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 up 285 points from 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 71.14 cents per pound for the week ending Thursday, December 17.

The weekly average was up from 68.29 cents last week and from 62.46 reported the corresponding period a year ago. Daily average quotations ranged from a low of 69.72 cents Friday, December 11 to a season high of 72.90 cents Thursday, December 17.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 17 totaled 152,664 bales. This compares to 98,938 reported last week and 109,251 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 782,746 bales compared to 711,368 bales the corresponding week a year ago. The ICE March settlement price ended the week at 77.19 cents, compared to 74.26 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #9 FOR UPLAND COTTON December 17, 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 December 24, 2020, allowing importation of 8,108,926 kilograms (37,244 bales of 480-lbs) of upland cotton.

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Quota number 9 will be established as of December 24, 2020 and will apply to upland cotton purchased not later than March 23, 2021 and entered into the U.S. not later than June 21, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period July 2020 through September 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 were moderate. Producer offerings were heavy. Demand was good. 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.

Mostly cloudy conditions prevailed across the lower Southeast during the period and widespread showers brought rainfall to areas throughout Alabama, the Florida Panhandle, and Georgia. Daytime high temperatures in the upper 60s to low 70s over the weekend dropped into the upper 40s to mid-50s late during the week as a cold front moved across the region.

Weekly precipitation totals measured from one-half of an inch to one inch of moisture across Gulf and Atlantic coastal areas, with heavier accumulations of one to three inches observed in central and north Alabama and Georgia. The wet conditions delayed fieldwork and idled pickers where producers were attempting to harvest the remaining fields. Gins continued to process backlogs of modules.

Similar conditions prevailed across the upper Southeast during the period. Widespread shower activity brought light-to-moderate precipitation to areas throughout the Carolinas and Virginia during the week. Daytime high temperatures in the upper 60s to low 70s dropped into the low 40s to low 50s later in the week. Weekly accumulated rainfall totals measured from trace amounts to around 1 inch of moisture. Fieldwork and harvest activities were interrupted, due to wet conditions. Gins continued to process backlogs of modules.

Textile Mill

Domestic mill buyers purchased a heavy volume of color 41, leaf 4, and staple 34 for April through October 2021 delivery. Reports indicated that mills continued to incrementally increase operating schedules as warranted by increased finished product demand. Yarn demand was good. Mills planned a few days or up to a week or more of downtime for the holidays. Mills continued to produce personal protective equipment for frontline workers and military supplies.

Demand through export channels was moderate. Agents for mills in China and Vietnam purchased a moderate volume of color 31, leaf 3, and staple 36 and longer for nearby shipment.

Trading

  • A moderate volume of color mostly 41, leaf 3 and 4, staple 37 and 38, mike 35-49, strength 28-30, and uniformity 80-83 sold for 74.75 to 76.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • Heavy volume mixed lots containing color mostly 41 and 51, leaf mostly 3 and 4, staple 36-38, mike 43-49, strength 29-32, and uniformity 80-83 sold for around 71.00 cents, same terms as above.

South Central Markets Regional Summary

North Delta

Spot cotton trading was slow. Supplies of available cotton were moderate. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was slow. Merchants purchased a light volume of cotton forfeited to the CCC-catalog. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy and daily infection rates were steadily increasing in many areas.

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Mostly cloudy skies and seasonably cold temperatures dominated the weather pattern during the week. Highs were generally in the 30s and 40s. Overnight lows were in the 20s and 30s. Up to 2 inches of precipitation was reported during the period, including a few snow flurries in northern areas. No field activities were reported as cold and damp conditions prevailed in many areas.

Many small gins have completed annual pressing operations, but larger gins continued to work through backlogs of modules on their yards. Due to the high rate of infection and the accompanying restrictions of COVID-19 social distancing requirements, producers and other interested parties attended virtual industry meetings and useful training workshops.

According to the U.S. Drought Monitor report released on December 17, abnormally dry conditions expanded in the cotton producing areas of southern Arkansas and western Tennessee. Adequate soil moisture was reported in the Bootheel of Missouri.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were moderate. Demand was 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 and daily infection rates were steadily increasing in many areas.

