Weekly Cotton Market Review – USDA

Spot quotations were up 365 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 84.73 cents per pound for the week ending Thursday, February 18, 2021.

The weekly average was up from 81.08 cents last week and from 63.65 reported the corresponding period a year ago. Daily average quotations ranged from a low of 83.77 cents Friday, February 12, to a season high of 85.41 cents Thursday, February 18.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 18 totaled 9,626 bales. This compares to 41,485 reported last week and 31,723 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,231,445 bales compared to 1,303,345 bales the corresponding week a year ago. The ICE May settlement price ended the week at 90.30 cents, compared to 87.87 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #18 FOR UPLAND COTTON February 18, 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 February 25, 2021, allowing importation of 9,464,255 kilograms (43,469 bales of 480-lbs) of upland cotton.

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Quota number 18 will be established as of February 25, 2021 and will apply to upland cotton purchased not later than May 25, 2021 and entered into the U.S. not later than August 23, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period September 2020 through November 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 inactive. Supplies were light. Demand was good. Producer offerings were moderate. 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.

A cold front moved into the lower Southeast during the period bringing rain and cooler temperatures. Daytime high temperatures in Georgia, the Florida Panhandle, and lower parts of Alabama varied from the low 40s to low 70s. Nighttime lows were in the 20s to 50s. In northern parts of Alabama, temperatures plunged below freezing into the teens.

Weekly rain totals measured from 2 to almost 4 inches, with up to 1 inch of snow or freezing rain in northern parts of Alabama. Fieldwork was hindered due to wet conditions. As soon as fields are dry enough, preparations will begin on next season’s crop. In Georgia, larger gins continued to process backlogs of modules.

At the beginning of the period, a cold front entered the upper Southeast causing daytime highs to fall into the 30s and 40s. Nightly temperatures ranged in the low 20s to upper 30s. During the middle of the week, temperatures began to rebound with highs in the upper 50s. Rain showers brought 2 to over 3 inches of moisture to the eastern Carolinas and Virginia.

Another cold front in the nearby forecast is expected to bring freezing rain to areas of Virginia. Wet conditions stalled any fieldwork. Gins remained on gin days as they waited for producers to finish the last bit of harvesting. Ginning is expected to be completed by mid-March.

Textile Mill

Buyers for domestic mills purchased a moderate volume of color 41, leaf 3, and staple 36 for April through December delivery. The rising price of cotton has caused mill buyers to scramble to lock in prices on raw materials. Mill buyers also made inquiries for 2021-crop cotton, color 41, leaf 4, and staple 34 and longer for November 2021 through January 2022 delivery.

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 moderate. Agents throughout the Far East inquired for any discounted or low-grade styles of cotton.

Trading

  • A light volume mixed-lot of color 41, 42 and 52, leaf 3-5, staple averaging 36.2, mike averaging 42.3, strength averaging 27.9, and uniformity averaging 80.9, sold for around 84.00 cents per pound, FOB car/truck, (Rule 5, compression charges paid).
  • A light volume of color 32 and better, leaf 2 and 3, staple 34-37, mike 45-47, strength 27-30, and uniformity 81 sold for around 64.00 cents, 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. Strong commodity prices encouraged producers to book a moderate volume of 2021-crop cotton. The COVID-19 Pandemic continues to negatively impact the overall global economy, but daily infection rates have been declining in many areas. Vaccinations are underway, but concern is growing over their effectiveness against new strains that are emerging in many places.

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Winter storms during the week prompted the National Weather Service to issue multiple severe weather warnings during the period. A mix of freezing rain and heavy snowfall, combined with near-record low temperatures, completely disrupted travel, and brought most business activities to a standstill. Power outages and broken main pipes were common. A state of emergency was declared in Memphis on Tuesday, February 16, to gain access to Federal funding to cope with the crisis.

Daytime highs were in the single digits to 20s in many places, and overnight temperatures dropped into single digits. Northern parts of the territory also experienced wind chill factors well below zero. Local experts reported up to 8 inches of snowfall. The Memphis Classing Office was forced to close for several days due to the inclement weather. Interested industry members participated in virtual industry meetings and educational seminars.

