Weekly Cotton Market Review – USDA

Cotton harvest. ©Debra L Ferguson

Average spot quotations were 133 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 57.56 cents per pound for the week ending Thursday, July 2, 2020.

The weekly average was up from 56.23 last week, but down from 60.50 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 55.99 cents Monday, June 29 to a high of 59.41 cents Thursday, July 2.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 2 totaled 14,318 bales. This compares to 4,549 reported last week and 8,371 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,560,238 bales compared to 1,260,426 bales the corresponding week a year ago. The ICE Oct settlement price ended the week at 63.55 cents, compared to 60.39 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #11 FOR UPLAND COTTON July 2, 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 July 9, 2020, allowing importation of 3,892,413 kilograms (17,878 bales of 480-lbs) of upland cotton.

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Quota number 11 will be established as of July 9, 2020 and will apply to upland cotton purchased not later than October 6, 2020 and entered into the U.S. not later than January 4, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period March 2020 through May 2020, 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 moderate. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was slow. No forward contracting was reported. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

The crop progressed well under sunny to cloudy conditions. Daytime high temperatures varied from the low 80s to 90s, with nighttime temperatures in the low to mid-70s. Weekly accumulated precipitation totals measured around 1 inch in areas throughout Alabama, with little or no accumulation reported in Georgia and the Florida Panhandle. The lack of moisture gave saturated fields a chance to dry out.

A string of thundershowers is in the nearby forecast for areas throughout Alabama, the Florida Panhandle, and Georgia. Producers reported that stands were good. Fields were treated for aphids and other pests as needed. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released June 29, cotton squaring had reached 55 percent completed in Georgia and 47 percent completed in Alabama. The crop was in fair-to-good condition.

Fair to cloudy conditions prevailed across the upper Southeastern region during the period. Daytime temperatures were in the mid-80s to low 90s, with nighttime temperature in the low 60s to mid-70s. Weekly accumulated precipitation totals measured from one-half of an inch to two inches in some areas of South Carolina, with lesser amounts being recorded in Virginia and North Carolina. Rain is in the nearby forecast.

Local experts reported insect pressure was at treatable levels, with fields being treated as needed. According to the NASS Crop Progress report released June 29, cotton squaring had reached 39 percent completed in Virginia, and 33 percent in South Carolina and North Carolina.

Textile Mill

Inquiries from domestic mill buyers were light. No sales were reported. Mill buyers remained very cautious due to very weak end product demand and reduced operating schedules associated with the COVID-19 virus. Mills continued to operate at minimal capacity with incremental increases as warranted by demand. Mills continued to produce personal protective equipment for frontline workers and military supplies in response to the COVID-19 pandemic.

Demand through export channels was very light. No inquiries were reported. Demand centered around any discounted styles of cotton.

Trading

  • A light volume of color 41, leaf 3 and 4, staple 33 and longer, mike 42-49, strength 27-32, and uniformity 79-83 sold for around 58.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A mixed lot containing mostly color 31 and 41, leaf 1-3, staple 34 and longer, mike 37-49, strength 27-32, and uniformity 80-84 sold for around even ICE October futures, same terms as above.
  • A moderate volume of color 31 and 41, leaf 3 and 4, staple 38 and 39, mike 43-48, strength 30-32, and uniformity 80-83 sold for around 100 points off ICE October futures, FOB car/truck, (Rule 5, compression charges paid).
  • A moderate volume of CCC-loan equities traded for around 6.00 cents.

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. The COVID-19 Pandemic continues to disrupt travel, trade, and many normal activities.

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The crop advanced across the region under mostly cloudy skies, which dominated the weather pattern. Seasonably hot and humid conditions prevailed with daytime high temperatures in the upper 80s to low 90s. Overnight lows were in the mid-70s. Scattered thunderstorms brought moisture to areas of southern Arkansas, the west Tennessee Valley, and the bootheel of Missouri during the week.

Weekly accumulated rainfall totals measured from one-half of an inch to two inches of moisture, with heavier accumulations observed in some locales. Flash flood watches were issued in some areas. Fieldwork continued in areas where soils were firm enough to support equipment. Producers applied herbicides, fertilizer, and plant growth regulators. Insect pressure was light, producers treated hot spots. Squaring advanced.

Boll-setting had begun in Tennessee. According to the National Agricultural Statistics Service’s Crop Progress report released on June 29, squaring had reached 68 percent in Arkansas, 29 in Tennessee, and 12 percent in Missouri; all figures lagged behind the five-year average.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was slow. No forward contracting was reported. The COVID-19 Pandemic continues to disrupt travel, trade, and many normal activities around the world.

The crop progressed at a good pace under fair to partly cloudy skies and warm weather during the period. Daytime high temperatures were in the upper 80s to mid-90s. Overnight lows were in the mid-70s. Widespread thunderstorms brought rainfall to areas throughout the region. Weekly accumulated precipitation totals measured from trace amounts to around two inches of moisture. Squaring was well underway across the region and boll-setting advanced at a rapid pace in Louisiana and was getting underway in Mississippi. Producers applied plant growth regulators, herbicides, and fertilizer in between rain events. Insect pressure was generally light and easily controlled. According to the National Agricultural Statistics Service’s Crop Progress report released June 29, squaring had reached 65 percent in Louisiana and 28 percent in Mississippi; both figures were behind the five-year average.

