Weekly Cotton Market Review – USDA

Cotton harvest near cotton gin with modules lined up in the gin yard. ©Debra L Ferguson

Spot quotations averaged 55 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 58.37 cents per pound for the week ending Thursday, September 10, 2020.

The weekly average was down from 58.92 last week, but up from 55.97 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 58.83 cents Friday, September 4 to a low of 57.90 cents Tuesday, September 8.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 10 totaled 10,399 bales. This compares to 4,584 reported last week and 25,783 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 125,269 bales compared to 64,228 bales the corresponding week a year ago. The ICE Oct settlement price ended the week at 63.96 cents, compared to 63.56 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #21 FOR UPLAND COTTON September 10, 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 September 17, 2020, allowing importation of 2,342,753 kilograms (10,760 bales of 480-lbs) of upland cotton.

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Quota number 21 will be established as of September 17, 2020 and will apply to upland cotton purchased not later than December 15, 2020 and entered into the U.S. not later than March 15, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period May 2020 through July 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 light. Supplies and producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was slow. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

Clear to fair conditions were observed across the lower Southeast during the period. Daytime high temperatures were in the upper 80s to low 90s. Dry conditions prevailed over most of the region, but localized thunderstorms brought around one-half of an inch to two inches of weekly accumulated moisture to areas of coastal Georgia. The crop progressed well under warm and dry conditions; fields were blooming, and bolls were cracking open.

Two Alabama counties have been designated as primary natural disaster areas. Producers in Mobile and Washington counties who suffered losses due to excessive rainfall and flash flooding from Tropical Storm Cristobal that occurred June 7 through June 10, 2020, may be eligible for USDA Farm Service Agency emergency loans.

Some producers reported concerns about boll-rot and hard locked bolls in fields that had received heavy precipitation in recent weeks. Producers scouted fields and applied treatments as needed. Industry members attended virtual crop tours and meetings.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 8, cotton bolls opening had reached 36 percent in Alabama and 35 percent in Georgia.

Mostly sunny to fair conditions prevailed across the upper Southeast during the period. Daytime high temperatures were in the mid-to-upper 80s. Widespread thunderstorms brought light to moderate precipitation along coastal areas of the Carolinas and Virginia late in the week. Precipitation totals measured from one-quarter of an inch to one inch of precipitation.

The crop made good progress in Virginia and advanced at a slower pace in the Carolinas. Fields were blooming and bolls were cracking open. In North Carolina, dry conditions stressed plants in areas that have missed moisture in recent weeks. Producers scouted fields for pests and applied treatments as needed.

According to the NASS Crop Progress report released September 8, cotton bolls opening lagged historical averages at 6 percent in South Carolina, and 24 in North Carolina, but was nearer to the five-year average at 27 percent opening in Virginia.

Textile Mill

Inquiries from domestic mill buyers were very light. No sales were reported. Reports indicatedmost mills have covered their raw cotton needs through fourth quarter 2020. Mills operating at reduced capacity due to lower demand associated with the COVID-19 Pandemic have delayed deliveries of previously booked raw cotton and some do not anticipate transitioning to using 2020-crop cotton until January or February 2021.

The undertone from mill buyers remained cautious. Yarn demand saw an incremental improvement. 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 throughout the Far East inquired for any discounted styles of cotton.

Trading

  • A moderate volume of color mostly 41, leaf 3 and 4, staple mostly 38 and 39, mike 43-49, strength 29-31, and uniformity 81-83 sold for around 175 points off ICE December futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A light volume of color 31 and 41, leaf mostly 3 and 4, staple 38, mike 43-49, strength 29-30, and uniformity 82-83 sold for around 61.25 cents per pound, same terms as above.
  • A moderate volume 2019 CCC-loan equity sold for around 6.25 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 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.

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Mostly clear skies and warm temperatures prevailed during the week. Daytime temperatures were mostly in the low 90s. Overnight lows were in the 60s and 70s. The crop made good progress under ideal conditions. Local experts and cotton extension specialists were concerned about the lateness of the crop and the onset of cooler weather, as a cold front is expected to enter the region in the next week.

Bolls were rapidly opening and defoliation had begun on early-planted and dryland acres. Harvesting was expected to get underway within a week to ten days. Producers in northern areas were hoping for an extended period of clear, dry weather.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on September 8, bolls opening had reached 68 percent completed in Arkansas, 14 in Missouri, and 15 percent in Tennessee. The figures for Missouri and Tennessee were about two weeks 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 lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact economic activity around the world.

Clear to partly cloudy skies and hot temperatures dominated the weather pattern during the week. Daytime temperatures were mostly in the low 90s. Overnight lows were in the 60s and 70s. The crop made good progress under ideal conditions. Defoliation slowly gained momentum, and cotton harvesting had commenced. Ginning was expected to get underway in a week to ten days; however, some gins reported a shortage of skilled laborers and may be forced to operate a single shift, instead of the normal two.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on September 8, bolls opening had reached 73 percent completed in Louisiana and 42 percent in Mississippi; while Louisiana was at the five-year average, the crop in Mississippi remained at least a week behind.

