Weekly Cotton Market Review – USDA

Photo: University of Tennessee

Spot quotations averaged 74 points lower 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 65.21 cents per pound for the week ending Thursday, January 30, 2020.

The weekly average was down from 65.95 last week and from 69.81 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 65.90 cents Tuesday, January 28 to a low of 64.59 cents Thursday, January 30.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 30 totaled 62,139 bales. This compares to 49,718 reported last week and 91,509 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,216,688 bales compared to 462,593 bales the corresponding week a year ago. The ICE March settlement price ended the week at 69.05 cents, compared to 70.03 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #15 FOR UPLAND COTTON January 30, 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 February 6, 2020, allowing importation of 12,240,623 kilograms (56,220 bales) of upland cotton.

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Quota number 15 will be established as of February 6, 2020 and will apply to upland cotton purchased not later than May 5, 2020 and entered into the U.S. not later than August 3, 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 light. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive. A light volume of cotton forfeited to the CCC-Catalog was sold.

Fair to mostly cloudy conditions prevailed across the lower Southeast during the period. Daytime high temperatures were in the low 50s to mid-60s. Widespread rain shower activity brought moisture to areas from the Gulf to Atlantic coasts throughout the week. Precipitation totals measured from one-half of an inch to one inch throughout Alabama, the Florida Panhandle, and central and north Georgia.

The wet weather delayed fieldwork. Ginning neared completion; most gins had finished operations, but some remained on gin days as they waited for the last fields to be harvested and modules to accumulate on gin yards. The Macon Classing Office continued to process samples. Producers, ginners, and industry members attended the Georgia Cotton Commission’s annual meeting on January 29.

A mix of cloudy to sunny conditions were observed across the upper Southeast during the period. Daytime high temperatures were mostly in the low to high 50s. Fieldwork continued in areas were soils were firm enough to support equipment. Ginning neared completion; several gins remained on gin days as they waited for modules to arrive from the last harvested fields. The Florence Classing Office continued to process samples.

Textile Mill

Domestic mill buyers purchased a moderate volume of color 41, leaf 4, and staple 34 and 36 for March through October delivery. No additional sales or inquiries were reported. Demand for ring-spun and open-end yarn was moderate.

Demand through export channels was moderate, but had slowed during the Chinese New Year. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A heavy volume mixed lot containing color mostly 41-52, leaf 2-4, staple 33-37, mike 43-52, strength 26-31, and uniformity 79-81 sold for around 65.75 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A moderate volume of CCC-Catalog cotton was sold for 55.00 to 57.50 cents, FOB warehouse (compression charges not paid).
  • A light volume of CCC-Catalog cotton was sold for 61.75 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 light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts. A light volume of cotton forfeited to the CCC-Catalog was sold.

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Seasonably mild winter weather was experienced during the week. A cold front brought light rain to northern parts of the territory late week. Daytime temperatures were in the 40s and 50s. Overnight lows were in 30s and 40s. Areas that received the heaviest amounts of precipitation reported less than 1 inch of rain. Saturated fields continued to prevent some producers from shredding stalks in a timely manner.

Operating gins were working at capacity. No major delays were reported. Producers and other interested parties made plans to attend regional informational meetings. The Dumas and Memphis Classing Offices continued processing samples.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts.

Seasonably mild winter weather characterized conditions during the week. A cold front brought rain to parts of the region late week. Daytime temperatures were in the 40s and 50s. Overnight lows were in 30s and 40s. Some areas that received the heaviest amounts of precipitation reported nearly 2 inches of rain. Wet fields continued to prevent some producers from shredding stalks in a timely manner.

Several gins remained in operation and were working at capacity. No mechanical or weather related delays were reported. Power was restored to all areas in the wake of the tornadoes that devastated the region two weeks ago. Clean-up operations continued for some property owners.

The Rayville Classing Office continued to operate one shift. According to the U.S. Drought Monitor, abnormal dryness in Louisiana persisted in the absence of significant rain events in the drier portions of the state. Producers attended local and regional industry meetings.

Trading

North Delta

  • A light volume of CCC-Catalog cotton in mixed lots, color mostly 54 and better, leaf 6 and better, staple 35 and longer, mike 43-52, strength averaging 27.1, and uniformity 79-83 traded for around 49.00 cents per pound, FOB warehouse (compression charges not paid).

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was active. Supplies were heavy. Producer offerings were moderate. Demand was good. Average local spot prices were lower. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was slow. Foreign inquiries were moderate. Interest was best from Mexico, Pakistan, and Turkey.

Fields were pre-watered and fertilizer was applied, in the Rio Grande Valley. Conditions remained dry and rainfall would be beneficial. Producers ordered seed ahead of planting. Some areas in south Texas received beneficial rainfall early in the period. Beneficial rainfall was received in the Blackland Prairies. Fieldwork was halted since soils were too soggy to support equipment.

In Kansas, for the month of January topsoil moisture was rated 10 percent very short, 22 short, 54 adequate, and 14 percent surplus, according to the National Agricultural Statistics Service’s Crop Progress report released on January 27. Subsoil moisture was rated 9 percent very short, 23 short, 59 adequate, and 9 percent surplus.

Ginning continued in Kansas and was expected to continue through February. In Oklahoma, half of the gins continued to provide ginning services. Snow and rain was received in Kansas and in Oklahoma as winter storms moved through the area.

