Weekly Cotton Market Review – USDA

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

Average spot quotations were 195 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 63.08 cents per pound for the week ending Thursday, October 15, 2020.

The weekly average was up from 61.13 last week and from 60.97 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 62.10 cents Friday, October 9 to a season high of 63.76 cents Thursday, October 15.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 15 totaled 36,653 bales. This compares to 28,834 reported last week and 23,191 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 253,387 bales compared to 158,303 bales the corresponding week a year ago. The ICE Dec settlement price ended the week at 69.22 cents, compared to 67.49 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON October 15, 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 October 22, 2020, allowing importation of 5,551,846 kilograms (25,499 bales of 480-lbs) of upland cotton.

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Quota number 26 will be established as of October 22, 2020 and will apply to upland cotton purchased not later than January 19, 2021 and entered into the U.S. not later than April 19, 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 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.

Fieldwork was interrupted early in the period as the remnants of Hurricane Delta tracked across the lower Southeast early in the period. Strong winds and heavy rainfall accompanied the storms. Areas throughout central Alabama and north Georgia received around 2 to 4 inches of rainfall. Gusting winds blew cotton bolls around and lint was strung out in some fields due to the wet weather.

Producers welcomed dry and sunny conditions late in the week, which helped soft soils to firm and bleach out discolored lint. Defoliation and harvesting were expanding. Gins were beginning pressing operations for the season as backlogs of modules accumulated on gin yards. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 13, cotton bolls opening had reached 87 percent completed in Georgia and 86 percent completed in Alabama; NASS reported cotton harvested at 13 percent in Georgia and 12 percent in Alabama.

Rainfall from storms associated with the remnants of Hurricane Delta moved across the upper Southeast over the weekend and interrupted fieldwork. Rainfall totals measured from around one-quarter of an inch to around one and one-half inches of moisture in areas throughout the Carolinas and Virginia. Foggy conditions in some areas later in the week also delayed field activities.

The crop advanced at a good pace and bolls were cracking open, but crop progress remained about a week behind the five-year average in the Carolinas. Defoliation and harvesting activities were getting underway. Ginning was also slowly getting underway in the Carolinas; gins were waiting for backlogs of modules to accumulate on gin yards before beginning pressing operations for the season.

According to the NASS Crop Progress report released October 13, bolls opening had reached 93 percent completed in Virginia, 86 in South Carolina, and 85 percent completed in North Carolina; cotton harvested had reached 9 percent in North Carolina and Virginia and 1 percent in South Carolina.

Textile Mill

Buyers for domestic mills inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for January through October 2021 delivery. No sales were reported. Additional inquiries from domestic mill buyers were very light. Most mills have covered their raw cotton needs through the fourth quarter 2020. The undertone from mill buyers remained cautious as they continued to operate at reduced capacity due to the COVID-19 Pandemic. Mills continued to produce personal protective equipment for frontline workers and military supplies.

Demand through export channels was light. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • Even-running lots containing color 31 and 41, leaf 3 and 4, staple 38, mike 43-45, strength 29-31, and uniformity 82-83 sold for around 68.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A heavy volume mixed lot containing mostly color 51 and better, leaf 2-4, staple 34-37, mike 43-49, strength 25-30, and uniformity 79-81 sold for 62.25 cents, same terms as above.

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. A moderate volume of forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy.

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Partly cloudy skies mixed with rain showers dominated the weather pattern during the week. Accumulated precipitation measured from 1 to 2 inches throughout the region. Variable temperatures prevailed as a cold front moved through the territory late week. Daytime highs were in the 60s to 80s. Overnight low temperatures were in the 40s and 60s. Field activities were delayed in southeastern Arkansas, which received around 2 inches of rain from the remnants of Hurricane Delta.

Producers in the rest of the region experienced brief delays, if any, due to inclement weather and defoliation, harvesting, and fall fieldwork continued normally. Ginning continued without interruption and several more gins commenced annual pressing operations. According to the National Agricultural Statistics Service’s Crop Progress report released on October 13, cotton harvested had reached 30 percent completed in Arkansas, 19 in Missouri, and 18 percent in Tennessee. These figures were at least one week behind the five-year average in all states.

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. A light volume of forward contracting was reported. The COVID-19 Pandemic continues to negatively impact economic activity around the world.

Hurricane Delta made landfall near Lake Charles, Louisiana as a Category 2 storm on Saturday, October 10. Two people perished in Louisiana as a direct result of the storm. Local experts reported that most of the cotton in the direct path of the storm had been harvested before 30-40 mph winds and heavy rain, which measured up to 9 inches in the worst-hit places in Louisiana, moved through the region. A few producers reported 17 inches of accumulated precipitation in the preceding 30 days, including moisture from two hurricanes and a tropical depression.

Other cotton-producing areas in both Louisiana and Mississippi received around 5 inches of rain. All field activities were delayed in areas that received substantial rainfall. Flood water and soft soils prevented producers from getting into the unharvested fields; damage assessments were on-going. No significant yield losses were reported or expected, but the overall negative impact on color grades remains to be seen.

Most large gins were able to continue steady operations; however, a few gins that were just getting started were delayed due to their inability to bring modules from the field. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on October 13, harvesting had reached 61 percent completed in Louisiana and 29 percent in Mississippi. Harvesting was about two weeks behind the NASS five-year average in Mississippi.

Trading

North Delta

  • Producers booked a moderate volume of CCC-loan equities for 10.00 to 11.00 cents per pound.

