Weekly Cotton Market Review – USDA

Spraying cotton midseason. Photo: Alabama Cooperative Extension

Average spot quotations were 108 points higher 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 53.88 cents per pound for the week ending Thursday, May 21, 2020.

The weekly average was up from 52.80 last week, but down from 61.55 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 53.37 cents Monday, May 18 to a high of 54.77 cents Tuesday, May 19.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 21 totaled 7,312 bales. This compares to 21,979 reported last week and 12,871 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,488,167 bales compared to 1,177,101 bales the corresponding week a year ago. The ICE July settlement price ended the week at 58.06 cents, compared to 57.85 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was slow. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

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Partly cloudy to overcast conditions prevailed across the lower Southeastern region during most of the period. Daytime high temperatures varied from the mid-70s to mid-80s. Scattered thundershowers brought 1 to 3 inches of moisture to areas across Alabama, Georgia, and the Florida Panhandle over the weekend and early week. Planting advanced at a rapid pace and producers welcomed the moisture received during the period.

Producers scouted the earliest-planted fields where seedlings were emerging and treated areas where pest populations met threshold limits. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released May 18, cotton planting had reached 63 percent completed in Alabama and 41 percent completed in Georgia.

Mostly cloudy conditions prevailed across the Carolinas and Virginia during the period. Daytime high temperatures were in the low to mid-80s. Widespread storms brought moderate to heavy moisture to the Carolinas and cotton growing areas of Virginia during the week. Rainfall totals measured from 1 to 4 inches.

Planting activity expanded at a rapid pace, but was delayed in some areas due to wet conditions. According to the NASS Crop Progress report released May 18, cotton planting had reached 45 percent completed in South Carolina, and 34 percent completed in North Carolina and Virginia.

Textile Mill

Mill buyers made initial inquiries for 2020-crop cotton, color 41, leaf 3, and staple 37 for November/December delivery. No sales were reported. Additional inquiries were very light. The undertone from mill buyers remained very cautious, due to lackluster retail sales and diminished end user demand associated with the COVID-19 virus.

Mills have begun incremental increases in production as supported by finished product orders. Most production centered on personal protective equipment for frontline workers and military supplies in response to the COVID-19 Pandemic.

Demand through export channels was light to moderate. Representatives for mills in Turkey purchased mixed lot recaps containing color 51 and better, leaf 4 and better, and staple 34 and longer for nearby shipment. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A moderate volume of color mostly 41 and 51, leaf mostly 3 and 4, staple 35-38, mike 37-49, strength 28-31, and uniformity 80-83 sold for around 400 points off ICE July futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

South Central Markets Regional Summary

North Delta

Spot cotton trading was inactive. Supplies of available cotton and demand were light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Commodity prices struggled to gain much ground as the COVID-19 Pandemic continues to negatively impact financial markets and manufacturing supply chains around the world.

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Partly cloudy and cool weather prevailed during the week. Most areas reported rainfall of less than 1 inch. Daytime temperatures were mostly in the 60s to 80s. Overnight lows were in the 50s and 60s. Fieldwork advanced in most places, but planting was hampered in Missouri by wet and cold soil conditions and advanced slowly in low-lying fields throughout the region.

Local experts attributed good germination under adverse conditions to strong seed vigor of new varieties; a few producers reported some replanting. Some producers were switching to short-season varieties in order to continue sowing cotton beyond their normal planting window. According to the National Agricultural Statistics Service’s Crop Progress report released on May 18, cotton planting was at 47 percent completed in Arkansas, 15 in Missouri, and 23 percent in Tennessee, all of which were well behind the five-year average.

South Delta

Spot cotton trading was inactive. Supplies of available cotton and demand were light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Commodity prices fluctuated during the week and the COVID-19 Pandemic continues to disrupt manufacturing supply chains around the world.

Cloudy to partly clear skies prevailed during the week. Daytime temperatures reached into the 80s. Warmer overnight temperatures were in the 60s. Scattered showers brought less than 1 inch of rain to most areas, but up to 2 inches of heavy precipitation were received in isolated areas. Planting expanded at a normal pace in most areas throughout Louisiana, but lagged in Mississippi, in part due to wet fields.

Developing stands were treated for thrips and field crickets, as necessary. According to the National Agricultural Statistics Service’s Crop Progress report released on May 18, cotton planting advanced normally to 75 percent completed in Louisiana. Progress was good in Mississippi, at 52 percent planted, which is about one week behind the five-year average.