West Texas

Spot cotton trading was active. Supplies were heavy. Producer offerings were moderate. Demand was good. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was slow. Merchants purchased a light volume of cotton forfeited to the CCC-Catalog. Foreign inquiries were moderate. Interest was best from Mexico, Pakistan, and Turkey.

Spring-like conditions prevailed early in the reporting period with daytime high temperatures in the upper 40s to low 70s, and overnight lows in the teens to 30s. A winter storm entered the region on January 28 and brought snow and rain to the Northern High Plains. Dense freezing fog moved in overnight on January 30 with overnight temperatures below freezing.

Ginning continued at some gins. Approximately 95 percent of the gins had closed out the season and began repairs. Fewer modules remained on the gin yards as the season was drawing to an end. Fieldwork was underway, but mostly for other crops. Planting seed was ordered. Whole cottonseed that had been ginned remained around $300 per ton. County level meetings were held.

Trading

East Texas

  • In Texas, an even-running lot containing a heavy volume of color 11 and 21, leaf 2 and 3, staple 37 and longer, mike 35-46, strength 30-35, and uniformity 78-82 sold for around 67.50 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a heavy volume of mostly color 12 and 22, leaf 2, 3, and 4, staple 36 and 37, mike 39-46, strength 30-33, and uniformity 79-82 sold for around 65.50 cents, FOB car/truck (compression charges not paid).
  • A moderate volume of color 31, leaf 3 and 4, staple 36 and 37, mike averaging 50.7, strength averaging 33.9, and uniformity averaging 80.8 sold for around 64.50 cents, same terms as above.
  • A heavy volume of 2019-crop CCC-loan equities traded for 5.25 cents.

West Texas

  • A mixed lot containing a heavy volume of mostly color 22, 32, and 42, leaf 2-4, staple 35-37, mike 37-49, strength 27-34, and uniformity 78-83, sold for around 64.25 cents per pound, FOB car/truck (compression charges not paid).
  • Mixed lots containing a heavy volume of mostly color 21, 31, and 32, leaf 1-3, staple 34 and longer, mike 33-48, strength 28-33, and uniformity 78-83 sold for around 62.50 to 63.00 cents, same terms as above.
  • A heavy volume of mostly color 32 and better, leaf 3, staple 36 and 37, mike averaging 29.6, strength averaging 32.4, and uniformity averaging 79.6 sold for around 53.00 cents, same terms as above.
  • A light volume of 2018-crop CCC-Catalog cotton, color 31, leaf 4, staple 36, mike averaging 37.9, strength averaging 28.5, and uniformity averaging 79.2 sold for 58.16 cents, FOB warehouse (compression charges not paid).
  • A light volume of 2018-crop CCC-loan equities traded for -2.75 to 2.00 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. An open invitation to bid on a light volume of 2018-crop New Mexico CCC-Catalog cotton closed on January 29. Foreign mill inquiries were light.

Temperatures were in the low 70s with sunny skies for central Arizona. No rainfall was recorded in the period. Cotton-growing counties in central Arizona remained drought free, according to the U.S. Drought Monitor. Spring fieldwork was active. Yuma, AZ producers prepared fields for cotton planting.

The U.S. Drought Monitor showed mostly abnormally dry conditions for cotton-growing counties of eastern New Mexico. Topsoil moisture was rated 65 percent very short to short and subsoil moisture rated 77 percent very short to short, according to the National Agricultural Statistics Service’s New Mexico crop progress report released January 27. Ginning continued uninterrupted in the DSW.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Shippers reported a decrease in foreign mill interest due to Chinese New Year and concerns about the coronavirus.

Scattered fog was reported throughout the Valley early in the period. Temperatures were in the high 50s and low 60s. Ginning continued. Producers prepared fields for spring plantings. Local sources estimated a 25 to 30 percent decline in cotton acreage was expected. Mostly due to low demand.

According the U.S. Drought Monitor released on January 30, California remained free of drought status. January has been a dry month and the central Valley would benefit from a good general rain. The California Department of Water Resources reported the statewide snowpack at 73 percent of average as of January 29. The snowpack water equivalent was reported at 12.30 inches.

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 light. Shippers reported a decrease in foreign mill interest due to Chinese New Year and concerns about the coronavirus.

Temperatures were mostly in the 50s and 70s for the Far West. No rainfall was recorded in the period. The cotton-growing areas of the region needed a good general rainfall. Ginning continued in the San Joaquin Valley (SJV) of California. Ginning was virtually completed in Arizona, New Mexico, and El Paso, TX. SJV sources estimated a 25 to 30 percent decline in cotton acreage was expected. Mostly due to low demand and a heavy inventory. An SJV gin completed the 2019 ginning season and will not operate in 2020.

Trading

Desert Southwest

  • A heavy volume of color 21 and better, leaf 2 and better, staple 37 and longer, mike averaging 45.0, strength averaging 32.0, and uniformity averaging 81.3 sold for around 72.25 cents per pound, uncompressed, FOB warehouse (compression charges not paid).
  • Similar lots containing color 12-32, and staple 34 and longer sold for 69.75 to 70.50 cents, same terms as above.
  • A light volume of mostly color 41 and 51, leaf 3 and 4, staple 37 and longer, mike averaging 51.0, strength averaging 35.0, and uniformity averaging 82.5 sold for around 55.00 cents, same terms as above.
  • A light volume of CCC-Catalog cotton mostly color 31, leaf 3, staple 36-38, mike 36-39, strength 29-32, and uniformity 80-82 sold for 62.16 cents, FOB warehouse (compression charges not paid).

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.



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