Weekly Cotton Market Review – USDA

Average spot quotations were 477 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 47.81 cents per pound for the week ending Thursday, March 26, 2020.

This is the lowest weekly average since week ending April 23, 2009 when the average was 46.19. The weekly average was down from 52.58 last week and 71.47 cents reported the corresponding period a year ago.

Daily average quotations ranged from a high of 48.50 cents Friday, March 20 to a season low of 46.97 cents Monday, March 23. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended March 26 totaled 298 bales.

This compares to 18,593 reported last week and 72,955 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,374,368 bales compared to 985,842 bales the corresponding week a year ago.

The ICE May settlement price ended the week at 52.78 cents, compared to 54.93 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was inactive. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

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Fair to partly cloudy conditions prevailed across the lower Southeastern region during the period. Daytime high temperatures varied from the upper 60s to mid-80s. A severe storm system moved across north Alabama and Georgia mid-week, bringing damaging wind, hail, and heavy rainfall. An EF-1 tornado with maximum sustained winds of 110 miles per hour made landfall along the northwest Alabama-Mississippi border and damaged structures. Weekly accumulated precipitation totals measured from around 1 to 3 inches, with locally heavier accumulations observed in some areas.

Mostly dry conditions prevailed across Gulf Coastal areas and abnormally dry conditions persisted along coastal Alabama areas and the western Florida Panhandle, according to the U.S. Drought Monitor. Spring field preparations were getting underway in areas where soils were firm enough to support equipment.

Mostly cloudy conditions dominated the weather pattern across the Carolinas and Virginia during the period. Daytime high temperatures in the 70s and 80s dipped into the 50s early week as a cold front moved across the region. A series of thunderstorms brought moisture to areas throughout South Carolina, cotton growing areas of eastern North Carolina, and Virginia during the week.

Day-to-day precipitation accumulations measured from 1 to 2 inches of moisture. Flash flood and river flood warnings were issued in portions of South Carolina that have received heavy rainfall in recent weeks. The wet weather interrupted field activities, but field preparations will resume as soft soils firm.

Textile Mill

Inquiries from domestic mill buyers were light. No sales were reported. Most mill buyers have covered their immediate-to-nearby raw cotton needs. No additional inquiries were reported. The undertone from mill buyers remained very cautious as they delayed or rescheduled deliveries of raw cotton due to declining demand associated the Covid-19 virus. Some mills planned extended down time at plants due to weak yarn demand.

Demand through export channels was light. No inquiries were reported.

Trading

  • A light volume of color mostly 42, leaf 5 and better, staple 32 and longer, mike 35-49, strength 28-30, and uniformity 79-81 sold for around 950 points off ICE May futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A light volume of 2019-crop CCC-catalog cotton, mostly color 51, leaf 3-5, staple 35-37, mike 43-49, strength 25-27, and uniformity 80 to 81 sold for 44.00 cents per pound, FOB car/truck (Rule 5, compression charges 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 lower. Trading of CCC-loan equities was slow. No forward contracting was reported. Cotton prices moved lower overall, but continued to fluctuate as a result of the negative impact on financial markets and trade due to the worldwide COVID-19 Pandemic.

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Mostly cloudy, wet weather early in the week gave way to clear skies and a warming trend late week. Daytime temperatures were in the 40s to 80s. Low temperatures were in the 30s and 60s across the region. Rainfall accumulations of up to 2 inches were reported in many areas. River flood warnings issued by the National Weather Service remained in effect for numerous locations throughout the region.

Roads and fields in low-lying areas remained flooded. Saturated soils and extreme cases of standing water in fields prevented any type of field activity in many places. Many producers were still considering planting decisions for the coming season due to inclement weather, unworkable fields, and commodity market related issues.

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. Financial markets moved lower and economic activity slowed in most sectors as a result of the worldwide effects of the COVID-19 Pandemic.

Cool and wet weather early in the week gave way to clear skies and a warming trend late week. Daytime temperatures were in the 60s to 80s. Low temperatures were in the 50s and 60s. A series of storms brought heavy rainfall and some severe weather to the region during the week. Up to 4 inches of precipitation were reported in many areas. Tornadoes were reported in northeastern Mississippi, which caused some property damage and a few injuries.

The National Weather Service maintained multiple river flood warnings throughout the region, due to the accumulated precipitation in recent weeks. Field activities were hampered due to saturated soils and standing water in low-lying fields. Many communities in Louisiana and Mississippi were dealing with the effects of flood conditions as high water slowly receded. Producers were still facing uncertain planting decisions due to the wet conditions and low soil temperatures. Some fieldwork was accomplished in areas that were passed over by the storm fronts.

