Weekly Cotton Market Review – USDA

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Spot quotations averaged 224 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 62.97 cents per pound for the week ending Thursday, February 6, 2020.

The weekly average was down from 65.21 last week and from 68.68 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 62.38 cents Monday, February 3 to a high of 63.48 cents Thursday, February 6.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 6 totaled 22,305 bales. This compares to 62,139 reported last week and 50,215 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,238,993 bales compared to 512,808 bales the corresponding week a year ago. The ICE March settlement price ended the week at 67.91 cents, compared to 69.05 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #16 FOR UPLAND COTTON February 6, 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 13, 2020, allowing importation of 12,240,623 kilograms (56,220 bales) of upland cotton.

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Quota number 16 will be established as of February 13, 2020 and will apply to upland cotton purchased not later than May 12, 2020 and entered into the U.S. not later than August 10, 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 lower. Trading of CCC-loan equities was inactive.

Sunny to overcast conditions were observed across the lower Southeast during the period. Daytime high temperatures varied from the low 50s to low 70s. Widespread showers brought light moisture to areas throughout Alabama, the Florida Panhandle, and Georgia early in the period and heavy rainfall late in the week.

Flash flood watches were issued for areas throughout the region at the end of the period as strong storms moved across the region. Weekly accumulated precipitation totals measured from 1 to 2 inches. Fieldwork and activities remained at a standstill due to wet conditions. Ginning neared completion as most gins had finished operations for the season; some remained on gin days as they waited on the last fields to be harvested and modules to arrive on gin yards. The Macon Classing Office continued to process samples.

Similar conditions were observed across the upper Southeast region during the period. Daytime high temperatures varied from the mid-40s to upper 70s. Widespread rain showers brought moderate precipitation to areas across the Carolinas and Virginia early and late in the period. Weekly accumulated precipitation totals measured from one-half of an inch to two inches in some areas. Flash flood watches and river flood warnings were issued in some areas during the week.

Fieldwork was at a standstill due to wet conditions. Ginning rapidly neared completion as most gins had finished operations for the season; some gins remained on gin days as they waited for the last fields to be harvested and modules to accumulate on gin yards. The Florence Classing Office continued to process samples. Producers, ginners, and industry members attended the 21st Annual Virginia Cotton meeting on February 6.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for third and fourth quarter delivery. No sales were reported. Most mills have covered their raw cotton needs through the second quarter. No additional 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

  • Heavy volume mixed lots containing color 52 and better, leaf 2-4, staple 33 and longer, mike 43-49, strength 25-29, and uniformity 80-83 sold for around 66.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • Moderate volume 2018-crop, even-running lots containing color 21 and 31, leaf 2 and 3, staple 36 and longer, mike 37-49, strength 28-32, and uniformity 80-82 sold for around 65.00 cents, FOB car/truck (Rule 5, compression charges paid).
  • Light volume even-running lots containing color 41-52, leaf 3-5, staple 38, mike 35-49, strength 28-30, and uniformity 79-82 sold for around 57.00 cents, same terms as above.
  • A light volume mixed lot containing color 41-52, leaf 2-4, staple 35 and 36, mike 37-47, strength 26-28, and uniformity 79-81 sold for around 700 points off ICE March 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 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. Cotton prices moved upward slightly based on the news that the People’s Bank of China lowered domestic interest rates and injected around 245 billion U.S. dollars into its economy.

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Unsettled winter weather was experienced during the week. Rain early in the week gave way to clear skies with daytime temperatures in the upper 60s. A cold front late week brought a wintry mixed of rain and sleet, especially in the northern areas of the region.

Overnight lows dropped into the upper 20s before rebounding to the 30s. Areas that received the heaviest amounts of precipitation reported less than 2 inches of rain. Saturated fields hindered any type of field activity. Several gins were working at capacity; a few others were working on gin days only. A few weather related 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 slow. 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. Cotton prices moved up slightly based on the news that the People’s Bank of China lowered domestic interest rates and injected around 245 billion U.S. dollars into its economy.

Variable climatic conditions were experienced during the week. Clear and mild conditions early in the week gave way to cloudy skies, with daytime temperatures in the upper 40s, as a cold front late week moved through the region. Overnight lows in the 50s briefly dropped into the low 30s. Most areas reported less than 1 inch of rain. Saturated fields continued to prevent most field activities.

Several gins remained in steady operation, while a few were only working on gin days as they waited for the delivery of modules from muddy fields. The Rayville Classing Office continued to operate one shift. According to the U.S. Drought Monitor, abnormal dryness in Louisiana continued to persist in the drier portions of the state. Producers attended local and regional industry meetings.

Trading

North Delta

  • No trading activity was reported.

South Delta

  • A light volume of 2018-crop cotton containing color 21 and 31, leaf 2 and 3, staple 36 and longer, mike 37-49, strength 28-32, and uniformity 80-82 sold for around 65.00 cents, FOB car/truck (Rule 5, compression charges paid).

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 light to moderate. Interest was best from China, Pakistan, and Thailand. Fields were pre-watered and fertilizer was applied in the Rio Grande Valley.