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. Strong commodity prices encouraged producers to book a moderate volume of 2021-crop cotton. The COVID-19 Pandemic continues to negatively impact the overall global economy, but daily infection rates have been declining in many areas. Vaccinations are underway, but concern is growing over their effectiveness against new strains that are emerging in many places.

Harsh winter storms during the week prompted the National Weather Service to issue multiple severe weather warnings. A mix of freezing rain, heavy snowfall, and extremely cold temperatures completely disrupted travel and brought most business activities to a standstill. Power outages and broken main pipes were common. Daytime highs were in the 20s and 30s in many places, and overnight temperatures dropped into the teens.

Accumulated precipitation measured around 2 inches, with reports of 4 to 6 inches of snow fall in most areas. Producers were carefully monitoring commodity prices as they continued planning crop selections for planting season. Industry members and other interested parties participated in virtual industry meetings and educational seminars.

Trading

North Delta

  • Producers booked a moderate volume of 2021-crop cotton for CCC-loan equities of 24.00 to 26.00 cents per pound.

South Delta

  • Producers booked a moderate volume of 2021-crop cotton for CCC-loan equities of 24.00 to 26.00 cents per pound.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher. Producer interest in forward contracting was heavy. Trading of CCC-loan equities was active. Foreign inquiries were moderate. Interest was best from China, and Pakistan. The COVID-19 Pandemic continued to influence marketing logistics and impact global cotton demand. Medical communities continued administering vaccinations.

Winter storm Uri brought up to one-half of an inch of wintry precipitation to the Rio Grande Valley, with daytime high temperatures in the upper 20s to low 60s and overnight lows in the 20s to 30s. A few early planted cotton fields, that were sown to harvest the first bale, will be replanted. Citrus losses were a concern. Rain and snow amounts increased in south Texas and in the Upper Coast with some areas receiving as much as 4 inches of snow.

Many seasonal temperature records were broken with daytime temperatures dipping into the low 20s, and near zero wind chill factors. Rolling blackouts, continuous days of power outages, and frozen wells and pipes have caused multiple problems for populations in cities as well as in rural communities. Corn and sorghum fields will be replanted. In the Blackland Prairies, producers booked cotton planting seed.

Livestock was stressed and needed supplemental feed and water with daytime temperatures in the teens to upper 30s and overnight lows around zero to the low 20s. Some areas received as much as 8 inches of snow and rain. All 254-counties in Texas were issued winter storm warnings for the first time in history. Electric companies struggled to provide power for all customers and rolling blackouts affected everyone during this historic winter storm event.

In Kansas, brutal temperatures around zero to the low 20s put a strain on electric and natural gas providers that caused gins to shut down operations for more than a week. Overnight lows were mostly in the negative single digits. Harvesting and ginning neared the end, but will be delayed until fields firm. Some modules will remain in the fields until weather conditions improve and transportation can resume. Dairies need cottonseed for feed and demand is good.

Shipping cottonseed from the gin yards has been slow. In Oklahoma, ginning was interrupted by 12 inches of snowfall that was received during the reporting period. Gins were expected to start up operations next week.

West Texas

Spot cotton trading was moderate. Supplies and producer offerings were light. Demand was moderate. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries were light. Interest was best from China, and Pakistan. The COVID-19 Pandemic continued to impact commodity markets and global cotton demand. Vaccination distributions were underway, but were interrupted by inclement weather and rolling blackouts.

Historic arctic storm Uri brought bitter conditions that caused rolling electric power outages to many homes and businesses. Icy, snowy conditions prevailed with daytime highs in the low single digits to upper 20s and overnight temperatures below zero to the low teens. Three different snow events during the period brought up to a foot of accumulated snow.

Travel was difficult on highways, city streets, and impossible on farm-to-market rural roads. Industry members were encouraged to receive moisture from the wintry precipitation. The extreme temperature lows were expected to reduce overwintering insect pest populations.

