Weekly Cotton Market Review – USDA

Spot cotton quotations were 75 points lower 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, uniformity 81.0-81.9) in the seven designated markets averaged 66.19 cents per pound for the week ended Thursday, August 25, 2016.

The weekly average was down from 66.94 cents last week, but up from 61.30 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 66.55 cents Tuesday, August 23 to a low of 65.94 cents Wednesday, August 24.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended August 25 totaled 1,541 bales. This compares to 761 bales reported last week and 2,725 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 8,366 bales compared to 17,776 bales the corresponding week a year ago.

The ICE October settlement prices ended the week at 67.75 cents, compared to 68.50 cents last week.

Prices are in effect from August 26 – September 1, 2016

• Adjusted World Price (AWP) – 58.81
• ELS Competitiveness Payment – 0.00
• Loan Deficiency Payment (LDP) – 0.00
• Fine Count Adjustment 2015 Crop – 0.12
• Coarse Count Adjustment (CCA) – 0.00
• Fine Count Adjustment 2016 Crop – 0.22
  Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #23 FOR UPLAND COTTON August 25, 2016

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 September 1, 2016, allowing importation of 14,260,197 kilograms (65,496 bales) of upland cotton. Quota number 23 will be established as of September 1, 2016, and will apply to upland cotton purchased not later than November 29, 2016, and entered into the U.S. not later than February 27, 2017.

The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period April 2016 through June 2016, 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.

Regional Summaries

Southeastern Market

Spot cotton trading was inactive. Supplies were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive.

Mostly sunny to partly cloudy conditions were observed across the entire Southeastern region during the period with daytime high temperatures in the upper 80s to mid-90s. Localized showers brought light scattered precipitation to areas from the Gulf to the Atlantic coasts. Precipitation totals measured from trace amounts to around one-tenth of an inch in most areas, with slightly heavier accumulations reported in some locales.

Crop development progressed rapidly in all areas. Growers would welcome additional moisture on dryland fields in areas of south Georgia and portions of the Carolinas to help invigorate wilting plants that have missed rainfall in recent weeks. In the lower Southeast, producers applied sprays to manage pressure from stink bugs.

In the Carolinas and Virginia, a heavier-than-usual moth flight occurred in parts of the region and producers were actively scouting fields that remained susceptible to boll injury. Local experts recommended higher rates of pyrethroid sprays where hot spots of bollworms were detected and higher level moth flight was observed. According the National Agricultural Statistics Service’s Crop Progress report, boll-setting neared completion and bolls were cracking open in the earliest planted dryland fields across the region.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Wet, humid weather conditions dominated the climatic pattern early in the period. Up to 2 inches of precipitation was reported. High temperatures were in the upper 80s and overnight lows were in the low 70s. Clear, dry conditions returned late in the period. The sunshine helped the canopy and saturated soils. Local experts reported some cases of boll-rot, hard-lock, and seed sprouting in the boll. Damage assessments were underway.

Defoliation was expected to get underway within a week on earlier planted fields, provided conditions were dry enough. Plant growth regulators were applied to some late planted fields. Insect pressure from bollworms was light. The crop made slow progress under wet conditions.

According to the National Agricultural Statistics Service (NASS) Crop Progress report released August 22, boll opening was at 16 percent in Arkansas, 1 in Missouri, and 9 percent in Tennessee. These figures were near the five-year average. NASS also reported that the crop was in good-to-excellent condition in Arkansas and Tennessee and fair-to-good condition in Missouri.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was moderate. No forward contracting was reported.

Intermittent rainfall prevailed in the cotton producing parts of the region early in the period. Clear, hot conditions returned late in the period. Local experts reported widespread boll-rot and boll-lock due to prolonged wet conditions. Assessments of potential yield losses were underway. Fields that had previously cut-out were exhibiting signs of regrowth. Some minor seed sprouting in the boll was also reported. Some insect pressure from bollworms was reported and fields were treated as necessary to control slippage.

