Weekly Cotton Market Review – USDA

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Average spot quotations were 227 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 81.68 cents per pound for the week ending Thursday, June 10, 2021.

The weekly average was up from 79.41 cents last week and from 56.19 reported the corresponding period a year ago. Daily average quotations ranged from a low of 80.18 cents Monday, June 7 to a high of 83.18 cents Thursday, June 10.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 10 totaled 1,751 bales. This compares to 252 reported last week and 9,065 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,364,299 bales compared to 1,535,151 bales the corresponding week a year ago. The ICE July settlement price ended the week at 87.36 cents, compared to 84.21 cents last week.

Supply & Demand

The U.S. cotton projections for 2021/22 show a 100,000-bale increase in exports from last month, to 14.8 million bales, as stronger than expected late-season 2020/21 shipments extend past July 31. U.S. 2021/22 production and consumption are unchanged from last month, and with lower beginning stocks and higher exports, ending stocks are now 200,000 bales lower, at 2.9 million.

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The upland cotton farm price for 2021/22 is unchanged, at 75 cents per pound, while the 2020/21 price is reduced 1 cent to 67 cents per pound. Global ending stocks in 2021/22 are also projected lower this month, down 1.7 million bales to 89.3 million. Beginning stocks are slightly lower as a 625,000-bale increase in 2020/21 consumption more than offsets higher estimated supplies.

Consumption is also higher for 2021/22, up 1.1 million bales, as increases for China, Bangladesh, and Turkey offset a lower forecast for India. Global cotton production in 2021/22 is 570,000 bales lower this month, led by a 750,000-bale reduction in China following recent surveys indicating lower than expected area in Southern Xinjiang. World trade is 1.1 million bales higher, with increased imports for China, Bangladesh, and Turkey.

Expected exports are higher this month for Brazil, Australia, and Tanzania, as well as the United States.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #8 FOR UPLAND COTTON June 10, 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 17, 2021, allowing importation of 10,452,580 kilograms (48,008 bales of 480-lbs) of upland cotton.

Quota number 8 will be established as of June 17, 2021 and will apply to upland cotton purchased not later than September 14, 2021 and entered into the U.S. not later than December 13, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period February 2021 through April 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 higher. 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.

Cloudy conditions prevailed over much of the lower Southeast during the period. Seasonably warm daytime high temperatures were in the upper 80s to low 90s. Widespread showers developed across much of the region throughout the week depositing light to moderate moisture across the region with some pockets of heavy rainfall. Weekly accumulated precipitation totals measured from 2 to 4 inches throughout Alabama, the Florida Panhandle, and south central Georgia.

Producers welcomed the rainfall, particularly on dryland fields that were dusted in last week ahead of the anticipated storm activity. The beneficial moisture improved dry conditions and invigorated young plants. Squaring was underway in the earliest planted fields. Pressure from thrips continued to build in some locales and producers applied sprays. Planting advanced in between rain events.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released June 7, planting advanced to 95 percent completed in Alabama and 89 percent completed in Georgia. Mostly cloudy to overcast conditions with occasional rainfall was observed across the upper Southeast during the period. Daytime temperatures were in the upper 80s to the low 90s. Widespread shower activity brought moisture to areas throughout the Carolinas and Virginia.

Weekly accumulated precipitation totals measured from 2 to 4 inches with heavier downpours observer in portions of eastern North Carolina. The moisture benefitted the crop and improved droughty conditions. Fieldwork and planting advanced as dry conditions allowed. Producers applied herbicides in some areas. According to NASS, planting advanced to 93 percent completed in North Carolina and Virginia, and 90 percent completed in South 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 fourth quarter 2021 through fourth quarter 2022 delivery. No sales were reported. Yarn demand remained good and mills continued to operate below capacity due to persistent 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 styles of cotton. No sales were reported.

Trading

  • A moderate volume of color mostly 31 and 41, leaf 3-5, staple 35 and 36, mike 37-49, strength 28-31, uniformity 80-83, and 75 percent extraneous matter sold for 86.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

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. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy and supply chains. The rate of vaccinations has slowed in many states due to consumer concerns about possible side effects from the vaccines.

Johnson and Johnson reported that millions of doses of the one-shot version are due to expire soon due to the lack of demand in the U.S., while countries such as Brazil and India continued to cope with vaccine shortages.

Cloudy to partly cloudy conditions characterized the weather during the week. Daytime highs were in the 70s to mid-80s. Overnight temperatures were in the 60s. Up to 2 inches of rain were reported generally, and soil conditions remained soggy. Field activities progressed moderately during the week under less than favorable weather conditions. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on June 7, planting was nearly complete at 98 percent in Arkansas, 98 in Missouri, and 96 percent in Tennessee.

NASS also reported that squaring advanced to 8 percent in Tennessee, the only state in the region to report squaring, and the condition of the majority of the crop overall was fair to good. Insect pressure from thrips was light and easily controlled.

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. No forward contracting was reported. The COVID-19 Pandemic continues to negatively impact the overall global economy. The rate of vaccinations has slowed in many states due to consumer concerns about possible side effects from the vaccines.

Johnson and Johnson reported that millions of doses of the one-shot version are due to expire soon due to the lack of demand in the U.S., while countries such as Brazil and India continued to cope with vaccine shortages.

Persistent rainfall dominated the weather pattern throughout the region. Light, but frequent, thundershowers brought up to 2 inches of rain to many places. River flood warnings remained in effect in parts of the region. Daytime highs were in the low 90s. Overnight temperatures were in the 70s. Fieldwork was delayed in areas where soils were too soft to support equipment. Soil moisture was rated from adequate to surplus in most places; some minor flooding was reported in a few fields.