Clear to partly cloudy conditions prevailed during the week. Temperatures were seasonably cool, with highs in the 40s and 50s. Overnight lows were in the 30s. A cold front brought nearly 3 inches of rain to the territory during the week. No field activities were reported, due to cold and wet weather. A few gins completed annual pressing operations, but several larger gins continued processing backlogs of modules.

Producers attended virtual informational and training workshops, due to the restrictions of COVID-19 social distancing requirements. According to the U.S. Drought Monitor report released on December 17, abnormally dry conditions deteriorated to moderate drought in isolated parts of the cotton producing areas of northwestern Louisiana and central Mississippi.

Producers reported that the price of cotton seed has jump from $175 to $275 per ton recently. Local experts indicated that the dramatic increase could be the result of the increase in commodity prices, particularly soybeans.

Trading

North Delta

  • A light volume of mixed lots, color 51 and better, leaf 5 and better, staple mostly 37 and longer, mike 35-49, strength 28-33, and uniformity 79-84 traded for around 71.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of 2019-crop CCC-catalog cotton, color 51 and better, leaf 4 and better, staple 34 and longer, mike 38-52, strength 26-34, and uniformity 79-84 sold for 29.99 cents, FOB warehouse (compression charges not paid).
  • A light volume of CCC-loan equities traded for around 14.50 cents.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. Demand was good. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was moderate. Merchants purchased a light volume of cotton forfeited to the CCC-catalog. Foreign inquiries were moderate. Interest was best from China, Korea, and Vietnam. The COVID-19 Pandemic continued to influence market uncertainty and impact global cotton demand. Medical communities struggled with positive case surges.

In Corpus Christi, cool, crisp conditions were reported with daytime temperature highs in the low 50s to low 80s, and overnight lows in the 40s to 60s. Beneficial rainfall was received in south Texas with heavier accumulations in the Upper Coast early in the period. More precipitation will be needed ahead of sowing to recharge waterways.

Ginning neared the end in the Upper Coast, the Blackland Prairies, and in the Winter Garden area. Yields were lower than expected and ginning continued towards the last module. Harvesting was virtually completed in all parts of the Texas region. Producers prepared fields ahead of the planting season and applied fertilizer.

Cotton growing areas in Kansas received up to 5 inches of snow early in the period that caused sloshy gin yards. Some areas received an additional 2 to 3 inches of snow mid-week. Ginning continued through inclement weather. Harvesting was stalled until the fields dried enough to support harvesting equipment. In Kansas, approximately 60 percent of the crop was off the stalks and in modules.

Oklahoma also received snowfall early in the period with additional snow in a second cold front that pushed into the region on December 15. Harvesting activities were stalled, but ginning continued.

West Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. Demand was very good. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were moderate. Interest was best from China, Korea, and Vietnam.

The COVID-19 Pandemic continued to impact commodity markets and global cotton demand. Infection spikes continued to pressure local medical institutions and resources. The initial lot of vaccines were received and hospital employees were among the first to receive injections.

Winter weather early in the reporting period brought up to 5 inches of snow in the northern portions of the High Plains. Light rain and drizzle were received in other parts of the region. Transportation of modules had slowed intermittently. Some gins in the Panhandle expected to be finished in about 10 days. Further south, a few gins expected to run into the New Year. Some fields were plowed and prepped for winter. Harvesting and ginning continued in the Rolling Plains.

Trading

East Texas

  • In Texas, a light volume of mostly color 31 and 41, leaf 2-4, staple 35 and longer, mike 32-37, strength 29-33, and uniformity 79-81 sold for around 70.00 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a moderate volume of cotton mostly color 21 and 31, leaf 3 and 4, staple 36 and 37, mike 32-37, strength 29-33, uniformity 79-81, and 25 percent extraneous matter sold for around 67.75 cents, FOB car/truck (compression charges not paid).
  • A mixed lot containing a light volume of mostly color 31 and 41, leaf 4-7, staple 36, mike 32-36, strength 29-30, and uniformity 80-81 sold for around 62.00 cents, same terms as above.
  • In Oklahoma, an even-running lot containing a moderate volume of mostly color 21 and 31, leaf 3, staple 37 and 38, mike 33-39, strength 30-35, and uniformity 79-81 sold for around 73.00 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 1.75 to 14.00 cents.
  • A light volume of 2019-crop CCC-catalog cotton, color 52 and better, leaf 1-4, staple 35 and longer, mike averaging 44.6, strength averaging 31.6, uniformity averaging 81.0, and 100 percent extraneous matter (Level 1 Plastic) sold for 26.99 cents, FOB warehouse (compression charges not paid).

