Weekly Cotton Market Review – USDA

Moving cotton modules into line during harvest. ©Debra L Ferguson

Spot quotations averaged slightly 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 59.82 cents per pound for the week ending Thursday, September 24, 2020.

The weekly average was down from 59.84 last week, but up from 57.94 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 60.05 cents Friday, September 18 to a low of 59.63 cents Monday, September 21.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 24 totaled 11,437 bales. This compares to 33,704 reported last week and 9,447 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 170,410 bales compared to 101,193 bales the corresponding week a year ago. The ICE Dec settlement price ended the week at 65.46 cents, compared to 65.85 cents last week.

Southeastern Markets Regional Summary

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

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Mostly cloudy conditions dominated the weather pattern across the lower Southeastern region most of the period. Daytime high temperatures were in the mid-70s to low 80s. Over the weekend, scattered thunderstorms brought light-to-moderate moisture to portions of central and south Alabama and the Florida Panhandle.

Later in the week, remnants of Tropical Storm Beta brought additional moisture to these areas, which remained waterlogged due to heavy rainfall in recent weeks. Weekly accumulated rainfall totals measured from one-half of an inch to two inches of moisture.

The moisture negatively impacted crop conditions, particularly in the Florida Panhandle, where assessments indicated fields that bore the brunt of slow-moving Hurricane Sally suffered quality and yield loss.

In Georgia, defoliation was getting underway as allowed by dry conditions and harvesting had begun in a few fields. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 21, cotton bolls opening reached 66 percent completed in Alabama and 64 percent completed in Georgia, both figures behind the five-year average.

Entering the period, remnants of Hurricane Sally brought moderate-to-heavy rainfall to portions of the Carolinas and Virginia. Precipitation totals measured from one-quarter of an inch to three inches of moisture. Over the weekend and the remainder of the week, mostly clear to partly cloudy conditions prevailed across the upper Southeastern. Daytime high temperatures varied from the low 60s to mid-70s.

Fieldwork was slowed or completely halted due to wet conditions. The heavy rainfall caused ponding in some fields and stressed plants where soils remained water-logged. Producers were preparing to defoliate some of the earliest-planted fields. In Virginia, harvesting had begun in a few fields. According to the NASS Crop Progress report released September 21, bolls opening reached 49 percent completed in North Carolina and Virginia, and 39 percent completed in South Carolina, figures behind the five-year average.

Textile Mill

Buyers for domestic mills purchased a light volume of color 41, leaf 4, and staple 34 and 35 for fourth quarter 2020 and first quarter 2021 fill-in needs. No additional sales were reported. Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for delivery January through October 2021.

Additional inquiries from domestic mill buyers were very light. Most mills have covered their raw cotton needs through the fourth quarter  The undertone from mills buyers remained cautious as mills continued to operate at reduced capacity due to lower demand associated with the COVID-19 Pandemic. Mills continued to produce personal protective equipment for frontline workers and military supplies.

Demand through export channels was very light. Agents for mills in Taiwan purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 37 for nearby shipment. Agents for mills in Pakistan purchased a light volume of low grade mixed lot recaps for nearby shipment.

Trading

  • A heavy volume mixed lot containing mostly color 41 and 52, leaf 2-4, staple 34-37, mike 37-49, strength 26-29, and uniformity 79-82 sold for around 58.00 cents per pound, 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. The COVID-19 Pandemic continues to negatively impact the overall global economy.

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A cold front mid-week brought cool temperatures and two days of steady, ground-soaking rainfall. Precipitation totals of up to one and one-half inches were reported in many areas. Daytime temperatures were in the 60s. Overnight lows were in the 50s. Preparations for the harvest season, particularly the application of defoliants, were hampered by the untimely moisture. Fieldwork was delayed due to saturated soil conditions.

The crop made excellent progress before the cool, wet weather moved in. According to the National Agricultural Statistics Service’s Crop Progress report released on September 21, bolls opening reached 91 percent completed in Arkansas, 62 in Missouri, and 50 percent completed in Tennessee. The crop was rated good to excellent in Arkansas, and fair to good in Missouri and Tennessee, but continued to lag behind average in Tennessee.

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. The COVID-19 Pandemic continues to negatively impact economic activity around the world.

A cold front mid-week brought cool temperatures and two days of heavy rainfall. Local experts reported up to 5 inches of rainfall. The inclement weather was of great concern to producers throughout the region, coming on the heels of Hurricane Laura. Daytime temperatures were in the 60s. Overnight lows were in the 50s. Harvesting activities were delayed by the untimely moisture.