Insect pressure from thrips in early-planted fields was reported. Multiple treatments were made as necessary to control infestations. Seedling development ranged from emerged to pinhead squares across the territory. The condition of the planted acreage was rated as mostly good regionally, but producers were still assessing overall stand development as a result of the inclement weather conditions.

The level of prevented planting in the region remains to be determined. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on June 7, planting advanced slowly to just 77 percent in Louisiana, but reached 91 percent in Mississippi. NASS reported that squaring was underway at 2 percent in Louisiana and 1 percent in Mississippi.

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 higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate for new crop. Interest was best from India, Korea, and Taiwan. The COVID-19 Pandemic continued to put pressure on commodity markets and shipping logistics.

Fields began to firm following recent rainfall in the Rio Grande Valley with daytime temperature highs in the low-80s to mid-90s. Blooming increased and bolls began to form. Insect pressure was light as most fields have matured past early pest problems, or the insects have washed away with rainfall. Stands advanced in the Upper Coast and in the Coastal Bend. Some stands exhibited nitrogen deficiencies from excessive rainfall and would benefit from a period of warm, sunny conditions.

Stands were blooming. Early planted fields in the Brazos Bottoms progressed and later planted fields struggled with weeds. Producers were eager for soils to firm in the Blackland Prairies (BP) so planters, cultivators, and sprayers could enter fields. Some considered applying plant growth regulators. Cotton planting was behind schedule and stands in low-lying areas struggled or were lost.

A significant number of planted acres in the northern BP were flooded and will be replanted as soon as the fields firm. The wet weather caused planting delays in Kansas, and that opportunity has passed. According to the National Agricultural Statistic Service’s Crop Progress report released on June 7, planting was 89 done, near 91 percent last year, but ahead of the 69 percent average.

Early-planted fields had begun to square. Industry members report a significant reduction in planted acres compared to last year because of strong grain prices. In Oklahoma, warmer temperatures helped advance emergence and planting activities early in the period. Daytime temperatures in Altus were in the upper 80s to low 100s, and overnight temperatures were in the 60s and 70s.

Fields were scouted for pests with a focus on thrips. Planting was 44 percent completed ahead of 26 percent a year ago and down from the 53 percent average, according to NASS.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate for new crop. Interest was best from India, Korea, and Taiwan. The COVID-19 pandemic continued to place pressure on commodity markets and shipping logistics.

Triple digit temperatures increased heat units and dried soggy soils with daytime temperatures in the low 80s to low 100s. Temperatures in the 100s have not been observed since late September 2020. Sowing was behind schedule from recent rainfall, but made good progress under hot weather conditions late in the period.

Planting was completed in fields that dried and were able to support equipment. Stands had emerged. The insurance deadlines have expired for some counties, but other counties have until June 20 to complete sowing. Field scouts monitored for thrips and aphids. Weeds are abundant and producers are eager for fields to firm so cultivators and spray rigs can enter the fields.

Trading

East Texas

  • In Oklahoma, a light volume even-running lot containing color 11 and 21, leaf 3 and better, staple 37 and longer, mike 30-52, strength 29-34, and uniformity 79-82 sold for around 73.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume lot mostly color 42 and 43, leaf 3 and 4, staple 34 and longer, mike 28-32, strength 28-31, uniformity averaging 79.3, and 50 percent extraneous matter sold for around 72.50 cents, same terms as above.
  • A light volume of 2019-crop cotton containing color 32 and better, leaf 1-7, staple 34 and longer, mike 35-52, strength 26-35, and uniformity 77-83 sold for 72.00 to 72.50 cents, same terms as above.

West Texas

  • An even-running lot containing a light volume of color 31 and better, leaf 3 and better, staple 37 and longer, mike 37-48, strength averaging 30.1, and uniformity averaging 80.1 sold for around 87.75 cents per pound, FOB car/truck (compression charges not paid).
  • Mixed lots containing a light volume of color 22 and better, leaf 3 and better, staple 34 and longer, mike 30-52, strength 27-30, uniformity 78-82, and 25 percent extraneous matter sold for around 73.00 cents, same terms as above.
  • A light volume of mostly color 21, leaf 3, staple 35, mike 32-40, strength averaging 29.7, uniformity averaging 80.1, and 25 percent extraneous matter sold for around 70.00 cents, same terms as above.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were higher. 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.

Drought conditions intensified throughout most of the DSW. The crop made good progress in central Arizona. Producers were irrigating the crop. Local El Paso area sources reported that some of the crop was struggling, due to lack of water. Some producers will not be able to finish the crop to harvest.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were higher. 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.

Unseasonably cool conditions were reported mid-week with below-average temperatures in the high 70s to low 80s. Drought conditions intensified as extreme to exceptional drought status expanded. Reservoirs and lakes are low. Local municipalities have water restrictions in place. The crop made progress. No significant insect pressures were reported.

American Pima (AP)

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

According to the Foreign Agricultural Service, U.S. Export Sales report nearly 808,600 bales of Pima cotton were committed for export for the week ending June 3. This compares to 560,600 bales the previous year. Only 4,000 bales were committed for the 2021 marketing year.

Temperatures were in the 70s to low 100s for the Far West. No moisture was recorded in the period. Drought conditions intensified. Reservoirs are below capacity throughout the region. Concern exists about the generation of hydropower this summer. FW producers continued with irrigation schedules. The crop made good progress.

Save the date: The Visalia Classing Office will host the annual American Pima Guide Box Matching on July 7.

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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