Weekly Cotton Market Review – USDA

Cotton harvest. ©Debra L Ferguson

Average spot quotations were up 237 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 75.34 cents per pound for the week ending Thursday, January 7, 2021.

The weekly average was up from 72.97 cents last week and from 65.48 reported the corresponding period a year ago. Daily average quotations ranged from a low of 74.43 cents Monday, January 4 to a season high of 75.81 cents Tuesday, January 5.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 7 totaled 67,350 bales. This compares to 68,535 reported last week and 100,122 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 980,831 bales compared to 978,523 bales the corresponding week a year ago. The ICE March settlement price ended the week at 79.76 cents, compared to 78.12 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #12 FOR UPLAND COTTON January 7, 2021

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 January 14, 2021, allowing importation of 8,893,540 kilograms (40,847 bales of 480-lbs) of upland cotton.

Quota number 12 will be established as of January 14, 2021 and will apply to upland cotton purchased not later than April 13, 2021 and entered into the U.S. not later than July 12, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period August 2020 through October 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.

Statement Regarding Seed Coat Fragments in Cotton Produced in the Southeast

U.S. Secretary of Agriculture Sonny Perdue has directed the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) to collaborate with the Georgia Department of Agriculture to raise awareness and further examine the significant increase in seed coat fragments in cotton produced in the southeast region. Thus far in the 2020 cotton season, the AMS Macon, GA Classing Office has classed 2.2 million samples, of which approximately 895,000 contained seed coat fragments. In addition to seed coat fragments, a portion of samples also contained whole cotton seed.

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“This significant increase in seed coat fragments has caused obvious concern around the region and questions about the possible cause as well as the cotton classing process,” said Georgia Commissioner of Agriculture Gary Black. “We are working closely with USDA and industry experts to identify the cause of the issue and potential solutions.”

“Following Secretary Perdue’s engagement with Commissioner Black, we would like to invite producers and stakeholders to visit our office and see classing firsthand to better understand the issue,” said USDA Under Secretary for Marketing and Regulatory Programs Greg Ibach. “All ten of the AMS Cotton Program classing offices operate by the same standards, processes and quality control procedures, and we look forward to sharing more information about how we ensure accuracy and consistency in the classing process.”

A highly trained team classes every cotton sample received at an AMS Cotton Classing Office. After being tested on an electronic “high volume instrument” (HVI) for a variety of fiber properties, samples are manually inspected for the presence of extraneous matter. If a classer determines that an appreciable amount of extraneous matter exists throughout the sample, a code is entered into the computer system that identifies the specific type of matter.

A portion of all samples graded each day are randomly selected for re-check in the office and another portion of these samples are shipped to the AMS Cotton Program’s Quality Assurance Division in Memphis for another re-check.

“I have complete confidence in the integrity of the cotton classing process, and I appreciate USDA’s willingness to provide additional information to producers,” added Commissioner Black.

The Macon Classing Office looks forward to welcoming stakeholders or producers who would like to observe the cotton classing process. Please contact Noah Bell, Area Director, at (478) 474-2831 to set up an appointment. The office is located at 1100 Parkway Drive, Macon GA 31220. Strict adherence to COVID-19 protocol is required for each visitor.

Southeastern Markets Regional Summary

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was good. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures prices to book a moderate volume of 2021-crop cotton. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

Cloudy conditions entering the weekend gave way to fair and sunny skies later in the week. Daytime high temperatures in the mid-70s cooled into the mid-60s to upper 50s as a cold front settled over the region. Widespread showers brought light to moderate moisture from the Gulf Coast to areas throughout south Georgia. Weekly accumulated precipitation totals measured from 1 to 3 inches.

The wet weather interrupted fieldwork and the harvest of the last remaining fields. Ginning continued; some smaller gins finished pressing operations for the season and some larger gins had gone to gin days. Producers, ginners, and industry members made plans to attend virtual meetings scheduled for early 2021.

Cloudy conditions were observed early in the period and fair skies prevailed later in the week as a high-pressure system moved across the region. Daytime high temperatures in the mid-60s over the weekend dropped into the low to mid-50s later in the week. Widespread showers brought moisture to areas throughout South Carolina, eastern North Carolina, and portions of coastal Virginia.

Weekly accumulated rainfall totals measured from 1 to 2 inches of moisture. The wet conditions interrupted fieldwork and harvest activities. Ginning continued; a few gins had finished operations for the season and some others had gone to gin days. Producers, ginners, and industry members made plans to attend virtual meetings scheduled for early 2021.

Textile Mill

Buyers for domestic mills purchased a moderate volume of color 41, leaf 3 and 4, and staple 34 for March through October 2021 delivery. Buyers for domestic mills also inquired for a moderate volume of color 41-51, leaf 5 and better, and staple 32 and longer for delivery throughout 2021. No additional sales were reported.

