Weekly Cotton Market Review – USDA

Photo: Fred Miller, University of Arkansas

Spot quotations averaged slightly 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 63.65 cents per pound for the week ending Thursday, February 20, 2020.

The weekly average was down from 63.67 last week and from 66.88 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 62.98 cents Friday, February 14 to a high of 64.22 cents Wednesday, February 19. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 20 totaled 31,723 bales.

This compares to 32,629 reported last week and 62,571 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,303,345 bales compared to 600,564 bales the corresponding week a year ago. The ICE May settlement price ended the week at 69.37 cents, compared to 68.63 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #18 FOR UPLAND COTTON February 20, 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 February 27, 2020, allowing importation of 12,096,232 kilograms (55,557 bales) of upland cotton.

Quota number 18 will be established as of February 27, 2020 and will apply to upland cotton purchased not later than May 26, 2020 and entered into the U.S. not later than August 24, 2020. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period October 2019 through December 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 inactive. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

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Overcast and rainy conditions dominated the weather pattern throughout most of the period. Daytime high temperatures were in the low 50s to mid-70s. Widespread thunderstorms brought moderate to heavy rainfall to areas across the entire lower Southeast region. Precipitation totals measured from 2 to 4 inches in most areas with locally heavier accumulations observed in some locales.

River flood warnings were in effect in areas across Alabama and Georgia as rivers and creeks remained swollen from continued rainfall. Fieldwork remained at a standstill due to soggy conditions.

Ginning neared completion for the season; a few gins remained on gin days as they waited for the last modules to arrive on gin yards. The Macon Classing Office continued to process samples.

A mix of fair to cloudy conditions prevailed across the Carolinas and Virginia during the period. Unseasonably warm daytime high temperatures in the low 60s cooled into the low 40s late in the week.

Widespread shower activity brought 1 to 2 inches of weekly accumulated moisture to areas throughout South Carolina. Lesser accumulations of one-half of an inch to one inch were observed across North Carolina and Virginia during the week. River flood warnings remained in effect in some areas.

Fieldwork remained at a standstill, due to wet conditions. Ginning rapidly neared completion; a few gins remained on gin days as they waited for the last modules to arrive from fields. The Florence Classing Office continued to process samples.

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. No sales were reported. Most mills have covered their raw cotton needs through the summer months. No additional inquiries were reported. 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 styles of cotton.

Trading

  • No trading activity was reported.

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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts. Producers were carefully watching all commodity prices as the spring planting season approaches.

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Overcast skies with light but frequent rain showers characterized a typical winter weather pattern during the week. Daytime temperatures were in the 40s and 50s. Overnight lows were in the 20s as a series of cold fronts moved through the region. Northern areas reported a wintry mix of rain, sleet, and snow; most places reported less than 1 inch of rain.

The National Weather Service issued a river flood warning for numerous locations throughout the region. Most roads inside the levee were flooded. Saturated fields and standing water hindered any type of outdoor activity.

Ginning was rapidly drawing to close in all areas. Producers and other interested parties made plans to attend regional industry meetings, notably the Mid-South Farm and Gin Show. Local experts reported that cotton acreage for the coming season will probably be about the same as last year. The Memphis Classing Office and the Dumas Classing Office continued to process samples.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton was being delivered to fulfill contracts. Producers were carefully watching the price of competing commodities as the cotton planting season approaches.

Mostly overcast skies intermingled with heavy rain showers prevailed during the week. Daytime temperatures ranged from the 40s to the 70s as another cold front moved through the region. Low temperatures were in the 20s to 40s. Most areas reported at least 2 inches of rain, with localized reports of up to 3 inches. The National Weather Service issued multiple river flood warnings throughout the region, due to the accumulated precipitation in recent weeks.

Outdoor activities were at a standstill due to saturated soils and standing water in low-lying fields. Major flooding caused the evacuation of thousands of residents in Louisiana and Mississippi as hundreds of homes were flooded. The Rayville Classing Office completed annual operations. Producers and other interested parties made plans to attend regional industry meetings, especially the Mid-South Farm and Gin Show.

Trading

North Delta

  • No trading activity was reported.

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 steady. Producer interest in forward contracting was moderate. Trading of CCC-loan equities was active. An open invitation to bid on 2018-crop CCC-Catalog cotton closed on February 19. Foreign inquiries were light. Interest was best from China, Korea, and Pakistan. Concerns over the coronavirus continued to pressure the market.

In the Rio Grande Valley, fieldwork progressed with daytime temperature highs in the mid-60s to mid-80s. Overnight temperatures were in the mid-40s to upper 60s. A few fields were planted, mostly to compete for having the first bale harvested, according to local sources. Lots of fields were pre-watered ahead of planting.

Gusty winds dried fields and a general rain event is needed. In south Texas, fields were prepped ahead of cotton planting. Rain continued intermittently in the Blackland Prairies, further slowing fieldwork. Herbicide and fertilizer had been applied to some previously plowed fields.

