Weekly Cotton Market Review – USDA

Fertilizer application in cotton. ©Debra L Ferguson Stock Photography

Average spot quotations were slightly 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 78.50 cents per pound for the week ending Thursday, May 27, 2021.

The weekly average was up from 78.46 cents last week and from 53.51 reported the corresponding period a year ago. Daily average quotations ranged from a high of 78.64 cents Friday, May 21 and Monday, May 24 to a low of 78.26 cents Wednesday, May 26.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 27 totaled 744 bales. This compares to 1,135 reported last week and 13,916 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,362,296 bales compared to 1,502,083 bales the corresponding week a year ago. The ICE July settlement price ended the week at 82.61 cents, compared to 81.53 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #6 FOR UPLAND COTTON May 27, 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 June 3, 2021, allowing importation of 9,364,126 kilograms (43,009 bales of 480-lbs) of upland cotton.

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Quota number 6 will be established as of June 3, 2021 and will apply to upland cotton purchased not later than August 31, 2021 and entered into the U.S. not later than November 29, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period January 2021 through March 2021, 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 and producer offerings were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains. Vaccination doses were being distributed at a steady pace.

Partly to mostly cloudy conditions were observed across the lower Southeast during the period. Seasonably warm daytime high temperatures were in the upper 80s to low 90s. Moderate precipitation was received in northwest Alabama late in the week. Rainfall totals measured from trace amounts to around 1 inch of moisture. Planting and fieldwork advanced without interruption.

Producers applied fertilizer and herbicides. Emerging seedlings and young plants were monitored for pests. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released May 24, planting advanced to 68 percent in Alabama and 61 percent in Georgia.

Sunny to partly cloudy conditions prevailed across the upper Southeast during the period. Seasonably hot daytime temperatures were in the upper 80s to mid-90s. Light scattered precipitation was received in areas throughout the Carolinas and coastal Virginia. Rainfall totals measured from trace amounts to around one-half of an inch of moisture.

Planting and fieldwork advanced at a steady pace. Producers applied fertilizer, herbicide, and scouted emerging seedlings for pests. According to NASS, planting advanced to 73 percent in South Carolina, 65 in Virginia, and 63 percent in North Carolina.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2021-crop cotton, color 41 and better, leaf 4 and better, and staple 34 and longer for first quarter through fourth quarter 2022 delivery. No sales were reported. Yarn demand remained good and some mills continued to operate below capacity, due to labor personnel shortages. Personal protective equipment continued to be produced for frontline workers and consumers.

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

Trading

  • No trading activity was reported.

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 steady. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy and supply chains. Daily infection rates in the United States have been steady for the past week. The pace of vaccinations remains slow in many areas.

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Cloudy to partly cloudy conditions prevailed during the week. Daytime highs were in the 80s to low 90s. Overnight temperatures were in the upper 60s. Less than one-quarter of an inch of rain fell during the period, but soil moisture levels remained mostly adequate. Planting progressed rapidly during the week under favorable weather conditions. Seeds are germinating, and a few fields are up to a stand. Some replanting was reported.

According to the National Agricultural Statistics Service’s Crop Progress report released on May 24, planting surged to 71 percent completed in Arkansas, 85 in Missouri, and 70 percent completed in Tennessee. Only Arkansas remained behind the five-year average. Producers and other members of the cotton industry participated in virtual industry events and educational seminars.

South Delta

Spot cotton trading was inactive. Supplies of available cotton and demand were light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy. Daily infection rates in the United States have been steady. The rate of vaccinations has slowed in many states.

Persistent rainfall dominated the weather pattern in parts of Louisiana. Scattered storm systems brought up to 2 inches of rain to some places. River flood warnings remained in effect in parts of the state. Daytime highs were in the low 90s. Overnight temperatures varied from the 60s to 70s as warm, moist weather lingered throughout the region. Fieldwork was delayed in areas where soils were too soft to support equipment.

Local experts in Louisiana were concerned about total cotton acreage now that the May 25th insurance cutoff date has passed. Soil moisture was rated at adequate to surplus in most places; low-lying fields remained saturated in areas already wet from frequent rain showers. According to the National Agricultural Statistics Service’s Crop Progress report released on May 24, planting advanced slowly to just 50 percent in Louisiana, but jumped to 67 percent in Mississippi.

Planting in Louisiana continued to lag at least two weeks behind the five-year average. Producers and other members of the cotton industry participated in virtual industry events and educational seminars.

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 slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. Interest was best from Pakistan and Turkey. The COVID-19 Pandemic continued to put pressure on commodity markets and shipping logistics.

Temperatures were in the mid-80s to low 90s in east and south Texas. Scattered thunderstorms produced around three quarters of an inch to two inches of rain in the region. Daily moisture remains in the forecast. Local sources reported the crop made good progress in the Rio Grande Valley. Blooming fields were reported. Bolls were forming on the lower portion of plants. Some Coastal Bend fields that held standing water last week, showed some cotton stands that had turned yellow. In most cases, fields were able to drain quickly.