Reports indicated that mills continued to incrementally increase operating schedules as warranted by increased finished product demand. Yarn demand was good. 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 or low-grade styles of cotton for nearby shipment.

Trading

  • A heavy volume of color mostly 31 and 41, leaf 3 and 4, staple mostly 38, mike 37-49, strength 28-34, and uniformity 81-83 sold for 80.00 to 81.25 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • Moderate volume mixed lots containing color 21-42, leaf 3 and 4, staple 37 and 38, mike 35-49, strength 27-30, and uniformity 80-83 sold for 74.00 to 77.50 cents, same terms as above.
  • Even-running lots containing color mostly 51-53, leaf 4-6, staple 38, mike 43-49, strength 28-30, uniformity 80-81, and 100 percent seed coat fragments sold for 64.00 to 66.00 cents, same terms as above.
  • A heavy volume of color 31 and 41, leaf 3-5, staple mostly 38, mike 37-43, strength 28-30, uniformity 80-82, and 50 percent seed coat fragments sold for around 81.25 cents, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • A moderate mixed lot containing color mostly 41 and 42, leaf 3 and 4, staple 35-37, strength 27-30, uniformity 79-81, and 75 percent seed coat fragments sold for around 73.50 cents, same terms as above.

South Central Markets Regional Summary

North 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 slow. No forward contracting was reported; local experts reported that some business would occur if the ICE December 2021 futures were to reach 80.00 cents. The contract closed at 76.35 cents on January 7. 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 40s and 50s. Overnight lows were in the 30s. Up to 3 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 and fieldwork was mostly completed for the season.

Several gins continued to work as modules trickled in from distant fields. 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 January 7, abnormally dry conditions contracted sharply 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 for the most part, but highs did reach into the 60s before another cold front brought temperatures in the 40s. Overnight lows were in the 20s and 30s. A cold front brought about 1 inch of rain to the territory during the week. No field activities were reported due to cold and wet weather.

A few gins continued processing backlogs of modules, but most had completed annual pressing operations. Producers attended virtual informational and training workshops virtually, due to the restrictions of COVID-19 social distancing requirements. According to the U.S. Drought Monitor report released on January 7, abnormally dry conditions improved in the cotton producing areas of northwestern Louisiana and central Mississippi.

Trading

North Delta

  • A light volume of CCC-loan equities traded for 20.00 to 23.00 cents per pound.

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 active. Foreign inquiries were moderate. Interest was best from China, Indonesia, and Vietnam. The COVID-19 Pandemic continued to influence market uncertainty and impact global cotton demand. Medical communities struggled with the number of available hospital beds as positive cases surged. Administering COVID-19 first and second vaccinations were underway.

In Corpus Christi, spring fieldwork was underway with daytime temperature highs in the upper 50s to mid-70s, and overnight lows in the low 40s to low 60s. Fields were tilled and herbicide was applied. The Upper Coast through the Blackland Prairies (BP) received beneficial rainfall. Parts of the Rio Grande Valley received a light amount of moisture. A few thousand more bales remain to be ginned in south Texas and in the BP, but were expected to be completed next week. Producers were planning for the 2021 crop year and determining which crops to plant.

In Kansas, snow slowed harvesting and the transporting of modules out of fields. Producers were able to return to the fields late in the period, but progress was slow. Local reports indicated that around 75 percent of the crop had been harvested. Gins continued processing modules that were on the gin yards. Producers were discouraged with poor cotton quality and considered planting corn and sorghum in the spring. In Oklahoma, harvesting was finalized and ginning continued. Local sources estimated that about 75 percent of the crop has been ginned.

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 active. Foreign inquiries were moderate. Interest was best from China, Indonesia, 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. COVID-19 vaccinations were distributed, and some healthcare employees were administered a second dose.

Winter weather early in the reporting period brought up to 12 inches of snow at Big Spring. Lubbock received one-half of an inch of snow accumulation. Light rain and drizzle were received in other parts of the region. The snow quickly melted with daytime temperatures in the upper 40s to low 60s, and overnight lows in the low 20s to mid-30s. Transportation of modules had slowed intermittently. Ginning continued, but more gins finished during the period. Ginning was slowed temporarily due to high wind conditions. Fieldwork was minimal.