Trading

North Delta

  • A light volume of a mixed lot, 2016-crop cotton, color mostly 31 and 41, leaf 6 and better, staple 37, mike averaging 40.1, strength averaging 30.8, and uniformity averaging 82.0 traded for around 37.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was active. 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 active. Foreign inquiries were light. Interest was best from China, Indonesia, and Pakistan. An open invitation to bid on a light volume of 2019-crop CCC-catalog cotton closed on September 10. The Loan Deficiency Payment remains in effect. The COVID-19 Pandemic continued to influence market uncertainty and affect global cotton demand.

In the Upper Coast, ginning advanced. Storms interrupted harvesting activities. Modules were transported to the gin yards. In the Coastal Bend, module backlogs were processed at area gins. Fieldwork was finalized around rain events. In the Blackland Prairies, harvesting expanded and more gins opened for the season. Intermittent storms interfered with field activities. The Corpus Christi Classing Office expanded shifts and classified samples through the Labor Day weekend.

In Kansas, bolls opening was 21 percent, ahead of 8 last year and 15 for the five-year average, according to the National Agricultural Statistics Service’s (NASS) Crop Progress Report released on September 8. A cold front brought 1 inch of rainfall and dropped daytime temperatures from the upper 90s into the low 40s. The rain came too late to help mature the top crop on dryland acres, but overall the additional moisture was beneficial.

In Oklahoma, bolls opening reached 27 percent, down from 33 last year and up from 21 percent for the five-year average, according to NASS. Storms moved through the state and gusty winds whipped the stands, but damage was minimal.

West Texas

Spot cotton trading was moderate. Supplies and 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, Pakistan, and Taiwan. The Loan Deficiency Payment remains in effect. The COVID-19 Pandemic continued to impact commodity markets and global cotton demand.

An early cold front moving through the area brought gusty winds and rainfall with daytime temperatures in the mid-30s to mid-90s. Overnight lows were in the low 30s to upper 60s. Several weather records were set for the earliest low temperature highs and lows. Producers made decisions to shut off irrigation.

Widespread scattered thundershowers brought up to 5 inches of accumulated precipitation. The Rolling Plains received the most rainfall. Cooler temperatures and the impact on the crop were concerning. Damage assessments were underway. Industry continued to conduct virtual meetings.

Trading

East Texas

  • In Texas, a heavy volume of mostly color 31 and 41, leaf 2-4, staple 37, mike 42-47, strength averaging 31.1, and uniformity averaging 81.2 sold for around 63.00 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, even running lots containing a heavy volume of 2019-crop cotton mostly color 31 and 41, leaf 5, staple 36 and longer, mike 35-52, strength 29-34, uniformity 80-82, and 100 percent extraneous matter sold for around 56.00 cents, FOB car/truck (compression charges not paid).
  • A heavy volume of 2019 CCC-loan equities traded for 1.75 to 4.50 cents.
  • A light volume of 2019-crop CCC-catalog cotton, color 11, leaf 3 and better, staple 35 and longer, mike 37-47, strength 28-31, uniformity 79-82, and 100 percent extraneous matter (Plastic) sold for around 13.00 cents, FOB warehouse (compression charges not paid).

West Texas

  • A moderate volume of 2019-crop cotton mostly color 22 and better, leaf 2 and 3, staple 35 and longer, mike 30-34, strength 28-31, uniformity 78-82, and 25 percent extraneous matter sold for around 51.00 cents per pound, FOB car/truck (compression charges not paid).
  • An even running lot containing a light volume of cotton mostly color 21, leaf 3, staple 35 and longer, mike averaging 28.9, strength averaging 29.9, uniformity averaging 80.2, and 50 percent extraneous matter sold for around 46.75 cents, same terms as above.
  • A light volume of 2019 CCC-loan equities traded for 0.25 to 5.00 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. The COVID-19 Pandemic continued to disrupt the U.S. economy and global cotton demand. Average local spot prices were lower. Local merchant contacts reported that new crop cotton will go into the CCC loan program. No foreign or domestic mill activity was reported. Foreign mill inquiries were light.

Hot, dry conditions pushed the DSW crop towards completion. Harvesting continued in Yuma. Modules accumulated on the gin yard. The first new-crop samples were classed on Tuesday, September 8. Quality was typical. The crop made good progress in New Mexico and El Paso, TX. DSW producers readied equipment for harvest.

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 global cotton demand. Average local spot prices were lower. Local merchant contacts reported that new crop cotton will go into the CCC loan program. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Hot, dry conditions continued. Temperatures stayed in the high 90s to low 100s as smoke kept temperatures from climbing higher. Hazy, smoky conditions from devastating wildfires due east of the SJV raged. Air quality was poor. The crop rapidly approached cut-out. Bolls are cracking open. Producers prepared for defoliation activities and equipment for harvest.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Demand was light. Average local spot prices were steady. Local merchant contacts reported that new crop cotton will go into the CCC loan program, or cooperative and merchant pools. No forward contracting or domestic mill activity was reported. No new-crop pricing or contracts were offered. The COVID-19 Pandemic continues to affect the global demand for Extra Long Staple cotton.

Foreign mill inquiries were light and for prompt shipment. Inquiries for new-crop cotton were mostly for price discovery. Shippers continued to offer and ship 2019-crop cotton. According to the Foreign Agricultural Service, the export report for week ending September 3 showed 17,400 bales of new sales.

Hot, dry conditions were reported throughout the Far West. Smoke from wildfires affected air quality for the region. Rainfall is needed to clear the air. Boll-setting advanced. Bolls were cracking open. Producers prepared equipment for harvest. Gin repairs were finalized.

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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