Weekly Cotton Market Review – USDA

Photo: Kay Ledbetter, Texas AgriLife Extension

Spot quotations averaged 101 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 66.49 cents per pound for the week ending Thursday, January 16, 2020.

The weekly average was up from 65.48 last week, but down from 68.77 cents reported the corresponding period a year ago. Daily average quotations ranged from a season high of 67.07 cents Monday, January 13 to a low of 65.76 cents Thursday, January 16.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 16 totaled 126,308 bales. This compares to 100,122 reported last week and 54,137 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,104,831 bales compared to 326,122 bales the corresponding week a year ago. The ICE March settlement price ended the week at 70.22 cents, compared to 70.69 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #13 FOR UPLAND COTTON January 16, 2020

The Department of Agriculture’s Commodity Credit Corporation 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 23, 2020, allowing importation of 11,008,601 kilograms (50,562 bales) of upland cotton.

Quota number 13 will be established as of January 23, 2020 and will apply to upland cotton purchased not later than April 21, 2020 and entered into the U.S. not later than July 20, 2020. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period September 2019 through November 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. Trading of CCC-loan equities was inactive. Merchants purchased a light volume of cotton forfeited to the CCC-Catalog.

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Mostly cloudy to overcast conditions dominated the weather pattern across the lower Southeast during the period. A band of severe storms swept across Alabama and Georgia over the weekend bringing heavy rainfall, damaging winds, and cutting power to tens of thousands of residents. The storms spawned five tornados in central and north Alabama, three deaths, and several injuries were reported in Pickens County.

Moderate-to-heavy rainfall was received in areas throughout Alabama, the Florida Panhandle, and areas of north and central Georgia. Weekly accumulated rainfall totals measured from 1 to 3 inches with heavier downpours received in some locales.

Fieldwork was at a standstill due to wet conditions in recent weeks. Many gins had finished operations for the season or gone to gin days as they waited for modules to arrive from the last harvested fields. Some larger gins continued daily operations. Producers, ginners, and industry members attended the Southern Southeastern annual meeting in Savannah, GA.

Mostly cloudy to overcast conditions prevailed across the Carolinas and Virginia during the period. Daytime high temperatures were in the 60s to low 70s. Widespread showers brought moisture to areas throughout the upper Southeastern region. Precipitation accumulations measured from around one-half of an inch to around two inches of precipitation in the cotton growing areas of the Carolinas and Virginia. Fieldwork remained stalled due to wet conditions. Ginning was winding down as gins continued to finish operations for the season. Producers, ginners, and industry members attended the Southern Southeastern annual meeting in Savannah, GA.

Textile Mill

Domestic mill buyers purchased a light volume of color 41, leaf 4, and staple 35 for first quarter fill-in needs. Additional inquiries were light and no additional sales were reported. Reports indicated 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 to good. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A moderate volume of color 11-31, leaf 2-4, staple 35 and longer, mike 40-43, strength 29-31, and uniformity 80-83 sold for around 74.75 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A heavy volume of mixed lot containing color mostly 41 and 51, leaf 5 and better, staple 34 and longer, mike 43-49, strength 27-32, and uniformity 80-82 sold for around 68.50 cents, same terms as above.
  • A light volume of 2018-crop, CCC-catalog cotton, mostly color 52 and better, leaf 5 and better, staple 34 and longer, mike 37-49, strength 24-32, and uniformity averaging 78-82 sold for around 58.00 cents, FOB warehouse (compression charges not paid).

South Central Markets Regional Summary

North Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Merchants purchased a moderate volume of cotton forfeited to the CCC-Catalog. 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.

Tornadoes ripped through parts of eastern Arkansas earlier in the period, toppling power transmission poles and causing major structural damage in communities in the path of this severe weather. No fatalities were reported, but power outages in some affected areas were expected to last for up to two weeks. Heavy rainfall caused localized flooding and hindered ginning operations in a few cases; prolonged wet weather has resulted in seasonal precipitation totals that are well above average.

