Weekly Cotton Market Review – USDA

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Truck loaded with modules backing into gin. ©Debra L Ferguson

Spot quotations averaged 71 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 64.74 cents per pound for the week ending Thursday, January 2, 2020. This is the highest weekly average since weekending May 9, 2019 when the average was 67.45 cents.

The weekly average was up from 64.03 last week, but down from 67.09 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 64.46 cents Friday, December 27 to a season high of 65.13 cents Monday, December 30.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 2 totaled 75,558 bales. This compares to 91,475 reported last week and 9,450 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 878,401 bales compared to 243,295 bales the corresponding week a year ago. The ICE March settlement price ended the week at 69.27 cents, compared to 68.70 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #11 FOR UPLAND COTTON January 2, 2020

The Department of Agriculture’s Commodity Credit Corporation today announced a special import quota for upland cotton that permits importation of a quantity of upland cotton equal to one week’s domestic mill use. The quota will be established on January 9, 2020, allowing importation of 12,237,111 kilograms (56,204 bales) of upland cotton.

Quota number 11 will be established as of January 9, 2020 and will apply to upland cotton purchased not later than April 7, 2020 and entered into the U.S. not later than July 6, 2020. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period August through October 2019, the most recent three months for which data are available.

Future quotas, in addition to the quantity announced, will be established if price conditions warrant.

Southeastern Markets Regional Summary

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher for the week ending December 26, 2019 and the week ending January 2, 2020. Trading of CCC-loan equities was inactive.

Mostly cloudy conditions prevailed across Alabama, the Florida Panhandle, and Georgia during the first half of the extended two-week reporting period. Daytime high temperatures varied from the mid-50s to low 70s. Widespread thundershowers brought moderate-to-heavy rainfall to areas across the lower Southeastern region. Weekly accumulated rainfall totals measured from 1 to 2 inches in most areas, with heavier accumulations of 4 inches observed along the Gulf and Atlantic coastal areas, and in northwest Alabama.

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During the latter period, overcast skies and unseasonably warm temperatures in the low-to-mid 70s gave way to a brief window of sunny and cold weather before the return of wet conditions late week. Fieldwork was limited as soils remained soft from recent heavy rainfall. Ginning continued uninterrupted, but several gins had finished operations for the season; some others had gone to gin days as the last modules trickled in from late harvested fields. Producers considered spring planting options and made plans to attend approaching annual meetings.

Widespread showers brought heavy moisture to areas throughout South Carolina during the first weekend of the extended two-week reporting period. Day-to-day accumulated rainfall totals measured from 2 to 3 inches. Portions of eastern North Carolina received from trace amounts to around one-quarter of an inch of moisture. Daytime high temperatures varied from the upper 40s to lower 70s.

During the latter period, a mix of sun and clouds prevailed with seasonably cooler temperatures in the mid-50s to low 60s. A band of showers brought additional moisture across the upper Southeastern region again late week. Ginning continued; some additional gins had finished operations for the season and others had gone to gin days as they waited for the last fields to be harvested.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 3, and staple 37 for first and third quarter 2020 delivery. No sales were reported. No additional inquiries were reported. Most mills have covered their immediate-to-nearby raw cotton needs. Demand for ring-spun and open-end yarn was moderate.

Demand through export channels was moderate. Agents throughout the Far East inquired for any discounted or low grade styles of cotton.

Trading

  • For the week ending December 26, a moderate volume of color 21, 31, and 41, leaf 2-4, staple 36-38, mike 43-49, strength 28-32, and uniformity 80-83 sold for around 125 points on ICE March futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A moderate volume of color mostly 41, leaf 3 and 4, staple 36-39, mike 43-49, strength 29-32, and uniformity 81-83 sold for around 50 to 100 points on ICE March futures, same terms as above.
  • Similar lots containing color 41, staple 34-36, and strength 26-28 sold for around 400 points off ICE March futures, same terms as above.
  • For the week ending January 2, no trading activity was reported.

South Central Markets Regional Summary

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher for the week ending December 26, 2019 and the week ending January 2, 2020. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts. Producers are hopeful that a trade deal with China will spur inactive trading.

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Unseasonably warm weather prevailed throughout the two-week report period, interspersed with a day or two of cool temperatures. Daytime temperatures throughout were in the 40s to 70s. Overnight lows were in the 40s. Approximately 2 inches of rain fell during the period, which hampered the retrieval of modules from a few fields. The Dumas Classing Office had a single shift operating, while the Memphis Classing Office continued to operate with two shifts.

A number of gins have completed annual pressing operations, but a few gins in the Memphis territory will operate well into January. Producers made plans to attend regional and national industry meetings, including the Beltwide meetings in Austin, TX. According to the U.S. Drought Monitor, soil moisture conditions were adequate throughout the entire region.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher for the week ending December 26, 2019 and the week ending January 2, 2020. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts. Producers are hopeful that a trade deal with China will stimulate lackluster sales.