Producers booked planting seed and attended multiple virtual meetings and trainings. Plains Cotton Growers held an educational Cotton Crop Insurance seminar on February 16. Cotton Incorporated hosted a Cotton & Coffee episode on the same day via Zoom.

Trading

East Texas

  • In Kansas, a heavy volume of color 21 and 31, leaf 4 and 5, staple 36 and longer, mike averaging 33.7, strength 27-35, uniformity 78-82, and 25 percent extraneous matter sold for around 84.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume even-running lot containing color 41, leaf 3 and 4, staple 34 and 35, mike 33-34, strength 26-28, uniformity 77-79, and 75 percent extraneous matter sold for around 72.50 cents, same terms as above.
  • In Oklahoma, a light volume of color 31 and 41, leaf 3, staple 36, mike 31-37, strength averaging 29.8, and uniformity 78-80 sold for around 82.00 cents, same terms as above.
  • A light volume of CCC-loan equities traded for 14.00 to 19.25 cents.

West Texas

  • Lots containing a heavy volume of color 11, leaf 1 and 2, staple 35, mike 35-49, strength 28-33, and uniformity 79-82 sold for around 85.50 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 21, leaf 3, staple 37, mike 31-45, strength 28-32, and uniformity 79-81 sold for around 80.25 cents, same terms as above.
  • A light volume containing mostly color 21 and 32, leaf 3, staple 32 and 33, mike averaging 26.6, strength averaging 25.9, and uniformity averaging 78.1 sold for around 67.25 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and producer offerings were moderate. Demand was moderate. Average local spot prices were higher. Producers inquired for 2021-crop forward contracts. Cooperatives and merchants opened pool sign-ups. Producers were interested in pricing new-crop in the mid-80.00 cents range.

No forward contracting or domestic mill activity was reported. Foreign mill inquiries were good. Demand for agricultural products improved as slight advances were noted in consumer spending, labor, and world economies. COVID-19 vaccines became more widely available under various government stimulus programs, and local and regional recovery efforts.

Mostly cloudy skies with temperatures in the high 60s to low 70s prevailed in central Arizona. Scattered slushy showers were reported in Safford, AZ. Windy conditions were reported mid-week with gusts up to 30 miles per hour throughout Arizona. The Salt River and reservoir system was at 83 percent capacity and the Verde reservoir system stood at 32 percent of capacity, while the San Carlos reservoir was at 2 percent of capacity.

Initial planting began in Yuma last week. Seed deliveries were active. Ginning neared completion. Daytime high temperatures in the 60s dropped to the low 30s early in the reporting period for New Mexico, and El Paso, TX. Scattered showers were reported in the area. Improvements were made to the snowpack, but the release date of irrigation water remained unchanged at June 1. Limited irrigation water remained a concern, but with cotton prices over 80.00 cents, some producers are willing to pump well water.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local spot prices were higher. Producers inquired for 2021-crop forward contracts. Cooperatives and merchants opened pool sign-ups. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Some improvements were noted in consumer spending, world economies, labor, and demand for agricultural products due to COVID-19 vaccines becoming more widely available, various government stimulus programs, and local and regional recovery efforts.

Temperatures were in the high 50s to low 60s. Cloudy conditions moved into the region early in the reporting period. Approximately one-quarter of an inch of rainfall was received. Fieldwork was active. As of February 17, the statewide snowpack for California was at 68 percent of normal for this time of year.

American Pima (AP)

Spot cotton trading was active. Supplies and producer offerings of 2020-crop cotton were heavy. Demand was good. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were slow. Demand for agricultural products improved as slight advances were noted in consumer spending, labor, and world economies. COVID-19 vaccines became more widely available under various government stimulus programs, and local and regional recovery efforts.

Partly cloudy conditions with scattered showers were recorded in the Far West. A cold front brought snow to mountainous areas and helped augment the snowpack. Lower-than-average snowpack levels will effect irrigation water deliveries for the region. Fieldwork was active. Ginning continued in the San Joaquin Valley of California.

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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