The Dumas Classing Office is expecting to continue classing operations well into February, due to delays in ginning a significant number of modules in Arkansas. Producers were hoping no significant quality issues will arise due to water-saturated modules remaining in the field. 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 moderate. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was slow. Merchants purchased a light volume of cotton forfeited to the CCC-Catalog. No forward contracting was reported. Cotton was being delivered to fulfill contracts. Producers took advantage of an uptick in the market to fix prices on previously booked cotton.

Several tornadoes wreaked havoc across a broad portion of Louisiana and Mississippi the Two fatalities were reported in Louisiana. Damage was estimated to be in the millions of dollars. Electrical power was not expected to be restored in some areas for as long as two weeks. Heavy rainfall caused localized flooding and hindered the retrieval of cotton modules on gin yards and turn rows; seasonal precipitation totals are well above average due to frequent rain events over the past weeks.

Producers are hoping no significant quality issues will arise due to water-saturation of modules still in the field. According to the U.S. Drought Monitor, abnormal dryness in Louisiana remained about the same as last week.

Trading

North Delta

  • A light volume of 2018-crop, CCC-catalog cotton, mostly color 41, leaf 4 and better, staple 37-40, mike 35-49, strength 29-32, and uniformity averaging 79.5 sold for around 59.50 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of 2018-crop, CCC-catalog cotton, mostly color 41, leaf 6 and better, staple 37-40, mike 35-55, strength 26-30, and uniformity averaging 79.5 sold for around 52.04 cents, same terms as above.

South Delta

  • A light volume of CCC-loan equities traded for around 9.00 to 11.00 cents per pound.

Southwestern Markets Regional Summary

East 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 moderate. Trading of CCC-loan equities was active. An open invitation to bid on a heavy volume of 2018-crop CCC-Catalog cotton closed on January 15. Foreign inquiries were moderate. Interest was best from China, Pakistan, and Taiwan.

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In the Rio Grande Valley, producers attended the pre-plant meeting. Seed was booked. Fieldwork was active with weed control and fertilizer applications. Fields were plowed and seedbeds were built. Planting is expected to begin in late February. Fields were prepared in south Texas. Ginning continued. In east Texas, industry members attended the 58th annual Blackland Income Growth Conference at Waco. Fieldwork was limited due to fog and rainy conditions. Local reports indicated that one to four inches of rainfall was received.

In Kansas, ginning continued and made good progress. All of the gins were operating. Local reports estimated that 50 percent of the crop had been ginned. Modules were hauled from the fields to the gin yards. Planting seed was being sold for next year and acreage is expected to increase compared to 2019. Kansas weather was favorable with sunshine until a storm brought beneficial rainfall on January 16.

In Oklahoma, ginning continued uninterrupted, but some gins had finished for the season. The warehouse was busy receiving and shipping bales. Shipping had increased. A cold-front brought welcomed rainfall late in the period that helped moisten fields.

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 active. An open invitation to bid on a heavy volume of 2018-crop CCC-Catalog cotton closed on January 15. Foreign inquiries were moderate. Interest was best from China, Pakistan, and Taiwan.

Snowfall was received early in the period, but quickly gave way to unseasonably warm conditions until a winter storm entered the region late in the period. Daytime high temperatures were in the low 30s to mid-70s, and overnight lows were in the 20s to 40s. Most dry fields received beneficial rainfall, and wintry precipitation. Fieldwork was active. Ginning continued. Regional meetings were attended.

Industry members were encouraged by the U.S. and China signing an initial trade deal that would increase China’s purchase of manufactured goods, agricultural products, energy, and services. The Phase 1 agreement was signed by President Donald Trump and Chinese Vice Premier Liu He on January 15 at the White House.

