Weekly Cotton Market Review – USDA

Cotton seed pile and bale loader at the Westhaven Cotton Company Gin in Lemoore, California . Photo: Lance Cheung, USDA

Spot quotations averaged 281 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 60.84 cents per pound for the week ending Thursday, February 27, 2020.

The weekly average was down from 63.65 last week and 67.00 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 63.68 cents Friday, February 21 to a low of 57.18 cents Thursday, February 27.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 27 totaled 21,679 bales. This compares to 31,723 reported last week and 66,537 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,325,024 bales compared to 667,101 bales the corresponding week a year ago. The ICE May settlement price ended the week at 62.50 cents, compared to 69.37 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #19 FOR UPLAND COTTON February 27, 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 March 5, 2020, allowing importation of 12,096,232 kilograms (55,557 bales) of upland cotton.

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Quota number 19will be established as of February 27, 2020 and will apply to upland cotton purchased not later than June 2, 2020 and entered into the U.S. not later than August 31,2020. 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 were moderate. Demand was moderate. Producer offerings were moderate. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

Fair to cloudy conditions prevailed across the lower southeast region during the period. Daytime high temperatures varied from the mid-40s to low 70s. Early in the week, intermittent widespread showers brought moisture across areas throughout Alabama, the Florida Panhandle, and Georgia. Day-to-day accumulated rainfall totals measured from one to two inches of precipitation.

River flood warnings remained in effect in south Alabama and south Georgia. Fieldwork and outside activities remained delayed due to saturated soils. Ginning was essentially completed for the season; but a few of gins remained on gin days as they waited for the last modules to arrive on gin yards. The Macon Classing Office continued to process the last samples that trickled into the classing office.

A mix of clear to cloudy conditions were observed across the upper southeast region during the period. Daytime high conditions varied from the mid-30s to upper 60s throughout the week. Weekly accumulated rainfall totals measured from one to two inches in areas throughout South Carolina and eastern North Carolina. Lesser accumulations of one-quarter to one-half of an inch were received in other areas of North Carolina and Virginia.

River flood warnings remained in effect in areas of the upper southeast region throughout the weekend; minor flooding was reported in some low-lying areas. Fieldwork and outside activities remained at a standstill due to wet conditions. Ginning was completed for the season.

Textile Mill

Domestic mill buyers booked a moderate volume of 2020-crop cotton, color 41, leaf 4, and staple 34 and 36 for November through December 2021 delivery. Mill buyers also purchased a moderate volume of color 41, leaf 4, and staple 35 for April through July delivery. No additional inquiries or sales were reported. Demand for ring-spun and open-end yarn was moderate. Demand through export channels was moderate. Pakistani mill buyers purchased a moderate volume of mixed lot recaps containing color 51 and better style cotton. No additional sales were reported. Domestic cotton exporters reported backlogs at ports and delays at foreign mills in China due to lack of workers available to unload containers and receive shipments due to the Coronavirus outbreak.

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 lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Cotton prices tumbled due to concern surrounding the Covid 19 virus and the economic slowdown it is causing around the world.

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Overcast skies with light, but frequent rain showers characterized a typical winter weather pattern early the week. Daytime temperatures were in the 40s and 50s. Overnight lows dropped into the 20s late week as another cold front moved through the region. Northern areas reported a wintry mix of rain and sleet; accumulations of less than 1 inch of moisture were widespread.

River flood warnings issued by the National Weather Service remained in effect for numerous locations throughout the region. Bottomland fields near any type of waterway were flooded. Saturated fields and standing water prevented any type of outdoor activity in many places.

Ginning was complete in all areas, with one or two exceptions. Producers and other interested parties made plans to attend regional industry meetings, notably the Mid-South Farm and Gin Show. Local experts reported that some uncertainty regarding cotton acreage for the coming season has dampened previous expectations. Some acreage reductions could be seen, particularly on a farm-by-farm basis.

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. Cotton prices tumbled as a result of the worldwide economic slowdown surrounding the Covid 19 virus.

More heavy rain showers exacerbated flood conditions during the week. Daytime temperatures were in the 50s and 60s as another cold front moved through the region. Low temperatures were in the 30s and 40s. Most areas reported at least 2 inches of rain, with some reports of up to 3 inches. The National Weather Service maintained 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. Residents in Louisiana and Mississippi were dealing with the effects of flooded homes as high water slowly receded. Producers and other interested parties attended the Louisiana Cotton and Grain Producers annual meeting in Monroe, Louisiana. Many people made plans to attend 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 moderate. Supplies were moderate. 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 active. Foreign inquiries were light. Interest was best from Bangladesh, India, and Pakistan. Concerns over the Coronavirus continued to pressure the market and limit yarn availability.

In the Rio Grande Valley, planting was underway with daytime temperature highs in the mid-60s to mid-80s. Overnight temperatures were in the low 30s to upper 60s. Some stands had emerged. Lots of fields were pre-watered ahead of planting. Gusty winds dried fields and rainfall would be beneficial. In the Upper Coast and Coastal Bend, fields were prepped ahead of cotton planting.

Rain continued intermittently in the Blackland Prairies and fieldwork was slow. Some fields remained too soggy to support heavy equipment. According to the National Agricultural Statistics Service’s (NASS) Crop Progress and Conditions report released on February 24, subsoil moisture was rated 45 percent adequate and 54 percent surplus. Producers prepped planting equipment and ordered seed. Herbicide and fertilizer had been applied to some fields.

Kansas ginning continued uninterrupted as the season drew to an end. A cold front brought snow and around one inch of rain that slowed all field work. Attendance was good at area meetings.

