Weekly Cotton Market Review – USDA

Cotton harvest. ©Debra L Ferguson

Average spot quotations were 91 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 58.18 cents per pound for the week ending Thursday, July 23, 2020.

The weekly average was down from 59.09 last week, but up from 57.71 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 58.70 cents Monday, July 20 to a low of 57.39 cents Thursday, July 23.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 23 totaled 1,894 bales. This compares to 21,274 reported last week and 6,375 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,596,496 bales compared to 1,271,313 bales the corresponding week a year ago. The ICE Oct settlement price ended the week at 61.68 cents, compared to 62.88 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #14 FOR UPLAND COTTON July 23, 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 30, 2020, allowing importation of 3,892,413 kilograms (17,878 bales of 480-lbs) of upland cotton.

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Quota number 14 will be established as of July 30, 2020 and will apply to upland cotton purchased not later than October 27, 2020 and entered into the U.S. not later than January 25, 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 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.  The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

A mix of sunny to partly cloudy conditions prevailed across the lower Southeastern region during the period. Seasonably warm daytime temperatures were in the low to mid-90s.  Mostly dry conditions dominated the weather pattern, but isolated pop-up thunderstorms brought localized moisture and downpours to portions of north and south Alabama, the Florida Panhandle, and Georgia.

Weekly accumulated precipitation totals measured from trace amounts to around one inch of moisture.  The crop progressed well and squaring and boll-setting advanced under hot and humid conditions.  Fields were irrigated. Producers applied plant growth regulators.

In Georgia, producers treated fields for whiteflies in areas where they are typically found.  Spider mites have flared in some fields where treatments for thrips also impacted beneficial insects.  Stink bug populations were increasing, particularly Southern green stinkbugs in southwest Alabama. Producers would welcome a soaking rainfall to relieve heat stressed plants and reduce spider mite and whitefly populations.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released July 20, cotton squaring neared completion and boll-setting reached 49 percent completed in Georgia and 41 percent completed in Alabama.

Sunny to partly cloudy conditions were observed across the upper Southeastern region during the period.  Seasonably warm daytime high temperatures were in the mid-to-upper 90s.  Scattered pop-up thunderstorms brought moisture to northerly areas of South Carolina and areas throughout North Carolina and Virginia. Weekly accumulated precipitation totals measured from trace amounts to around two inches of rainfall.

Producers in areas that received moisture welcomed the precipitation.  The crop advanced well under hot and humid conditions.  Fields were squaring and boll-setting was getting underway.  In the Carolinas, plant bugs and aphids were present at treatable levels in some fields.  Stink bugs are beginning to enter cotton fields.

According to the NASS Crop Progress report released July 20, boll-setting had reached 29 percent completed in Virginia, 26 in North Carolina, and 14 percent completed in South Carolina.

Textile Mill

Domestic mill buyers inquired for a light volume of color 41, leaf 3, and staple 37 for September/October delivery.  Mill buyers also made initial inquiries for a light volume of 2020-crop cotton of similar qualities for November/December delivery.  No sales were reported. Additional inquiries from domestic mill buyers were very light.

Mill buyers remained cautious as mills operated at reduced capacity, due to lackluster demand associated with the COVID-19 Pandemic.  Some mills planned to bring idled plants back into operation in late July or early August as orders increase.  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.  Agents for mills throughout the Far East inquired for any discounted styles of cotton.

Trading

  • No trading activity was reported.

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 lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.  The COVID-19 Pandemic continues to negatively impact the overall global economy.  The number of daily cases of COVID-19 continues to grow, especially in the United States and Latin America.

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Hot and humid climatic conditions continued to dominate the weather pattern during the week. Daytime temperatures were mostly in the 90s, with the heat index throughout the territory over 100 degrees due to high humidity.  Overnight lows were in the mid-70s.  The National Weather Service maintained heat advisories and air quality alerts for most of the region.

Scattered afternoon thundershowers brought less than one-quarter of an inch of rain to some places, with heavier amounts reported in localized areas. Thunderstorm activity is expected in the near-term forecast, which should provide relief to dry fields in places that receive any moisture.  Boll shedding was reported due to high temperatures.  Fields were being carefully scouted to insure that outbreaks of insect pests were identified and treated.

Producers were using both mechanical cultivation and manual chopping to control weed infestations.  Many fields were blooming, and plant growth regulators were applied as necessary.

According to the National Agricultural Statistics Service’s Crop Progress report released on July 20, cotton setting bolls had reached 56 percent in Arkansas, 11 in Missouri, and 37 percent in Tennessee.  Crop development was about two weeks behind the five-year average in both Arkansas and Missouri.

South Delta

Spot cotton trading was inactive.  Supplies of available cotton and demand were light. Average local spot prices were lower.  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 around the world. The number of daily cases continues to grow, especially in the United States and Brazil.

The weather pattern continued to be hot and humid.  Daytime temperatures were mostly in the 90s, with the heat index up to 110 degrees in some places due to high humidity.  Overnight lows were in the upper 70s.  A series of thundershowers brought less than one-half of an inch of rain throughout the territory. The weather forecast is calling for mostly hot and dry conditions, mixed with scattered showers, for the week ahead.