Kansas ginning continued uninterrupted as the season drew to an end. Fieldwork was active during periods of cool, dry conditions, aside from a couple of foggy mornings. In Altus, Oklahoma, daytime high temperatures were in the upper 40s to mid-50s, and overnight lows were in the low 20s to upper 30s. Clear, open weather was reported. Ginning continued. Soils had firmed enough to support equipment.

West Texas

Spot cotton trading was active. Supplies were heavy. Producer offerings were moderate. Demand was good. Average local spot prices were steady. Producer interest in forward contracting was light. Trading of CCC-loan equities was moderate. An open invitation to bid on 2018-crop CCC-Catalog cotton closed on February 19. Foreign inquiries were light. Interest was best from China, Korea, and Pakistan. Concerns over the coronavirus continued to pressure the market.

Sunny, warm conditions transformed to a cold, windy climate that brought wintry precipitation to the Panhandle. Rainfall was received in the Southern Rolling Plains. Daytime high temperatures were in the low 30s to mid-70s, and overnight lows were in the teens to low 40s. Fieldwork made some progress but stalled due to wet, windy conditions. Ginning continued at a few locations. Producers performed maintenance on planters and ordered seed. Local producer meetings were held.

Trading

East Texas

  • In Texas a light volume of color 41 and 42, leaf 3 and 4, staple mostly 36, mike 48-50, strength averaging 30.5, and uniformity averaging 80.5 sold for around 59.00 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a light volume of mostly color 21, leaf 2, staple 35, mike averaging 44.9, strength averaging 31.7, and uniformity averaging 81.5 sold for around 64.00 cents, FOB car/truck (compression charges not paid).
  • In Oklahoma, a moderate volume of color 21 and 31, leaf 2 and 3, staple 38 and 39, mike 42-47, strength 33-35, and uniformity averaging 80.5 sold for around 69.00 cents, same terms as above.
  • A heavy volume of 2018-crop CCC-Catalog cotton, color 42 and better, leaf 2 and 3, staple 34 and longer, mike 37-49, strength 25-32, and uniformity 77-81 sold for 50.95 cents, FOB warehouse (compression charges not paid).
  • A light volume of 2018 CCC-loan equities traded for 0.15 cents.
  • A heavy volume of 2019 CCC-loan equities traded for 4.25 to 11.00 cents.

West Texas

  • A mixed lot containing a heavy volume of mostly color 31 and 41, leaf 3-5, staple 35 and longer, mike 37-47, strength 28-33, and uniformity 78-80 sold for around 60.75 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a heavy volume of mostly color 31 and 41, leaf 5 and better, staple 33 and longer, mike 35-49, strength 25-31, and uniformity 78-80 sold for around 58.00 cents, same terms as above.
  • A light volume of color 31 and 32, leaf 3 and better, staple 32 and longer, mike averaging 45.0, strength averaging 29.0, and uniformity 77-80 sold for around 57.25 cents, same terms as above.
  • A light volume of 2018-crop CCC-Catalog cotton, mostly color 31 and 41, leaf 3 and 4, staple 30 and longer, mike 30-32, strength 30-32, and uniformity averaging 78.5 sold for 49.56 cents, FOB warehouse (compression charges not paid).
  • A heavy volume of 2019 CCC-loan equities traded for 4.00 to 11.00 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. A light volume of New Mexico CCC-loan forfeitures was sold in the period.

Sunny and warm conditions continued in the DSW. Above average temperatures were recorded in high 60s to high 70s. A wind advisory was in effect late in the period for New Mexico and El Paso, Texas as a cold front moved through the area. Ginning continued in Arizona. Yuma, Arizona producers began initial planting in the period. Acreage was expected to be nearly the same as last year.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Daily high temperatures were above average for this time of year. Sunny and mild conditions had temperatures in the high 60s to low 70s. A one day high of 74 degrees was reached in many Valley locales on Thursday, February 20. Fieldwork was active. Seedbed preparations were nearly completed. Ginning continued. President Trump was in Bakersfield on February 19 and signed a presidential memorandum to deliver more northern California water to the Central Valley Water Project and the State Water Project.

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 were concerned as the number of returning empty shipping containers were limited as the coronavirus created labor shortages at foreign ports.

Temperatures were above average in the Far West. Daytime temperatures were in the high 60s to high 70s. Conditions remained dry in the San Joaquin Valley (SJV) of California. Initial planting began in Yuma, Arizona. AP acreage was expected to be lower compared to last year, due to low prices. Fieldwork was active and seedbed preparations advanced throughout the region. Pre-plant irrigations were active.

Ginning continued uninterrupted in the SJV. President Trump was in Bakersfield, CA on February 19 and signed a presidential memorandum to deliver more northern California water to the Central Valley Water Project and the State Water Project.

Trading

Desert Southwest

  • A light volume of 2018-crop New Mexico cotton mostly color 51, leaf 4 and 5, staple 35-37, mike averaging 39.2, strength averaging 31.4, uniformity averaging 80.6, and 25 percent extraneous matter sold for around 50.00 cents per pound, 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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