In Oklahoma, daytime high temperatures were in the low 50s to 60s and overnight lows were in the low 20s to upper 40s. Soil moisture conditions were 25 percent short, 48 adequate, and 21 surplus, according to NASS.

West Texas

Spot cotton trading was moderate. Supplies were moderate. Producer offerings were moderate. Demand was moderate. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was active. Foreign inquiries were light. Interest was best from Bangladesh, India, and Pakistan. Concerns over the Coronavirus continued to pressure the market and limit yarn availability.

Light rainfall was received in isolated areas early in the period with daytime high temperatures in the low 40s to upper 60s. Overnight lows were in the 20s to low 40s. Some areas in the Panhandle received a dusting of snow. Producers were encouraged with the amount of ground moisture ahead of planting.

Subsoil moisture condition was rated mostly short to adequate in the Northern & Southern High Plains, and in the Northern & Southern Low Plains, according to the National Agricultural Statistics Service’s Crop Progress and Condition report, released on February 24. Planting seed was ordered. Meetings were attended.

Trading

East Texas

  • In Kansas, a moderate volume of mostly color 22, leaf 2 and 3, staple 36 and 37, mike averaging 38.8, strength averaging 31.2, and uniformity averaging 80.0 sold for around 61.00 cents, FOB car/truck (compression charges not paid).
  • In Oklahoma, lots containing a heavy volume of mostly color 31 and better, leaf 2 and 3, staple 38 and 39, mike 48-51, strength 32-35, and uniformity 80-82 sold for around 64.00 cents, same terms as above.
  • A heavy volume of 2018 CCC-loan equities traded for -3.00 to -6.00 cents.

West Texas

  • A mixed lot containing a moderate volume of mostly color 22 and better, leaf 3 and better, staple 33, mike 35-50, strength 26-31, and uniformity 76-81 sold for around 57.25 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 32, leaf 3 and 4, staple 34 and 35, mike averaging 49.9, strength averaging 32.2, uniformity 80-83, and 50 percent extraneous matter sold for around 55.75 cents, same terms as above.
  • A mixed lot containing a moderate volume of mostly color 33 and better, leaf 3 and 4, staple 32 and longer, mike 46-54, strength 28-33, uniformity 78-83, and 50 percent extraneous matter sold for around 52.75 cents, same terms as above.
  • A heavy volume of 2018 CCC-loan equities traded for -0.75 to -3.25 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies were moderate. Producer offerings 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 delays and cancellations to foreign destinations. Some foreign port openings were limited, due to labor shortages created by the Coronavirus and quarantines associated with the virus.

Sunny and warm conditions continued in Arizona. Temperatures were in high 60s to high 70s. Nearly 1 inch of rain was received early in the reporting period. Ginning continued in central Arizona. Planting gained momentum in Yuma, Arizona. Daytime high temperatures were in the high 50s to high 60s in New Mexico and El Paso, Texas. No rainfall was recorded in the period. Fieldwork was active.

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 delays and cancellations to foreign destinations. Some foreign port openings were limited, due to labor shortages created by the Coronavirus and quarantines associated with the virus.

Sunny and mild conditions continued with temperatures in the 70s. Daytime high temperatures reached 80 degrees late in the period. Fieldwork was active. Ginning continued. On February 26, the U.S. Bureau of Reclamation announced a 15 percent water allocation from the Central Valley Project to west side growers.

Reservoir storage is still above average, due to a very wet winter in 2019; however, rainfall and snowpack are below average so far in 2020. The overall Sierra Nevada Mountain water content stands at 11.5 inches as of February 26, according to the California Department of Water Resources. More rain and snow is needed to boost water allocations to growers.

American Pima (AP)

Spot cotton trading was slow. 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 delays and cancellations to foreign destinations. Some foreign port openings were limited, due to labor shortages created by the Coronavirus and quarantines associated with the virus. Shippers also reported a limited number of empty containers returning from foreign ports.

Temperatures were above average in the far west. Daytime highs were in the high 60s to high 70s. Cotton-growing areas of western and central Arizona received around 1 inch of rainfall early in the period. In the San Joaquin Valley (SJV) of California, temperatures reached 80 degrees late in the period. No rainfall was recorded in the SJV. On February 26, the U.S. Bureau of Reclamation announced a 15 percent water allocation from the Central Valley Project to west side growers.

Reservoir storage is still above average, due to a very wet winter in 2019; however, rainfall and snowpack are below average so far in 2020. The overall Sierra Nevada Mountain water content stands at 11.5 inches as of February 26, according to the California Department of Water Resources. Ginning continued in the SJV. Planting gained momentum in Yuma, Arizona.

Trading

Desert Southwest

  • A light volume of color 11 and 21, leaf mostly 2 and better, staple 37-39 sold for around 100 points off ICE May futures, uncompressed, FOB warehouse.
  • A moderate volume of color mostly 31 and better, leaf 2 and better, staple 37 and longer, mike 37-52, strength 31-33, and uniformity 79-72 sold for 400 to 425 points off ICE May futures, same terms as above.
  • Mixed lots of a moderate volume of mostly color 21, 32, and 33, leaf 4 and better, staple 35-37, mike averaging 36.4, strength averaging 30.8, and uniformity averaging 80.0 sold for around 900 points off ICE May futures, same terms as above.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A moderate volume of color 1 and 2, leaf 1 and 2, and staple 48 and 50 sold for around 105.00 cents per pound, uncompressed, FOB warehouse.



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