The irrigated crop made good progress; dryland fields were in need of moisture to continue to develop normally. Insect pressure from plant bugs increased in parts of Mississippi and Louisiana.  Fields were treated as necessary to  control outbreaks. Bollworm moth populations were building; a few fields received treatments to control infestations.  Most of the crop was blooming. Boll shedding was reported in some places as a result of the extreme temperatures.

Many fields have received several applications of plant growth regulators.  According to the National Agricultural Statistics Service’s Crop Progress report released on July 20, boll-setting had reached 56 percent in Louisiana and 26 percent in Mississippi. Both figures were behind the five-year average by about three weeks.

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 slow.  Supplies and producer offerings were moderate. 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, Indonesia, and Korea.  The Loan Deficiency Payment remains in effect. The lack of demand and the COVID-19 Pandemic turmoil disrupted marketing infrastructure.

Harvesting expanded in the Rio Grande Valley. Modules were transported from fields to the gin yards. Ginning had begun. Defoliation was underway in the Coastal Bend.  Harvesting was expected to begin this weekend, barring inclement weather.  Ginning was expected to begin next week. In the Blackland Prairies, stands advanced after recent rainfall. The earliest-planted fields had reached cutout. Boll loads were encouraging.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on July 20, Kansas cotton condition was rated mostly fair to good.  Squaring was at 76 percent, ahead of 54 last year, and 49 percent for the five-year average. Setting bolls was at 17 percent, ahead of 8 last year, and 5 percent for the five-year average. A cool down in temperatures in the 80s and 90s and a good general storm helped advance the stands. Some areas received over 1 inch of moisture.

The cotton condition in Oklahoma was rated mostly fair to good, according to NASS.  Squaring reached 50 percent, down from 69 a year ago and 59 percent for the five-year average. Setting bolls was at 10 percent, compared to 13 last year and 15 percent for the five-year average. Beneficial rainfall was received that helped the wells keep up with water demand.

West Texas

Spot cotton trading was moderate. Supplies were moderate. Producer offerings were moderate. 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 for old-crop. Interest was best from China, Indonesia, and Korea. The Loan Deficiency Payment remains in effect. The COVID-19 Pandemic continued to impact commodity markets.

Dryland struggled with daytime temperature highs in the low 90s to low 100s.  An eleven day record setting streak of triple digit temperatures ended early in the reporting period. Thundershowers brought    one-third of an inch to over two inches of beneficial rainfall to some locations. Coverage was spotty. Irrigation wells rested where precipitation was received. Other parts of the territory remained droughty and received no precipitation.  A widespread rainfall would benefit the dryland and irrigated fields.  Stands were setting squares or blooming. Careful monitoring was underway for insects. Industry associations held Zoom meetings to stay connected and share crop information.

Trading

East Texas

  • In Oklahoma, a light volume of mostly 2019-crop color 31, 22, and 32, leaf 3 and 4, staple 37-39, mike 33-39, strength 30-33, and uniformity 81-84 sold for around 56.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of 2019-crop color 32 and better, leaf 1-5, staple 31-33, mike 39-51, strength 25-32, and uniformity 76-81 sold for around 48.50 cents, same terms as above.
  • A light volume of 2019 CCC-loan equities traded for around 6.00 cents.

West Texas

  • A light volume of 2019-crop cotton containing mostly color 11 and 21, leaf 1 and 2, staple 32 and 33, mike averaging 41.1, strength averaging 26.6, and uniformity averaging 77.4 sold for around 49.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume containing mostly color 21 and 31, leaf 1 and 2, staple 31 and 32, mike averaging 41.4, strength averaging 25.2, and uniformity averaging 77.9 sold for around 47.00 cents, same terms as above.
  • A light volume of 2019 CCC-loan equities traded for 0.00 to 0.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive.  Supplies were moderate.  Demand was light. Producers offered equities.  Average local spot prices were lower. The COVID-19 Pandemic continued to put pressure on the cotton market and slowed the marketing chain for cotton.  No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures continued in the high 100s in western and central Arizona. Light showers moved through Arizona mid-week as monsoonal activity shifted to lower elevations. More rain is in the    near-term forecast.  The slight drop in temperatures as storms moved through helped keep heat stress at the Level 1 category. The Yuma crop approached cut-out stage. The crop made good progress in central Arizona. No significant insect pressures were reported.

Temperatures were in the high 90s to low 100s in New Mexico and El Paso, TX. Afternoon thunderstorms, some of which will have strong winds and heavy rainfall, were in the near-term forecast.  The crop made good progress.

San Joaquin Valley (SJV)

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

Valley skies were hazy as smoky conditions from the Mineral Fire in western Fresno County, near Coalinga continued to burn. The rugged terrain makes it difficult for firefighters to get the fire under control. Air quality remains poor. Temperatures were in the low to mid-100s. The crop made excellent progress.   No insect pressures were reported.

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. Mills inquired for new-crop cotton.

Shippers continued to offer 2019-crop cotton. According to the Foreign Agricultural Service Export report for week ending July 16, there were 11,600 bales of new sales with no cancellations.  Sales for marketing year 2020 were reported at 38,000 bales.

Hot, dry conditions were reported throughout the Far West.  Desert Southwest producers anticipated the first good monsoon rainfall.  Strong afternoon thunderstorms were in the near-term forecast.  Blooming and boll-setting advanced across the region. Insect pressures were easily managed and controlled.  Overall, the crop made excellent progress in the Far West.

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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