South Delta

  • Producers booked a light volume of CCC-loan equities for 10.00 to 11.00 cents per pound.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was moderate. Supplies and producer offerings of 2019-crop were moderate and supplies of 2020-crop cotton were light. Demand was good. Average local spot prices were higher. Trading of CCC-loan equities was active for Oklahoma cotton. Merchants purchased a light volume of 2019-crop cotton forfeited to the CCC-Catalog on October 13. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The COVID-19 Pandemic continued to pressure the U.S. economy and global demand for cotton.

Temperatures were in the mid-80s to mid-90s for the Coastal Bend, Upper Coast, and Rio Grande Valley. Harvesting was virtually completed in the territory. Producers were shredding stalks and preparing fields for other plantings. Some of the small volume gins in the Coastal Bend and Upper Coast were nearing the end of their ginning season. The Corpus Christ Classing Office continues to operate two 9-hour shifts. The classing office reached 60 percent of their 2020 classing estimate.

Harvesting was active in Kansas and Oklahoma. No ginning was reported for Kansas. One Oklahoma gin began a night shift in the period. The Abilene Classing Office classed samples a few days this week.

West Texas

Spot cotton trading was slow. Supplies of 2019-crop cotton and producer offerings were moderate. Supplies of 2020-crop cotton was light. Demand was good. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was active. Merchants purchased a light volume of 2019-crop cotton forfeited to the CCC-Catalog on October 13. Foreign mill inquiries were moderate. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

Daytime high temperatures were mostly in the 90s. Harvesting and ginning gained momentum. Some dryland fields continued to be shredded. Nearly half of the gins were beginning operations. Gins kept up with harvesting and very few gins had modules on the gin yard. Classing office receipts steadily increased. Early season classing results were good with color grade 11 and leaf grade 1 as the predominate quality. Warehouses were busy receiving cotton.

Trading

East Texas

  • A moderate volume of 2020-crop Texas cotton color 11 and 21, leaf 2 and better, staple 37 and longer, mike 37-46, strength averaging 30.5, and uniformity averaging 81.5 sold for around 68.00 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of color 21 and 31, leaf 2 and better, staple 35 and 36, mike averaging 42.5, strength averaging 31.3, and uniformity averaging 80.5 sold for around 67.00 cents, same terms as above.
  • A moderate volume mixed lot containing mostly color 31 and better, leaf 4 and better, staple 35-37, mike 40-45, strength 32-34, and uniformity averaging 82.4 sold for 63.25-63.50 cents, same terms as above.
  • A moderate volume mixed lot containing mostly color 41 and better, leaf 4 and better, staple 34-37, mike 28-49, strength averaging 30.8, and uniformity averaging 79.8 sold for around 60.00 cents, same terms as above.
  • A light volume of color 42 and 43, leaf 3 and 4, staple 35-37, mike 38-45, strength averaging 28.8, and uniformity averaging 79.4 sold for around 53.00 cents, same terms as above.
  • A heavy volume of 2019 CCC-loan Oklahoma equities sold for 3.00 to 12.00 cents.
  • A light volume of 2019 CCC-loan Kansas equities sold for 1.00 to 5.00 cents.

West Texas

  • A light volume of 2020-crop cotton color 11 and 21, leaf 2 and better, staple mostly 37-39, mike 39-42, strength averaging 32.0 sold for 71.25 to 71.50 cents per pound, FOB car/truck (compression charges not paid).
  • Similar lots containing staple 36-38 with mike averaging 46.0 sold for around 70.00 cents, same terms as above.
  • A light volume mixed lot containing mostly color 11, leaf 2, staple 35-37, mike averaging 38.9, strength averaging 28.8, and uniformity averaging 79.1 sold for around 69.00 cents, same terms as above.
  • Similar lots containing color 12 with staple 32 and 33 sold for around 58.75 cents, same terms as above.
  • A light volume of 2019-crop cotton color mostly 22 and 33, leaf 4 and better, staple 34-37, mike averaging 37.5, strength averaging 31.6, and uniformity averaging 79.5 sold for around 57.25 cents, same terms as above.
  • A light volume of 2018-crop cotton color 21 and 31, leaf mostly 3, staple 35 and 36, mike averaging 41.8, strength averaging 30.2, and uniformity averaging 81.0 sold for around 59.00 cents, same terms as above.
  • A heavy volume of 2019 CCC-loan equities sold for 1.50 to 10.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

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

Temperatures were in the low 100s for central Arizona. No rainfall was recorded in the period. Ginning continued in Yuma. Defoliation activities gained momentum throughout the DSW. Modules accumulated in fields and some were trucked to gin yards. Limited ginning began in central Arizona. No ginning was reported in New Mexico or El Paso, TX.

San Joaquin Valley (SJV)

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

Temperatures were in the 80s. Smoky conditions diminished, but air quality remains a concern. Defoliation activities continued. Harvesting gained momentum. Producers shredded stalks directly after harvesting. Modules accumulated in fields and gin yards. Two Valley gins began pressing operations.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Demand was light. Average local spot prices were steady. The COVID-19 Pandemic slowed the U.S. economy and global cotton demand. No forward contracting or domestic mill activity was reported.

Daytime high temperatures were in the 80s to low 100s for the region. Defoliation continued throughout the Far West. Harvesting was active in Arizona and California. A light volume of roller-ginned AP samples was received from the San Joaquin Valley of California in the period. No ginning was reported in Safford, Arizona, New Mexico, or El Paso, TX.

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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