Daytime high temperatures in Harlingen were in the 60s to mid-70s, and overnight lows were in the upper 40s to upper 60s. Soil temperatures had begun to warm. Cotton planting neared and producers considered which seed varieties to plant. Alternative crops were planted. Beneficial rainfall in the Upper Coast and Coastal Bend halted pre-plant fieldwork until the fields firmed enough to support equipment. Cold, rainy weather persisted in the northern Blackland Prairies and shut down all fieldwork.

In Kansas, ginning neared completion. Fieldwork was stalled because of soggy fields from recent snow melt off. Producers were eager to begin strip tilling the fields. Reports indicated that an increase in planted acres was expected, compared to last season. Producers ordered planting seed. In Oklahoma, a winter storm brought a light dusting of snow and isolated rain showers. Fieldwork was inactive. Ginning continued, but missed a shift at the onset of the storm moving through the region. Regional meetings were held and well attended.

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. Foreign inquiries were light to moderate. Interest was best from China, Pakistan, and Thailand.

Mild weather ushered in the period with daytime highs in the mid-70s. A strong cold front arrived February 4, bringing snow accumulations up to 14 inches in a two-day period. Blowing wind caused snow drifts and hazardous travel conditions. Winter storm watches and warnings were issued. The wind chill factor was below zero for some areas.

Daytime highs were in the low 20s to mid-70s, and overnight lows were in the teens to mid-40s. Fire danger was elevated due to high winds. Fieldwork was stalled. Ginning continued at the few gins that were in operation. Meetings included a county cotton conference and auxin applicator training.

Trading

East Texas

  • In Kansas, an even-running lot containing a light volume of color 31, leaf 3 and 4, staple 36, mike 39-46, strength 31-32, and uniformity 80-81 sold for around 62.75 cents per pound, FOB car/truck (compression charges not paid).
  • In Oklahoma, a moderate volume of mostly color 31 and 41, leaf 3 and 4, staple 38, mike 40-44, strength 32-34, and uniformity 80-83 sold for around 63.00 cents, same terms as above.
  • A moderate volume of color 41 and 42, leaf 4 and 5, staple 34 and 35, mike averaging 50.3, strength averaging 33.2, and uniformity averaging 81.7 sold for around 57.75 cents, same terms as above.
  • A light volume of 2018-crop CCC-loan equities traded for -0.50 cents.

West Texas

  • An even-running lot containing a heavy volume of color 21 and 31, leaf 2 and 3, staple 36 and 37, mike 35-49, strength 28-33, and uniformity 80-83, sold for around 61.25 cents per pound, FOB car/truck (compression charges not paid).
  • A heavy volume of 2018-crop cotton mostly color 21 and 31, leaf 2 and 3, staple 36 and longer, mike 35-49, strength 28-35, and uniformity 78-83 sold for around 59.75 cents, same terms as above.
  • A heavy volume of mostly color 42 and 43, leaf 6 and better, staple 32 and longer, mike 36-49, strength 24-34, uniformity 75-81, and 50 percent extraneous matter sold for around 53.50 cents, same terms as above.
  • A moderate volume of 2019-crop CCC-loan equities traded for 4.25 to 10.75 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 February 6. Foreign mill inquiries were light. Some shippers were cautiously optimistic with the cotton market, due to the impacts of the coronavirus in China and surrounding countries. Warehouses were shipping cotton.

Daytime high temperatures remained mild in central Arizona. Overnight lows were in the mid-30s to mid-40s. No rainfall was in the immediate forecast. Planting seed was delivered to Yuma producers. Initial sowing will likely begin next week as soil temperatures warm up. A few sources suggested a drop in cotton acreage in central Arizona, due to increased plantings for grain and alfalfa.

A winter advisory was in effect for El Paso, TX. Overnight lows dipped into the high 20s. Snow and icy roads halted fieldwork and slowed commutes in El Paso, TX. Prior to snowfall, some fields were prepped for planting. Local sources reported that dairies are not offering contracts for hay, so cotton acreage will see a boost. The Visalia Classing Office continues to operate 2 shifts.

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. Some shippers were cautiously optimistic with the cotton market, due to the impacts of the coronavirus in China and surrounding countries. Warehouses were shipping cotton.

Temperatures were cold with highs in the 50s. Overnight lows were in the low 30s to low 40s. Conditions remained dry. The Valley could use a good general rainfall. Fieldwork was active. Fields were readied for planting season throughout the region. The Visalia Classing Office continues to operate 2 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 light.

A few sales were reported and in general for prompt shipment. Interest was best from India, Pakistan, and Turkey. Some shippers were cautiously optimistic with the cotton market, due to the impacts of the coronavirus in China and surrounding countries.

The Department of Agriculture’s Commodity Credit Corporation announced the Pima Competitiveness Payment rate of 6 cents is in effect from 12:01 a.m., Eastern Time, Friday, February 7, 2020, through midnight, Eastern Time, Thursday, February 13, 2020. This is the first payment since March, 2010 and can be viewed here.

Cold temperatures prevailed. Daytime high temperatures were in the low 50s for most of the Far West region. Overnight lows were in the 20s and 30s. Yuma, AZ producers received planting seed. Soil temperatures were not optimal for planting at this time. Fields were readied for planting throughout the region. The Visalia Classing Office continues to operate 2 shifts.

Trading

Desert Southwest

  • Mixed lots of a moderate volume of mostly color 31 and better, leaf 3 and better, staple 34 and longer sold for around 64.50 cents per pound, uncompressed, 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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