Unseasonably warm weather prevailed during the two-week report period, interspersed with a few days of cool temperatures. Daytime temperatures were in the 50s to 70s. Overnight lows were in the 40s. Approximately 2 inches of rain fell during the period, which slowed the process of bringing modules to the gin in a few cases. The Rayville Classing Office had a single shift operating. Producers made plans to attend regional and national industry meetings, including the Beltwide meetings in Austin, TX. According to the U.S. Drought Monitor, abnormal dryness expanded in Louisiana.

Trading

North Delta

  • For week ending December 26, no trading activity was reported.

South Delta

  • For week ending January 2, a light volume of CCC-loan equities traded for around 10.00 cents per pound.
  • No trading activity was reported for week ending December 26, 2019 and for week ending January 2, 2020.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was active. Supplies were heavy. Demand was very good. Average local spot prices were sharply higher for the week ending December 26, 2019 as news of the U.S. and China reached a Phase One trade deal. Markets continued higher for the week ending January 2, 2020. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was moderate.

Fieldwork was active in eastern Texas for the extended two-week period. Fields were plowed, rows were built, and fertilizer was applied. Ginning continued in the Winter Garden area and for a few gins in the Coastal Bend. Ginning continued in north Texas.

In Kansas, all gins were in operation, and a few were about 50 percent completed. According to local sources, ginners’ estimates were adjusted as more cotton was delivered to gins than anticipated. Low grain prices compelled some producers, including a few for the first time ever, to grow cotton in-lieu of wheat.

In Oklahoma, ginning continued and was estimated at 70 to 75 percent done. Fieldwork was active with fertilizing and planting cover crops underway. Warehouses were busy receiving cotton. Shipping was slow in the two-week period.

The Corpus Christi Classing Office reported the season average of Upland color 31 and better was at 65 percent, leaf 3 and better at 86 percent, staple averaging 36.06, mike averaging 4.38, and strength averaging 30.87 for week ending December 26.

West Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. Demand was very good. Average local spot prices were sharply higher for the week ending December 26, 2019 as news of the U.S. and China reached a Phase One trade deal. Markets continued higher for the week ending January 2, 2020. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was light.

Daytime high temperatures were in the low 50s to low 70s, and overnight lows were in the teens to 30s. Fieldwork was active. Light tilling and fertilizer applications were applied. Some turned on irrigation systems to water in fertilizer. A few locations received light amounts of rainfall. The end of the harvesting and ginning season is drawing to a close in the High Plains.

Most fields have been harvested and the modules have been trucked to the gin yards. Several gins had completed pressing services for the season. Only a few gins have finished pressing services in the Rolling Plains. Ginning schedules were adjusted for the holiday observances, and sample receipts declined at the Classing Offices. Warehouses were busy receiving and shipping cotton.

Trading

East Texas

  • For the week ending December 26, in Texas, a heavy volume of color 31 and better, leaf 3 and better, staple 37-39, mike 35-48, strength 29-34, and uniformity 79-83 sold for around 66.75 cents per pound, FOB warehouse (compression charges not paid).
  • A heavy volume of mostly color 41, leaf 3 and 4, staple 37-40, mike 40-50, strength 28-34, and uniformity 77-82 sold for around 63.25 cents, same terms as above.
  • In Oklahoma, a moderate volume of mostly color 21 and 31, leaf 2, staple 35, mike 50-52, strength averaging 31.9, and uniformity averaging 82.0 sold for around 61.00 cents, FOB car/truck (compression charges not paid).
  • A light volume of 2019 CCC-loan equities traded for 5.75 cents.
  • For the week ending January 2, in Texas, a heavy volume mixed lot of mostly color 31 and better, leaf 3 and better, staple 34, strength averaging 30.1, and uniformity averaging 80.1 traded for around 62.75 cents , FOB warehouse (compression charges not paid).
  • In Oklahoma, a moderate volume of mostly color 21 and 31, leaf 3 and better, staple 37 and longer, mike 37-49, strength averaging 33.5, and uniformity 80-82 traded for 67.00-68.00 cents, FOB car/truck (compression charges not paid).
  • Similar lots containing staple 34 and 35 traded for 62.00-63.00 cents, same terms as above.
  • Mixed lots containing mostly color 41 and better, leaf 4 and better, staple 31-34, mike 33-50, strength averaging 30.0, uniformity averaging 80.0, with 25 percent extraneous matter traded for 56.00-57.00 cents, same terms as above.
  • A light volume of 2018 CCC-loan equities traded for 0.00 to 0.04 cents.
  • A moderate volume of 2019 CCC-loan equities traded for 2.75 to 6.00 cents.