Trading

North Delta

  • A light volume of CCC-loan equities traded for around 2.50 cents per pound.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were light-to-moderate. Interest was best from Indonesia, Pakistan, and Vietnam.

An open invitation to bid on a heavy volume of 2019-crop CCC-catalog cotton closed on March 23. No sales were reported. Concerns over the coronavirus continued to pressure the market, and confirmed cases increased throughout the region.

Sunny conditions dominated the weather pattern in the Rio Grande Valley (RGV), further confounding the drought situation. Although some rainfall was received early in the period, it was not enough to help the stands thrive. Some producers paused planting activities because of dry ground. Several stands were at the cotyledon and 2-true leaf stage. Abandonment was expected to be significant in the RGV and in some counties in south Texas.

Soil moisture conditions were in better shape in the Upper Coast with 1 inch of beneficial rainfall received during the period. Approximately 75 percent was planted, as several producers had completed planting. Texas A&M Agrilife Extension is providing online auxin training for continuing education credits for producers and applicators needing to satisfy certification requirements.

In Kansas, daytime temperature highs were in the low 40s to low 80s, and overnight temperature lows were in the upper 20s to upper 40s. Recent rainfall brought beneficial moisture to most parts of the state.

In Oklahoma, rain showers left the fields in good condition ahead of planting. According to the National Agricultural Statistics Service’s Crop Progress report released on March 23, the topsoil and subsoil moisture levels were rated mostly adequate to surplus.

West Texas

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were lower. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were light to moderate. Interest was best from Indonesia, Pakistan, and Vietnam. An open invitation to bid on a heavy volume of 2019-crop CCC-catalog cotton closed on March 23. No sales were reported. Concerns over the coronavirus continued to pressure the market. Shipping was active.

Fields began to firm with daytime temperature highs in the upper 40s to low 90s, and overnight lows in the upper 20s to upper 50s. Sunny, windy conditions prevailed. Fieldwork was active with fertilizer and herbicides applied to control winter overgrowth and spring weeds. Recent rainfall was beneficial and helped settle loose soil from blowing. Producers were determining the impact of COVID-19 on farming operations and adjusted planting estimates accordingly.

Texas A&M Agrilife Extension is offering online training that provides continuing education credits for auxin specific applicator certifications despite meetings and trainings that have been cancelled due to the spread of COVID-19. Agriculture is essential and crops must be planted.

Trading

East Texas

  • No trading activity was reported.

West Texas

  • A light volume of 2018-crop cotton mostly color 41, leaf 5 and 6, staple 38, mike averaging 37.9, strength averaging 32.8, uniformity averaging 82.0, and 75 percent extraneous matter sold for around 45.50 cents per pound, FOB car/truck (compression charges not paid).

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Producers moved bales into the CCC-loan program. Demand was light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. The world continued to react to contain the COVID-19 virus, as business activity slowed and some states and cities were ordered to shelter-in-place. Lack of a stimulus package lowered markets early in the week; however, markets rallied mid-week as relief was on the way. Foreign mill inquiries were light.

In Arizona, conditions were partly cloudy with daytime high temperatures in the 70s. No rainfall was recorded in the period. Red flag warnings were issued for New Mexico and El Paso, TX mid-week. Gusty winds 25 to 35 miles per hour and low humidity were reported. No rainfall was recorded in the period. As the Upland cotton market remains unstable, DSW producers are re-assessing planting prospects.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. A failed stimulus package lowered markets early in the week by mid-week, with an approved relief package in sight, cotton markets rose slightly. The world continued to react to contain the COVID-19 virus. More states and cities are under a shelter-in-place order. Foreign mill inquiries were light.

Daytime high temperatures were in the low 60s and high 50s, which is below average for this time of year. Rain moved into the area again Sunday evening and into Tuesday morning. Precipitation amounts ranged from one-quarter of an inch up to three-quarters of an inch. As of March 26, the statewide snowpack water equivalent was 52 percent of the April 1 average, which equates to about 15 inches of water. As the Upland cotton market remains unstable, SJV producers are re-assessing planting prospects.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Producers moved bales into the CCC-loan program. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. The world continued to react to contain the COVID-19 virus. Lack of a stimulus package lowered all U.S. markets early in the week, but by mid-week, cotton markets rose slightly on news of an approved relief package.

Merchants were fielding calls and emails from foreign mills about delayed or postponed shipments. Merchants were concerned about possible cancellations. India closed all businesses for three weeks, which includes cotton mills. Foreign mill inquiries were light.

Daytime high temperatures were in the 60s to 70s in the Far West. No rainfall was reported in the Desert Southwest. In the San Joaquin Valley of California, rainfall was welcomed in the period. One-quarter of an inch up to three-quarters of an inch of moisture was received. No planting was reported.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.



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