Trading

East Texas

  • In Texas, a mixed lot containing a heavy volume of mostly color 51, 42, 52, and 43, leaf 2-5, staple 36 and longer, mike 41-49, strength 28-34, and uniformity 79-81 sold for around 61.00 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a moderate volume of mostly color 11 and 21, leaf 2, staple 36 and longer, mike 41-44, strength 29-31, and uniformity 79-81 sold for around 68.50 cents, FOB car/truck (compression charges not paid).
  • In Oklahoma, a heavy volume of color 21, leaf 2 and 3, staple 37 and 38, mike 36-42, strength 30-33, and uniformity 80-82 sold for around 69.75 cents, same terms as above.
  • A light volume of 2018-crop, CCC-catalog cotton, mostly color 21 and 31, leaf 2 and 3, staple 36 and 37, mike 43-45, strength 30-31, and uniformity 80-82 sold for around 65.42 cents, FOB warehouse (compression charges not paid).
  • A heavy volume of 2018-crop CCC-loan equities traded for 0.00 to 7.75 cents.
  • A heavy volume of 2019-crop CCC-loan equities traded for 0.00 to 10.25 cents.

West Texas

  • A mixed lot containing a moderate volume of color mostly 11 and 21, leaf 1 and 2, staple 35 and longer, mike 39-51, strength 29-35, and uniformity 78-81, sold for around 67.00 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a heavy volume of mostly color 32, leaf 1-4, staple 32 and 33, mike 50-53, strength 25-30, and uniformity 77-82 sold for around 59.00 cents, same terms as above.
  • A heavy volume of mostly color 22, 32, and 33, leaf 2 and 3, staple 35 and longer, mike 34-52, strength 27-33, uniformity 77-81, and 25 percent extraneous matter sold for around 55.00 cents, same terms as above.
  • A light volume of 2018-crop, CCC-catalog cotton, mostly color 21 and 31, leaf 4 and 5, staple 35-37, mike 27-32, strength 28-32, and uniformity 79-82 sold for around 50.03 cents, FOB warehouse (compression charges not paid).
  • A heavy volume of 2019-crop CCC-loan equities traded for 3.50 to 8.75 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active early in the reporting period. Supplies and producer offerings were moderate. Demand was good. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Shippers and local industry were pleased with the progress to a resolution of the China/U.S. trade war. An open invitation to bid on a light volume of 2018-crop New Mexico CCC-Catalog cotton closed on January 15. No sales were reported. Foreign mill inquiries were slow.

Sunny conditions pushed high temperatures in the mid-60s to low 70s for central Arizona. No rainfall was recorded in the period. Ginning continued uninterrupted. Harvesting neared completion. Warehouse activity was brisk. Arizona producers and industry representatives attended continuing education courses and workshops. Temperatures varied in New Mexico and El Paso, TX.

Daytime highs were in the low 50s to low 60s early in the period. Temperatures reached 70 degrees late week. Ginning continued in New Mexico. Ginning in El Paso, TX reached completion. Producers considered spring planting options. Sources reported water supply was good and anticipated an increase in cotton acreage for El Paso, TX. The Visalia Classing Office continued to operate two 8-hour shifts.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Shippers and local industry were pleased with the progress to resolution of the China/U.S. trade war. Foggy mornings continued in the SJV.

Daytime high temperatures dropped from the 60s early week into the mid-50s to mid-40s late in the period. Rainfall was received late in the reporting period. Ginning continued. Producers considered spring planting options. The Visalia Classing Office continued to operate two 8-hour shifts.

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 steady. 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 moderate. Interest was best from China, Turkey, and Vietnam. Shippers and local industry were pleased with the progress to resolution of the China/U.S. trade war and with the final determination of a competing foreign growth for the ELS Cotton Competitiveness Program.

Temperatures were mostly in the 50s and 60s for the Far West. Rainfall moved into the region late in the period. Widespread early morning fog was prevalent in the San Joaquin Valley of California. Ginning was steady in California and on gin days for the Desert Southwest region. Warehouses were busying receiving cotton. The Visalia Classing Office continued to operate two 8-hour shifts.

Trading

Desert Southwest

  • A heavy volume of mostly color 21 and 31, leaf 3 and better, staple 36 and longer, mike averaging 45.0, strength averaging 31.0, and uniformity averaging 81.5 sold for 69.00 to 69.50 cents per pound, uncompressed, FOB warehouse (compression charges not paid).
  • Light volume mixed lots containing color 31 and 41, leaf mostly 4 and 5, staple 37 and longer sold for around 64.00 cents, same terms as above.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.



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