West Texas

  • Mixed lots containing a heavy volume of cotton mostly color 31 and better, leaf 1 and 2, staple 35 and longer, mike 37-52, strength 28-32, uniformity 78-82, and 25 percent extraneous matter sold for around 71.00 cents per pound, FOB car/truck (compression charges not paid).
  • A moderate volume of mostly color 22 and better, leaf 3 and better, staple 33 and longer, mike 33-39, strength 29-33, and uniformity 78-81 sold for around 65.50 cents, same terms as above.
  • Mixed lots containing a heavy volume of mostly color 22 and better, leaf 3-5, staple 32 and longer, mike 25-41, strength 27-31, and uniformity 77-81 sold for 59.00 to 60.25 cents, same terms as above.
  • A mixed lot containing a moderate volume of mostly color 32 and better, leaf 7 and better, staple 36 and longer, mike averaging 26.4, strength 27-32, uniformity averaging 78.5, and 50 percent extraneous matter sold for around 58.75 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies and producer offerings were heavy as ICE futures prices posted daily gains in the period. Demand was good. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate. The COVID-19 Pandemic continues to pressure the U.S. economy.

Daytime high temperatures were in the 60s for central Arizona. No rainfall was recorded in the period. Isolated fields remained to be harvested in the region. Gin yards were full of modules. Ginning continued throughout Arizona, New Mexico, and El Paso, TX. Sources reported ginning was 65 to 75 percent ginned. Lack of rain and snow are more of a concern going into 2021. DSW watersheds are low and producers are expecting to pump water for next year’s crop if prices remain high.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was good. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. Average local spot prices were higher. The COVID-19 Pandemic continues to pressure the U. S. economy. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate.

A cold front brought showers into the region early in the period. Accumulations were around one-tenth of an inch. Snowfall was deposited in higher elevations over 6,000 feet. The California Department of Water Resources reported the snow water equivalent average just over 3 inches as of December 14. This is 44 percent of normal for the state to date. Producers and industry were concerned about the lack of winter moisture. All cotton was in modules. Ginning was steady.

American Pima (AP)

Spot cotton trading was slow. Supplies of 2019-crop were light and were moderate for 2020-crop cotton. Demand was moderate. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate. Interest was best from China. Shippers offering prices were firm for 2020-crop cotton. The COVID-19 Pandemic slowed U.S. economic recovery and the progress of global economies.

Mostly sunny conditions prevailed throughout the region. Rain and snow were received in California early in the period. Cloudy conditions moved in late week. Much more moisture is needed to replenish water supplies for populace and farming. Ginning continued uninterrupted.

Trading

Desert Southwest

  • A heavy volume of Arizona cotton color 21 and better, leaf 2 and better, staple 37-39, mike 42-47, strength averaging 31.5, and uniformity averaging 80.0 sold for around 50 to 100 points on ICE March futures uncompressed, FOB warehouse.
  • Similar lots containing staple 35 and mike 50-54 sold for 225-250 points off ICE March futures, same terms as above.
  • In New Mexico, a light volume of color 21 and better, leaf 2 and better, and staple 34-38 sold for around 76.25 cents per pound, FOB car/trucks (compression charges not paid) late in the period.
  • Similar lots sold for 72.50 cents, same terms as above early in the period.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • A light volume of 2019-crop CCC-catalog cotton, color 2 and better, leaf 2 and better, staple 44-50 sold for 100.00 cents per pound, FOB warehouse (compression charges not paid).



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