Producers continued to inspect for crop damage. Some fields exhibited blooms. In the Blackland Prairies, cloudy conditions and scattered showers produced around one-third of an inch of moisture in the period. Planting continued between rain events. Established fields made good progress.

Scattered showers and cool temperatures slowed planting in Kansas, but improved drought conditions. Kansas sources indicated some growers switched to planting grains such as beans, corn, and milo as prices became attractive and for crop rotation. An early cold spell in late September 2020 brought concerns of crop quality issues specifically low micronaire and poor yields which influenced a few producers to move some acreage to grains in 2021.

Kansas warehouse building resumed after delays concerning 2020-crop intensions and the Pandemic. Completion and opening of the warehouse is targeted for fall 2021.

Oklahoma sources estimated that all irrigated cotton was planted and about 20 percent of the dryland. Recent wet weather slowed planting and allowed early-planted cotton to emerge. Drought condition improvements were made with recent rainfall, which helped topsoil moisture, but southwest Oklahoma missed significant rain events.

Although overall drought conditions improved for both Kansas and Oklahoma, sources reported some cotton-growing areas lacked adequate sub-soil moisture. Much more rainfall is needed to replenish sub-soil moisture, lakes, and watersheds.

West Texas

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. Interest was best from Pakistan and Turkey.

Fluctuations in the ICE futures market kept most traders and mills on the sidelines. Shippers reported foreign growths such as Australian and Brazilian cotton were moving. U.S. shippers managed rolled bookings and shipments. The COVID-19 Pandemic continued to put pressure on commodity markets and shipping destinations.

All eyes are on west Texas. Drought conditions steadily decreased each week in May for the region. Scattered showers and thunderstorm activity continued for much of the High and Low Plains. Some areas received intense downpours. Local industry sources were concerned about planted seed being washed out, but no damage assessments were available at this time. Wet weather continues to be in the forecast.

Some cotton is up, but planting is not widespread. Planting continued where producers could get in with equipment. Producers were controlling weed flushes. Timely rainfall will be needed to progress the young crop. In the Rolling Plains, fields were still too wet and muddy to begin planting. The area received good planting moisture. Initial planning will begin as fields dry enough to support equipment. Warehouses continued to ship cotton. A new upland saw-gin near San Angelo was tested this spring and is ready for the fall 2021 ginning season.

Trading

East Texas

  • In Kansas, a light volume of mostly color 32 and better, leaf 4 and better, staple 34-36, mike averaging 35.5, strength averaging 27.6, and uniformity averaging 80.8 sold for around 73.25 cents per pound, FOB car/truck (compression charges not paid).
  • Similar mixed lots containing mostly color 33 sold for around 60.50 cents, same terms as above.
  • Similar lots containing color 33 and 44 sold for around 58.25 cents, same terms as above.

West Texas

  • No trading activity was reported.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. West Coast port congestion remains a concern, but slight improvements were noted. Different variants of the COVID-19 virus worldwide slowed economic progress. In the U.S., various stimulus programs increased consumer spending.

Central Arizona temperatures were mostly in the mid-80s to high 90s. The crop made good progress. Temperatures were mostly in the 90s for New Mexico and El Paso, TX. Drought conditions continued in the DSW. No rainfall was recorded. Local sources reported the El Paso, TX crop made good progress. Plants were about 5 to 6 inches tall. Varied crop development from emergence to 4-true leaf stage was exhibited in cotton fields around Hatch, New Mexico. Cold nights slowed progress. Fieldwork was active in the region. No pest pressures were reported.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Shipping cotton remains a concern, due to West Coast port congestion. Different variants of the COVID-19 virus worldwide slowed economic progress. Various government stimulus programs boosted states’ economic recovery efforts.

Early in the reporting period, a late season cold storm brought a couple of inches of snow to elevations over 7,000 feet in the Sierra Nevada Mountain range. Sunny skies with temperatures mostly in the 80s to mid-90s were prevalent in the Valley. Evening breezes cooled nights into the low to mid-60s. Drought conditions intensified. According to the U.S. Drought Monitor, parts of the state increased to extreme drought to exceptional drought status. Irrigating fields continued. No pest pressures were reported. The crop made good progress.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand of 2020-crop were moderate. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Offerings of 2020-crop cotton continued, and prices were firm. West Coast port congestion and COVID-19 variants in key cotton foreign ports remains a concern. Shippers managed split shipments and rolled bookings.

Temperatures were in the 80s to high 90s for the Far West. No moisture was recorded in the period. First irrigations continued for the San Joaquin Valley crop. Organic plantings in New Mexico and Texas made good progress. American Pima acreage near Lubbock, TX was estimated to be around 15,000 acres. Local sources reported that the crop was at 2-true leaf stage. No pest pressures were reported. The roller-gin near Lubbock was recently certified Organic to process organic cotton.

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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