Trading

East Texas

  • In Texas, a heavy volume of mostly color 42 and better, leaf 2-4, staple 31-34, mike averaging 40.8, strength 24-32, and uniformity 76-81, sold for around 67.25 cents per pound, FOB warehouse (compression charges not paid).
  • In Kansas, a mixed lot containing a heavy volume of cotton color 31 and better, leaf 5 and better, staple 35 and longer, mike 26-29, strength 26-33, uniformity 76-82, and 25 percent extraneous matter sold for around 65.25 cents, FOB car/truck (compression charges not paid).
  • In Oklahoma, an even-running lot containing a moderate volume of color 21 and 31, leaf 2 and 3, staple 38, mike 33-38, strength 31-33, and uniformity 80-81 sold for around 77.00 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 4.25 to 30.00 cents.

West Texas

  • A mixed lot containing a moderate volume of mostly color 21, leaf 2 and 3, staple 34 and 35, mike 30-41, strength 25-31, and uniformity 77-80 sold for around 70.00 cents per pound, FOB car/truck (compression charges not paid).
  • A mixed lot containing a heavy volume of color 24 and better, leaf 1-3, staple 33 and 34, mike 26-43, strength 27-33, and uniformity 77-82 sold for around 64.75 cents, same terms as above.
  • A mixed lot containing a moderate volume of color 24 and better, leaf 7 and better, staple 31-37, mike 27-49, strength 25-32, uniformity 76-81, and 25 percent extraneous matter sold for around 61.00 cents, same terms as above.
  • A heavy volume of CCC-loan equities traded for 6.25 to 19.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was active. Supplies and producer offerings were heavy as ICE futures prices reached 80.00 cents in the period. Demand was very good. Average local spot prices were higher. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. Producers inquired for 2021-crop contracts. No sales were reported. No domestic mill activity was reported.

Foreign mill inquiries were good. Industry managed shipping logistics and delays as labor shortages at the ports, limited trucks, and lack of shipping containers were pressing concerns in the last few weeks. Shipments were pushed into late March. The COVID-19 Pandemic continues to pressure the U.S. economy and labor.

Weather conditions were mostly sunny with daytime high temperatures in the 60s and 70s for central Arizona. High temperatures in New Mexico and El Paso, TX reached the high 50s to low 60s. Overnight low temperatures were in the high 20s to mid-30s. No rainfall was recorded for the region in the period. According to the U.S. Drought Monitor report released on January 7, cotton-growing counties of Arizona, New Mexico, and El Paso, TX were in severe-to-exceptional drought status.

Lack of rain and snow are a growing concern. The Arizona Department of Water Resources will begin measuring water well levels in the Wilcox, Douglas, San Bernardino Valley, and San Simon basins. Ginning continued.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local spot prices were higher. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. Industry managed shipping logistics and delays as labor shortages at the ports, limited trucks, and lack of shipping containers were pressing concerns in the last few weeks. Shippers were busy trying to fulfill commitments.

The COVID-19 Pandemic continues to pressure the U. S. economy and labor. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Cold, foggy mornings were prevalent. Temperatures were in the high 50s to low 60s. No rainfall was received in the period. Planting decisions will be made soon, and with no significant moisture in the near term, acreage will decline. Producers and industry remained concerned about the lack of winter moisture. According to the U.S. Drought Monitor report released on January 7, moderate-to-severe drought conditions exist.

The California Department of Water Resources reported the statewide snowpack at 54 percent of average as of January 5. The snowpack water equivalent was reported at 6 inches. Ginning continued.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop were light and were heavy for 2020-crop cotton. Demand was very good. Producers delivered previously contracted cotton to merchant and cooperative marketing pools. DSW producers inquired for 2021-crop contracts. No sales were reported. Average local spot prices were steady. No domestic mill activity was reported. Foreign mill inquiries were moderate.

Shippers offering prices were higher for 2020-crop cotton. Industry managed with shipping logistics and delays as labor shortages at the ports, limited trucks, and lack of shipping containers were pressing concerns in the last few weeks. Shippers were busy trying to fulfill commitments. The COVID-19 Pandemic slowed U.S. economic recovery and the progress of global economies.

Dry, sunny conditions were the norm throughout the region. No rainfall was recorded in the period. In the San Joaquin Valley of California, foggy mornings were prevalent. More moisture is needed to replenish water supplies for populace and farming throughout the Far West. Ginning continued uninterrupted.

Trading

Desert Southwest

  • A moderate volume of color 21 and better, leaf 2 and better, staple 37-39, mike 33-49, strength averaging 32.0, and uniformity averaging 81.0 sold for 80.00 to 81.00 cents per pound, uncompressed, FOB warehouse.
  • Similar lots of a moderate volume containing staple 35 and longer sold for around 76.00 cents, same terms as above.
  • Light volume mixed lots of color 31 and better, leaf 2 and better, staple 34 and longer sold for around 63.00 cents, same terms as above.
  • A heavy volume of AZ 2020-crop cotton was contracted.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.



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