Trading

North Delta

  • No trading activity was reported.

South Delta

  • A heavy volume of CCC-loan equities traded for around 3.50 cents per pound.

Southwestern Markets Regional Summary

East Texas

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. Trading of CCC-loan equities was slow. Foreign mill inquiries were light. Coronavirus concerns continued to pressure the market and demand for cotton.

Temperatures were in the mid-80s to mid-90s for the Rio Grande Valley (RGV) and Coastal Bend. The National Weather Service warned south Texas residents to take precautions due to high humidity and hot conditions, which will make it feel like temperatures are in the mid-100s through Wednesday, July 1. Rainfall was received early in the reporting period. Accumulation amounts ranged from one-tenth of an inch up to one inch for south Texas.

The RGV crop neared cut-out. Producers prepared equipment for harvesting. Defoliation activities were expected to begin after July 4. Local sources reported rains from late May to mid-June turned the RGV, Coastal Bend, and Upper Coast crops around for the better. Boll counts revealed that the crop had the potential to be high yielding. Sources estimated production at 2 million bales. According to the Texas Boll Weevil Eradication Foundation, there are approximately 868,000 planted acres of cotton in south Texas.

Heat warnings were issued as temperatures in the Blackland Prairies reached the high 90s and forecasted to be in the low 100s late in the period. Rainfall is needed to bring welcomed relief to the crop. The crop made good progress in the Blackland Prairies. Temperatures were in the mid-to-high 90s in cotton-growing areas of central Kansas, with a one-day high of 102 degrees reached on Wednesday, July 1.

Daily temperatures were in the low 100s in western Kansas, with no precipitation. Fields were rated as mostly good. Some of the late-planted cotton was rated mostly in fair condition. The Oklahoma dryland crop looks a little beat up with wind damage. Dryland that was planted in cover crops looks good. Producers prepared for first irrigation of the crop.

West Texas

Spot cotton trading was slow. Supplies were moderate. Demand was light. Average local spot prices were higher. Foreign mill inquiries were light. No inquiries for 2019-crop cotton, but inquiries for color 31 and better with staple 36 and longer were good for new-crop cotton. No sales were reported. Inquiries were for price discovery. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was slow.

Hot, dry conditions were prevalent in the period. Temperatures were mostly in the low 100s. Dry conditions stressed cotton plants. The west Texas region could use a good general rainfall. Fields that received rain the previous week were progressing. Some fields that withstood strong winds and hail looked a little rough. The Rolling Plains crop was making good progress. Producers monitored for insect activity. Warehouses were shipping cotton, but it was not steady.

Trading

East Texas

  • In Oklahoma, a light volume of mostly color 41, leaf 5-7, staple 34-37, mike 30-52, strength 27-34, uniformity 78-82, with 50 percent extraneous matter sold for around 46.25 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of Oklahoma 2019 crop CCC-loan equities sold for around 2.25 to 4.75 cents.

West Texas

  • A light volume of mixed lot of mostly color 12 and 22, leaf 3 and better, staple 35-37, mike 34-46, strength averaging 30.1, and uniformity averaging 80.8 sold for around 55.50 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume mixed lot of mostly 2018-crop cotton color 22, 23, and 33, leaf 5 and better, staple 35-37, mike 35-48, strength 26-47, uniformity 77-82, and 50 percent extraneous matter sold for around 46.50 cents, same terms as above.
  • A light volume of 2019 crop CCC-loan equities sold for around 0.25 cents.
  • A moderate volume of 2018 crop CCC-loan equities sold 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. The effects of the COVID-19 Pandemic slowed the marketing chain for cotton. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Hot, dry conditions were the normal. Temperatures were steady in the low to mid-100s in central Arizona and in the high 90s for New Mexico and El Paso, TX. The DSW crop made good progress. No significant insect pressures were reported. Industry experts were in general agreement with the planted acreage as reported and released by the National Agricultural Statistics Service on June 30.

San Joaquin Valley (SJV)

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

Triple-digit temperatures were prevalent early in the period with a one-day high of 107 degrees in some locales. Temperatures retreated to the low 90s by mid-week. No rainfall was recorded in the period. The crop made excellent progress. No insect pressures were reported. Industry experts were in general agreement with the planted acreage as reported and released by the National Agricultural Statistics Service on June 30.

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 the livelihood of citizens across the nation and world, thus the demand for cotton. Foreign mill inquiries were light.

Hot, dry conditions were reported throughout the Far West. Temperatures were in the 90s to mid-100s. No rainfall was recorded in the period. Blooming was reported in the earliest-planted fields in central Arizona. A few blooms were reported in San Joaquin Valley fields of California. Overall, the crop made excellent progress in the Far West. Industry experts were in general agreement with the planted acreage as reported and released by the National Agricultural Statistics Service on June 30.

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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