Fieldwork was at a standstill until soft soils could firm enough to support equipment. Ginning continued without interruption. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on September 21, bolls opening reached 95 percent completed in Louisiana and 73 percent in Mississippi; NASS also reported cotton harvested was at 16 percent in Louisiana and 6 percent in Mississippi. The crop was rated fair to good in Louisiana and Mississippi.

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 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 moderate. Foreign inquiries were moderate. Interest was best from China, Pakistan, and Taiwan. The COVID-19 Pandemic continued to influence market uncertainty and impact global cotton demand.

Slow moving Tropical Storm (TS) Beta made landfall the morning of September 22 near Port Lavaca and brought high winds and days of flooding rain to the Upper Coast. Some areas received more than 15 inches of rainfall. Approximately 90 percent of the fields were harvested ahead of the storm. Transporting modules from fields to the gin yards was stalled because of flooded fields and roadways.

Ginning continued, until the gin yards became too soft to support equipment. Some gins closed for 2 days until the storm passed. Ginning in south Texas continued. Rainy conditions hindered fieldwork. Ginning advanced in the Winter Garden area.

No rainfall was received in the Rio Grande Valley (RGV) from TS Beta. The cotton season was completed in the RGV, and ginning had finished in early September. Intermittent spotty showers halted field work and module transportation in the Blackland Prairies. Gins continued processing the backlogs of modules on the yards.

In Kansas, cotton bolls opening was 41 percent ahead of 24 last year and 32 percent for the five-year average, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on September 21. Producers prepared to spray defoliants and boll openers on earlier-planted fields. The impact of the cold front on the crop from September 9 and 10, continued to be evaluated by industry leaders.

In Oklahoma, bolls opening was 45 percent compared to 51 last year and 45 percent for the five-year average, according to NASS. A few fields had been defoliated and ginning was expected to begin next week at some locations. The crop was rated mostly fair to good in Kansas and Oklahoma.

West Texas

Spot cotton trading was active. Supplies were moderate. Producer offerings and demand were 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 to moderate. 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.

The crop rapidly matured under hot, sunny conditions with daytime temperature in the upper 70s to upper 80s and overnight lows in the mid-50s to low 60s. Finished fields were defoliated on the High Plains. Some fields were harvested. A light volume of samples were received at the Lubbock Classing Office from two gins. Several underperforming dryland fields were plowed and submitted for insurance. Damage caused by the cold front on September 9 and 10 became more apparent, and fields continued to be assessed by industry leaders.

Trading

East Texas

  • In Texas, a light volume of new-crop cotton mostly color 31, leaf 3 and 4, staple 37, mike averaging 40.6, strength averaging 31.3, and uniformity averaging 81.6 sold for around 62.00 cents per pound, FOB warehouse (compression charges not paid).
  • A heavy volume of new-crop cotton color 51 and 52, leaf 3-5, staple 37, mike 38-48, strength 27-32, and uniformity 78-83 sold for around 54.75 cents, same terms as above.
  • A moderate volume of 2019 CCC-loan equities traded for 0.75 to 4.50 cents.

West Texas

  • A moderate volume of 2019-crop cotton mostly color 21, 31, and 32, leaf 4 and better, staple 34 and longer, mike 36-52, strength 26-33, and uniformity 78-83 sold for around 55.75 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a moderate volume of cotton mostly color 23 and 33, leaf 3 and better, staple 35 and longer, mike 32-48, strength 27-34, and uniformity 77-81 sold for around 50.75 cents, same terms as above.
  • A heavy volume of 2019 CCC-loan equities traded for 0.00 to 3.25 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

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

Hot, dry conditions pushed the DSW crop towards completion. Harvesting was 80 percent completed in Yuma. Modules accumulated on the gin yard. Ginning was steady. The crop made good progress in New Mexico and El Paso, Texas. DSW producers readied equipment for harvest.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. 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 and global cotton demand.

Temperatures were in the 80s and 90s as smoky conditions kept temperatures from climbing higher. Air quality was poor. Defoliation activities commenced. Producers prepared equipment for harvest. Ginning was expected to begin around October 15.

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. No new-crop pricing or contracts were offered. The COVID-19 Pandemic continues to affect the global demand for Extra Long Staple cotton (ELS). Foreign mill inquiries were light. Shippers continued to offer and ship 2019-crop cotton.

The expansion of the Coronavirus Food Assistance Program began on September 21 and will run through December 11. The expansion now includes ELS cotton.

Wildfire smoke continued to affect air quality in California. Rainfall is needed to clear the air. San Joaquin Valley fields reached cut-out. Defoliation activities began on a limited scale.

Trading

Desert Southwest

  • A light volume of 2019-crop cotton mostly color 32, leaf 2 and 3, staple 36-38, mike 47-54, strength 28-32, and uniformity 78-83 sold for around 54.25 cents per pound, FOB car/truck (compression charges not paid).

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.



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