Weekly Cotton Market Review – USDA

Photo: Texas AgriLife Extension

Average spot quotations were 268 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 45.13 cents per pound for the week ending Thursday, April 2, 2020.

The weekly average was down from 47.81 last week and 71.81 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 46.15 cents Friday, March 27 to a season low of 43.23 cents Wednesday, April 1.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended April 2 totaled 1,779 bales. This compares to 298 reported last week and 39,609 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,376,147 bales compared to 1,025,451 bales the corresponding week a year ago.

The ICE May settlement price ended the week at 49.99 cents, compared to 52.78 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. Producers considered spring planting options as the COVID-19 Pandemic continues to negatively impact economic activity.

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A mix of cloudy to sunny conditions were observed across the lower Southeast during the period. A cold front briefly moved across the region mid-week dropping daytime highs into the low 60s before returning to the 70s late week. Scattered showers brought moderate precipitation to much of north Alabama over the weekend. Rainfall totals measured from 1 to 3 inches. Areas throughout south Alabama, Georgia, and the Florida Panhandle received around one-quarter to one-half of an inch of moisture throughout the week.

Fieldwork advanced as dry conditions allowed in areas where soils were firm enough to support equipment. Producers applied lime and fertilizer to fields. Wet conditions prevented the application of herbicides in some areas.

Fair to cloudy conditions prevailed across the upper Southeastern region throughout the period. Warm daytime high temperatures in the upper 80s to low 90s cooled into the upper 50s to low 60s as a cold front moved across the region late week. Scattered shower activity brought light precipitation to portions of the Carolinas and cotton growing areas of Virginia early in the week. Precipitation totals measured from trace amounts to around one-half of an inch of moisture.

Fieldwork advanced between rain events in areas where soils were firm enough to support equipment. Producers applied fertilizers in preparation for spring planting.

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. The undertone from mill buyers remained very cautious as they continued to delay or reschedule deliveries of raw cotton due to declining demand associated with the COVID-19 virus. Some mills planned extended down time at plants due to weak yarn demand. A coalition of American apparel brands and textile manufacturers recently announced an effort to coordinate and produce 10 million face masks per week for medical workers treating coronavirus patients.

Demand through export channels was light-to-moderate. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A moderate volume of 2019-crop cotton, color 11-31, leaf 2 and 3, staple 36-39, mike 37-49, strength mostly 28-31, and uniformity 80-83 was offered for sale. Bids for around 400 points on ICE May futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage) were rejected by sellers.
  • A moderate volume mixed lot of 2019-crop cotton, color mostly 31 and 41, leaf 2-4, staple 37-39, mike 37-49, strength 28-31, and uniformity 80-83 was offered for sale. Bids for around 200 points on ICE May futures, same terms as above, were rejected by sellers.
  • A moderate volume of 2019-crop cotton, color 41 and 51, leaf 3-5, staple 35-37, mike 43-47, strength 29-32 and uniformity 81-83 was offered for sale. Bids for around 325 points off ICE May futures, same terms as above, were rejected by sellers.
  • A light volume of 2019-crop cotton, color mostly 51, leaf 3 and 4, staple 37, mike 37-47, strength 27-30, and uniformity 80-82 was offered for sale. Bids for around 550 points off ICE May futures, same terms as above, were rejected by sellers.

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 moved even lower than experts expected, due to the worsening worldwide COVID-19 Pandemic.

As prices dropped, producers were faced with the choice of making margin calls or liquidating their positions through price fixation. In many cases, it appeared that producers chose the latter option, which caused the market to fall even further. The ICE December 2020 futures contract settled the limit down at 50.41 cents on April 1.

Cloudy skies, with intermittent but heavy showers, and warm temperatures early in the week gave way to partly clear skies, but cooler days. Daytime temperatures were in the 40s to 80s. Some northern areas experienced temperatures in the upper 30s, while most of the region reported lows in the 40s and 60s. 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 or saturated. Soft soils limited field activity in many places.

The National Agricultural Statistics Service’s Prospective Plantings report indicated that Upland cotton is estimated at 13.5 million acres, down less than 1 percent from 2019. In the North Delta, Arkansas is expected to plant 590,000 acres, a decrease of 2 percent, Missouri 400,000, up 5 percent, and Tennessee 360,000 acres, down 12 percent compared with last season.

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

As prices dropped, producers were faced with the choice of making margin calls or liquidating their positions through price fixation. In many cases, it appeared that producers chose the latter option, which caused the market to fall even further. On Wednesday, April 1, the ICE December 2020 futures contract settled the limit down at 50.41 cents.

