staple 36 for January through October 2020 delivery. Domestic mills buyers also inquired for a moderate volume of color 42 and 51, leaf 4 and better, and staple 34 and longer for February/March 2020 delivery. No additional sales were reported. Demand for open-end and ring-spun yarn was moderate.

Demand through export channels was moderate. Pakistani mill buyers purchased a moderate volume of color 42 and 51, leaf 5 and better, and staple 32 and longer for December shipment. Pakistani mill buyers also inquired for a moderate volume of color 42, leaf 4, and staple 36 for February/March 2020 shipment. No additional sales were reported.

Trading

  • A moderate volume of color 21 and 31, leaf 2 and 3, staple 36 and 37, mike 35-49, strength 30-32, and uniformity 80-82 sold for around 300 points on ICE December futures, FOB car/truck (Rule 5, compression charges paid).
  • Mixed lots containing color mostly 31 and 41, leaf 3-5, staple 36 and longer, mike 43-49, strength 29-30, and uniformity 80-82 sold for around even ICE December futures, same terms as above.
  • A moderate volume of color 31 and 41, leaf 2-4, staple 36 and 37, mike 43-49, strength 29-32, and uniformity 80-82 sold for around 66.00 cents per pound, same terms as above.
  • A moderate volume of color mostly 21, 31, and 41, leaf 2-4, staple 33 and longer, mike 43-52, strength 26-31, and uniformity 80-83 sold for around 62.00 cents, same terms as above.

Trading

  • A moderate volume of color mostly 31, leaf 2 and 3, staple 35-37, strength 27-29, and uniformity 79-81 sold for around 200 points on ICE December futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • Mixed lots containing color mostly 21 and 31, leaf 2-4, staple mostly 35-37, strength 27-31, and uniformity 80-82 sold for around 100 points on ICE December futures, same terms as above.
  • A moderate volume mixed lot containing color mostly 21 and 31, leaf mostly 2 and 3, staple mostly 34-37, mike 43-52, strength 27-30, and uniformity 80-82 sold for around 50 points on ICE December futures, same terms as above.
  • Heavy volume mixed lots containing color 52 and better, leaf 3 and 4, staple 34 and 35, mike 43-49, strength 26-29, and uniformity 80-83 sold for around 200 to 250 points off ICE December futures, 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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported.

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Two major storm systems moved through the region during the period. A flow of moisture-laden air brought up to 2 inches of precipitation to most of the region, with higher amounts reported in localized places. This front was closely followed by a blast of Arctic air, which dropped temperatures into the teens. Wind chill factors in the single digits were experienced in northern areas. Some sleet was reported, and icy roads and bridges were common. Standing water in potholes and in fields froze solid.

Harvesting was at a standstill as producers were forced to wait until cotton remaining on the stalk could dry, and for wet soils to dry sufficiently to support equipment. Clear to partly cloudy skies and cold overnight temperatures were in the forecast for the week ahead. Many gins reported problems retrieving modules from fields, due to the treacherous condition of turnrows. Most gins had problems maintaining their normal pace of operations due to mechanical and personnel problems directly related to the frigid conditions.

According to the National Agricultural Statistics Service’s Crop Progress report released November 12, harvesting had reached 91 percent completed in Arkansas, 71 in Missouri, and 73 percent completed in Tennessee. A few producers reported yields of around 1,500 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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported. Clear to partly cloudy conditions continued to characterize the weather pattern, but winter-like temperatures prevailed as a flow of cold air moved through the region.

Daytime highs were mostly in the 30s and 40s. Overnight lows briefly dropped into the low 20s, with wind chill factors in the teens in northern parts of Mississippi. Less than 1 inch of rain was reported in most areas, but more rain was in the nearby forecast.

Harvest was nearing completion in Louisiana and advanced slowly in Mississippi as producers waited for soft soils the firm enough to support equipment and to allow cotton on the stalk to dry sufficiently for picking. Ginning continued at a steady pace, with some delays reported due to mechanical problems or cold weather. According to the National Agricultural Statistics Service’s Crop Progress report released November 12, harvesting had reached 96 percent completed in Louisiana and 84 percent in Mississippi.

Reported yields of around 1,250 pounds per acre were common, with a few fields yielding as much as 1,750 pounds per acre. According to the U.S. Drought Monitor, a few pockets of abnormally dry conditions persisted in northeastern Louisiana; normal-to-surplus soil moisture conditions prevailed throughout the region.

Trading

North Delta

  • A light volume of mixed lots, old-crop cotton of mostly color 42 and better, leaf 5 and better, staple 35 and longer, mike averaging 48.8, strength averaging 29.0, and uniformity averaging 81.9 traded for around 55.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

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 very good. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was moderate. Foreign inquiries were light. Interest was best from Pakistan.

Ginning was completed in the Rio Grande Valley, and most of the gins in the Coastal Bend neared completion. Some of the gins reported setting new records for the number of bales ginned. Most of the gins in the Upper Coast were busy finalizing their season. Some of the gins in south Texas reduced their workforce to one shift, as ginning crews had moved to help process the West Texas crop.