West Texas

  • For the week ending December 26, a heavy volume of color 11 and 21, leaf 1 and 2, staple 37 and longer, mike 36-49, strength 30-33, and uniformity 79-82, sold for around 68.25 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a heavy volume of mostly color 31, 41, and 32, leaf 3 and 4, staple 32-37, mike 34-48, strength 27-31, uniformity 76-79, and 50 percent extraneous matter sold for around 56.00 cents, same terms as above.
  • A moderate volume of mostly color 23 and 33, leaf 3 and 4, staple 35 and 36, mike 25-45, strength 29-33, uniformity 78-81, and 25 percent extraneous matter sold for around 52.00 cents, same terms as above.
  • A light volume of 2019 CCC-loan equities traded for 7.50 cents.
  • For the week ending January 2, a moderate volume of mostly color 21 and 31, leaf 2 and better, staple 37 and longer, mike 37-49, strength averaging 31.0, and uniformity averaging 80.56 sold for 68.00-68.50 cents, FOB car/truck (compression charges not paid).
  • Similar lots containing staple 34 and longer, with mike 50 and higher sold for 62.25-63.25 cents, same terms as above.
  • A light volume mixed lot of mostly color 21 and 22, leaf 2 and better, staple 32-34, mike averaging 44.0, strength averaging 28.5, and uniformity averaging 80.5 sold for around 58.50 cents, same terms as above.
  • A moderate volume of mixed lots mostly color 32, 42, 33, and 43, leaf 6 and better, staple 31-35, mike 27-50, strength averaging 29.0, uniformity averaging 80.0, and 25 percent extraneous matter sold for 50.00-51.00 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was good. Producers delivered 2019-crop cotton into the CCC-loan program or into merchant marketing pools. Average local spot prices were sharply higher for the week ending December 26, 2019 as news of the U.S. and China reached a Phase One trade deal. Markets continued higher for the week ending January 2, 2020. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Daytime high temperatures were in the 50s and 60s for central Arizona. Rainfall was recorded the week of December 23 and approximately one-half of an inch was received. Overnight lows were in the 30s and 40s for the two-week period. California mountain routes were closed due to snow on December 26, which delayed the delivery of samples from the Desert Southwest to the Visalia Classing Office. Wet weather moved into the El Paso, TX area January 2.

Harvesting continued in Arizona. Ginning was steady in Arizona, New Mexico, and El Paso, TX. Fewer gins, late harvest (due to inclement weather), which created a late start to ginning, pushed gins into operating into January and February. Warehouses were busying receiving and shipping cotton. The Visalia Classing Office continues to operate two-shift schedule.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was moderate. Average local spot prices were sharply higher for the week ending December 26, 2019 as news of the U.S. and China reached a Phase One trade deal. Markets continued higher for the week ending January 2, 2020. 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.

Highway 99 (the main artery into southern California from the Valley) and the Highway 58 through the Tehachapi Pass was closed for a day due to snow and strong winds on December 26. Nearly 2 feet of snow and ice was received on Highway 99. The California Highway Patrol escorted vehicles through the Tehachapi Pass late evening on December 26. Nearly one-half of an inch of rain was received in the SJV for week ending December 26.

Daytime high temperatures were in the 50s and 60s for the two-week reporting period. Early morning fog was present the week ending January 2. No rainfall was recorded in the period. The first manual snow survey of the season was conducted on January 2. The California Department of Water Resources recorded the snowpack at 33 and ½ inches, which is equivalent to around 11 inches of water content.

Ginning continued. The combination of fewer gins and late start to ginning pushed peak sample receipts into January, instead of the usual peak receipts received in November. The Visalia Classing Office continues to operate a two-shift schedule.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2018-crop cotton were light. Supplies of 2019-crop cotton were heavy. Demand was light. Average local spot prices were lower. 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.

Highway 99 (the main artery into southern California from the Valley) and the Highway 58 through the Tehachapi Pass was closed for a day due to snow and strong winds on December 26. Nearly 2 feet of snow and ice was received on Highway 99. The California Highway Patrol escorted vehicles through the Tehachapi Pass late evening on December 26. This delayed the delivery of samples from the Desert Southwest to the Visalia Classing Office.

Daytime temperatures were mostly in the 50s and 60s for the Far West in the two-week reporting period. The region received approximately one-half of an inch of rainfall for week ending December 26. No moisture was recorded for week ending January 2; although early morning fog was present in the San Joaquin Valley of California.

Gin yards were packed with modules. Ginning was steady. Warehouses were busying receiving cotton. The Visalia Classing Office continues to operate a two-shift schedule.

Trading

Desert Southwest

  • For the week ending December 26, no trading activity was reported.
  • For the week ending January 2, a heavy volume of Arizona cotton, color 11 and 21, leaf 2 and better, staple 37-40, mike averaging 45.9, strength averaging 31.0, and uniformity averaging 82.0 sold for around 70.50 cents per pound, uncompressed, FOB warehouse (compression charges not paid).
  • A moderate volume of mostly color 31 and better, leaf 2 and better, staple 36-38, mike 37-49, strength 32 and 33, and uniformity 80-84 sold for around 69.25 cents, same terms as above.
  • A light volume mix lot of mostly color 21 and better, leaf 2 and better, staple 34-37, mike 37-49, strength 29-33, and uniformity 79-81 sold for around 68.50 cents, same terms as above.
  • A moderate volume of color mostly 21, leaf 2 and better, staple 35-38, mike 50-52, strength averaging 31.8, and uniformity averaging 81.4 sold for around 66.50 cents, same terms as above.

San Joaquin Valley

  • No trading activity was reported for week ending December 26, 2019 and for week ending January 2, 2020.

American Pima

  • For the week ending December 26, no trading activity was reported.
  • For the week ending January 2, a light volume of trading was reported.



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