Severe weather and warm temperatures early in the week gave way to partly cloudy skies and cool conditions. Daytime temperatures were in the 60s to 80s. Low temperatures were in the 50s and 60s. A series of storms brought up to 3 inches of precipitation; higher amounts were reported in a few places. Tornadoes swept through in Mississippi, but no injuries were reported. Field activities were hampered due to saturated soils and standing water in low-lying fields. Aerial and ground-rig applications of burndown herbicides were made in many areas.

Corn was being planted, and fields were prepped for planting where soils were firm enough to support equipment. The National Agricultural Statistics Service’s Prospective Plantings report indicated that Upland cotton is estimated at 13.5 million acres, down less than 1 percent from 2019. In the South Delta, Louisiana is expected to plant 230,000 acres, a decrease of 18 percent, and Mississippi 660,000, a 7 percent decrease from last season.

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 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. Interest was best from China, Korea, and Vietnam. Concerns over the coronavirus continued to pressure the market, and confirmed cases increased throughout the region.

More on Cotton


In the Rio Grande Valley, cotton planting continued with daytime temperatures in the 80s and 90s and overnight lows mostly in the 70s. Some stands were at 4 to 6 true leaves. Extension specialists monitored for pests and reported light infestations of aphids and red spider mites. Dry conditions stalled planting for some producers in south Texas, and others decided to dry plant.

The nearby forecast contains a good chance for rainfall. Planting progressed in the Upper Coast. Parts of the Blackland Prairies received over 1 inch of rainfall that left fields saturated. Some producers were unable to finish planting corn and will consider planting cotton. A heavy amount of planting seed had been ordered.

Kansas received intermittent showers that brought light amounts of beneficial precipitation. Producers considered other cropping alternatives, but planted cotton acres were expected to be similar to last season. In Oklahoma, fieldwork was active with burndown of weeds and volunteer cotton ongoing. Fields were tilled and rows were built. Planting was expected to begin in the Panhandle in early April and continue through mid-May for the rest of the state. Oklahoma State University Extension offered a webinar via Zoom for producers and industry members.

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. Interest was best from China, Korea, and Vietnam. Concerns over the coronavirus continued to pressure the market.

Fieldwork made progress with daytime temperature highs in the mid-60s to upper 70s. A dry cold front moved into the region on April 2, dropping overnight lows from the 50s and 60s into the 20s and 30s. Soil temperatures had begun to warm into the 50s and 60s in most areas. Producers adjusted to the market climate and were strategically determining the most cost effective fertilizer and herbicide applications.

The 113th Annual Meeting & Cotton Trade Show hosted by the Texas Cotton Ginners’ Association was cancelled due to compliance with the regulations to help slow the spread of the Coronavirus. Producers and industry members continued to meet and conduct business using various internet platforms.

Trading

East Texas

  • No trading activity was reported.

West Texas

  • No trading activity was reported.

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. The COVID-19 virus continues to fuel U.S. and global economic turmoil. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the high 70s to mid-80s in central Arizona. No rainfall was recorded in the period. Cotton seedlings were up and made good progress in Yuma. Some re-planting was done, as some of the crop did not sprout, due to cooler temperatures and heavy rainfall received about two weeks ago. Temperatures reached the low 80s for New Mexico and El Paso, TX late in the period.

Fields were readied for planting and cottonseed was delivered. Sources reported a little planting may begin the week of April 6 in the lower Valley of El Paso. Producers considered other row crops to plant such as corn. Private estimates indicated Upland planted acreage in the DSW would be lower than planting intentions published in the Prospective Plantings report released by the National Agricultural Statistics Service on March 31, due to current market prices.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. The COVID-19 virus continues to impact U.S. and global economies. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were mostly in the 60s. Around one-tenth of an inch of moisture was received early in the period in the SJV. More was in the forecast over the weekend. The California Department of Water Resources measured the all-important April 1 snowpack. Statewide snowpack was measured at 53 percent of average. This represents the 11th lowest measurement since recordkeeping began.

Irrigation water availability is a concern for growers. No planting was reported for the SJV. Local sources were in general agreement with the National Agricultural Statistics Service’s Prospective Plantings report released on March 31. Sources were uncertain the amount of acreage dedicated to “save seed” programs. Soil temperatures were optimal and initial planting began in Blythe, CA.

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. Fears and concerns of the COVID-19 virus put the Upland cotton market under pressure, which in turn, pressured the AP. Foreign mill inquiries were light. Foreign mills requested delays or postponement of shipments. Merchants were concerned about possible cancellations. Shippers continued to ship and offer cotton.

Temperatures were in the 60s to 80s in the Far West. No rainfall was reported in the Desert Southwest. In the San Joaquin Valley (SJV) of CA, approximately one-tenth of an inch was received early in the period. Surprise was expressed for Prospective Plantings report released by National Agricultural Statistics Service on March 31. A light volume of acreage was planted in Yuma, AZ. Local sources reported the crop was up. Fields were readied for planting in the SJV. 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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