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 light. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. The COVID-19 Pandemic continued to put pressure on commodity markets. ICE futures market gains early in the period were lost by the end of the week.

Temperatures were in the mid-to-high 90s in the Rio Grande Valley (RGV). Areas Victoria south to the RGV received 1 inch of beneficial rain early in the period. Hot, humid conditions continued with thunderstorms possible into the weekend. Producers scouted for insect damage, but no heavy pest populations were reported. In the Coastal Bend and Upper Coast, the crop made progress as showers deposited up to two and one-quarter inches of rainfall. Local sources reported that the crop made good progress and recent rainfall boosted crop potential.

West Texas

Spot cotton trading was light. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. The COVID-19 Pandemic continued to put pressure on commodity markets. ICE futures market gains early in the period were lost by the end of the week.

Temperatures were in the low 90s, with a one-day high of 100 degrees reached on Tuesday, May 19. Scattered rain showers brought much needed moisture and deposited around one-quarter of an inch up to three-quarters of an inch. Strong winds and quarter-sized hail stones did some damage to young cotton plants. Planting is active. Irrigated acreage plantings were virtually completed.

Producers made great strides in dryland plantings. Planting is ahead of schedule, due to hot, dry weather in April. Early-planted cotton was up. Overall, seedlings made good progress. Some areas reported insect activity like wireworms and thrips. Chemical treatments were made to combat pests.

Trading

East Texas

  • In Texas, a moderate volume of mostly color 31, leaf 4, staple 37 and 38, mike averaging 41.8, strength averaging 32.5, and uniformity averaging 81.8 sold for around 54.50 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a light volume of color 21 and 31, leaf 2 and better, staple mostly 38, mike averaging 43.4, strength averaging 33.4, and uniformity averaging 80.9 sold for around 58.00 cents, FOB car/truck (compression charges not paid).
  • In Oklahoma, a light volume of mostly color 21 and 31, leaf 3 and better, staple 36 and 37, mike averaging 39.4, strength averaging 32.9, and uniformity averaging 80.7 sold for around 58.25 cents, same terms as above.
  • A light volume of color mostly 31, leaf 2 and 3, staple mostly 35 and 36, mike averaging 50.5, strength averaging 32.6, and uniformity averaging 82.1 sold for around 54.00 cents, same terms as above.
  • A light volume of color 31 and 41, leaf 4 and better, staple 34-36, mike averaging 47.7, strength averaging 32.9, uniformity averaging 81.2, with 25 percent extraneous matter sold for around 52.00 cents, same terms as above.

West Texas

  • A light volume mixed lot of color mostly 21 and 32, leaf 3 and better, staple 34-37, mike averaging 44.6, strength averaging 31.7, and uniformity 80.1 sold for around 53.00 cents per pound, FOB car/truck (compression charges not paid).
  • Similar lots containing mostly staple 34, with mike 50 and higher sold for around 52.00 to 52.50 cents, same terms as above.
  • A light volume of 2019 CCC-loan equities traded for around 4.25 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The effects of the COVID-19 Pandemic continues to disrupt the marketing chain for cotton.

Temperatures reached the high 90s to low 100s early in the period for Arizona. No rainfall was recorded in the week. The Yuma crop reached blooming stage. In parts of central Arizona, fields sowed in mid-March approached pinhead square stage. Little to no insect activity was reported. Overall, the crop made good progress in the DSW.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The COVID-19 Pandemic continued to impact the U.S. economy.

Two low pressure systems the last two weeks kept temperatures under the century mark, almost unheard of for late May. Cloudy conditions and thunderstorms moved into the Valley and brought rainfall. Approximately one-quarter of an inch of beneficial moisture was received mid-week. Snowfall was received in higher elevations over 7,000 feet in the Sierra Nevada Mountain range. The crop is ready for more heat. By all accounts, the crop made good progress. Germination rates were good.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. The COVID-19 Pandemic continues to affect demand for cotton. Foreign mill inquiries were light. Interest was best from China. Shippers continued to maintain previously made sales contracts.

Some contract obligations were rolled to 2021. According to the Foreign Agricultural Service Export report for week ending May 14, 600 bales of new sales were noted and no cancellations. Sales for the next marketing year were reported at 33,800 bales.

Temperatures ranged from the 70s to the low 100s in the Far West. The San Joaquin Valley of California received strong winds, rain, and some hail mid-week. No damage to cotton fields was reported. The crop is off to a good start. Germination rates were excellent, but crop progress slowed with the cool down. The crop needs more heat. The crop made good progress in the DSW.

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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