Harvesting neared completion in the Blackland Prairies, and ginning continued uninterrupted. Yields were as much as 30 percent lower compared to last year, according to local reports. Module transportation was active.

Some of the gins in Kansas had begun operations, but some were still under repair. Harvesting was interrupted early in the reporting period from foggy, humid conditions. According to local reports, approximately 25 percent of fields had been harvested and most of that was dryland acres. Irrigated fields in Oklahoma were off of the stalk and in modules. Producers were focused on harvesting dryland acres.

Overall, more than 50 percent of the fields were harvested, and 25 percent of the state’s crop had been ginned, according to industry experts. Around 25 percent of the estimated bales had been received at the warehouse so far this season. Shipping was underway for new and old crop.

West Texas

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

An Arctic blast enveloped all parts of the area bringing windy conditions and wintry precipitation to isolated areas. The gusty winds were helpful to knock leaves off plants, and dry soggy soils. Daytime temperature highs were in the low 30s to low 80s, and nighttime lows were in the teens to low 40s. Harvesting rapidly progressed with five days of excellent weather after the cold front passed. Some areas were reported at 60 to 70 percent off the stalk, according to local reports.

Module trucks transported modules from fields to the gin yards. Gins had a sufficient supply of modules and pressed bales uninterrupted. Shiftwork continued at most of the gins that planned to operate night shifts. The area was operating at peak conditions. Gins continued to report around 30 percent yield loss compared to last year. Industry meetings were attended. Several agricultural groups toured the classing offices.

Trading

East Texas

  • In Texas, a mixed lot containing a moderate volume of mostly color 31 and 41, leaf 3 and 4, staple 34-39, mike 35-49, strength 29-34, and uniformity 78-82 sold for around 62.25 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of mostly color 31 and 41, leaf 3 and 4, staple 34 and 35, mike averaging 46.8, strength averaging 30.1, and uniformity averaging 80.5 sold for around 55.50 cents, same terms as above.
  • In Oklahoma, a moderate volume of mostly color 21 and 31, leaf 2 and 3, staple 37 and 38, mike 44-48, strength 30-34, and uniformity averaging 81.3 sold for around 65.50 cents, FOB car/truck (compression charges not paid).
  • A moderate volume of 2018-crop CCC-loan equities traded for 0.00 to 8.25 cents.
  • A heavy volume of 2019-crop CCC-loan equities traded for 4.75 to 6.50 cents.

West Texas

  • A moderate volume of mostly color 21 and 31, leaf 2 and 3, staple 35-37, mike 42-48, strength 29-33, and uniformity 78-82 sold for around 65.75 cents per pound, FOB car/truck (compression charges not paid).
  • Mixed lots containing a heavy volume of mostly color 31 and better, leaf 4 and better, staple 33-36, mike 34-50, strength 25-35, and uniformity 77-81 sold for 60.50 to 61.25 cents, same terms as above.
  • A moderate volume of mostly color 11 and 21, leaf 1 and 2, staple 33 and longer, mike averaging 50.6, strength averaging 29.2, and uniformity averaging 80.1 sold for around 56.00 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was slow for new-crop cotton. Supplies and demand were light. Some producers offered cotton in the period. A few sales were reported. Most producers put 2019-crop cotton into the CCC-loan program or into merchant marketing pools. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were mostly in the high 80s in central Arizona. Local sources reported yields were off slightly. Harvesting and ginning continued uninterrupted in the DSW. It was estimated nearly 45 percent of the crop was harvested in New Mexico and El Paso, TX.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Producers delivered 2019-crop cotton into the CCC-loan program or into merchant marketing pools. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Above-average temperatures continued as the high-pressure system remained off the coast of California. Temperatures were in the low 80s for the week. Dusty conditions affected the air quality. No chances of rainfall were in the nearby forecast. Producers were busy with harvesting activities. Ginning continued uninterrupted. Modules filled gin yards and fields. Trucks delivered bales to warehouses. Producers shredded stalks.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2018-crop cotton were moderate. Supplies of 2019-crop cotton increased. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Shippers were concerned about the lack of progress in resolving the China/US trade relations, which continued to slow demand and put pressure on new-crop prices.

Daytime high temperatures were above-average for the week in the region. No rain was in the nearby forecast. Rainfall is needed to clear the air in the San Joaquin Valley of California. Ginning continued uninterrupted. Modules were in fields and in gin yards. Producers and shippers were enthusiastic about the quality. Nearly 58 percent of the crop is staple 50 and longer and strength averaging 44.0. Sources reported the downside was that yields were slightly off the average. Second picking continues.

Trading

Desert Southwest

  • In Arizona, a light volume of 2019-crop cotton color 21 and better, leaf mostly 2, staple 36 and better, mike 37-49, strength 30-33, and uniformity 79-81 sold for around 65.50 cents per pound, uncompressed, FOB warehouse.
  • Similar lots containing staple 33 and longer, with mike 50 and higher sold for around 60.50 cents, same terms as above.
  • A light volume of mixed-crop years of New Mexico cotton mostly color 41, leaf 3 and better, staple 35 and 36, mike 41-49, strength 28-31, and uniformity 79-82 sold for around 56.00 cents, FOB car/truck (compression charges not paid).

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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