Producers reported a higher than average incidence of target spot. Some fields were treated with fungicides to control outbreaks. According to the National Agricultural Statistics Service (NASS) Crop Progress report released August 22, boll opening had reached 44 percent in Louisiana and 18 percent in Mississippi. NASS reported that the crop remained in fair-to-good condition.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was slow. Supplies were light. Demand was moderate. Average local spot prices were weak. Trading of CCC-loan equities was inactive. Forward contracting was light. Foreign mill inquiries were moderate.

According to the Cotton and Tobacco Program’s Quality of Cotton Classed by Classing Office, released on August 26, the Corpus Christi Classing Office had classified 315,998 samples for the season that were submitted by 31 gins. In the Coastal Bend, approximately 70 percent of the crop was off the stalks and in modules. Harvesting expanded in the Upper Coastal areas, but was slowed by rainfall.

Defoliation and harvesting was stalled in the Winter Garden area because fields were too soggy to support equipment. Local sources in the Blackland Prairies estimated that around 10 to 15 percent of opened bolls had begun to sprout because of 9 to 11 inches of prolonged rainfall that was received for 9 straight days. Some fields had begun to dry and harvest aids were applied late in the reporting period.

Corn harvesting will be conducted ahead of cotton in most operations. Ginning is expected to begin in early September. Producers were finalizing harvesting activities in the Rio Grande Valley, but ginning continued uninterrupted.

Kansas cotton fields received one-half of an inch or more of beneficial rainfall. Local industry members were encouraged with good growing conditions and square retention. The crop was approaching cut-out.

In Oklahoma, expectations for above-average yields caused producers to make harvesting preparations. Some considered including module averaging as a marketing option in their planning. Upwards of 2 inches of rainfall gave a boost to dryland fields. Irrigated fields that received precipitation were carefully watered. Ginners were busy repairing and maintaining ginning equipment in advance of the harvesting season. Local experts monitored for bacterial blight.

West Texas

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Forward contracting was light. Foreign mill inquiries were moderate.

Producers continued to water irrigated acreage, but were mindful of rainfall, as scattered showers brought almost 6 inches to intermittent locations. Most dryland fields received a boost from spotty storms. The last effective bloom dates were generally reached, with plants shedding squares and small bolls to help mature harvestable bolls, according to industry experts.

Producers and crop consultants continued to monitor for stink bugs, bollworms, and aphids, even though plants are currently less vulnerable to insect pressures. Some fields were treated. Educational meetings and field days were held throughout the region.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the low 100s in Arizona. Monsoon activity brought mostly dusty conditions with some scattered showers into central Arizona. Defoliation and harvesting gained momentum in Yuma. Modules were moved to gin yards. The cotton crop progressed normally in central and eastern Arizona. Sources indicated that plants exhibited excellent boll loads, but some shedding of bolls was reported as humidity levels were higher, due to monsoon activity.

Producers applied final irrigation to the crop. Strong monsoon activity brought thunderstorms and windy conditions in parts of New Mexico and El Paso, Texas. Over 2 inches of rainfall was received in the period. Producers prepared equipment for harvesting. Overall, the crop made good progress in the DSW.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Hot, dry conditions continued. Air quality was hazy with ash from wildfires burning in surrounding areas, early in the period. The crop made good progress. Producers prepared to apply final irrigation to the crop. Producers prepared equipment for harvesting and attended gin meetings.

American Pima (AP)

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 moderate. Interest was best for 2016-crop cotton from China, India, and Pakistan.

Hot, dry conditions continued in the Far West, with the exception of the Desert Southwest. Arizona, New Mexico, and El Paso, Texas received one-tenth of an inch to two inches of rainfall. Defoliation and harvesting gained momentum in Yuma, Arizona. Modules were transported to gin yards. No ginning was reported. The crop made good progress in the Far West. Producers prepared equipment for harvesting and attended gin meetings.

Textile Mill

Domestic mill buyers purchased a moderate volume of 2016-crop cotton, color 41, leaf 4, and staple 34 for January through May 2017 delivery. Mill buyers inquired for similar qualities of 2015-crop cotton for nearby fill-in needs. No additional sales were reported. No sales were reported. The undertone from mill buyers remained cautious due to lackluster finished product sales. Most mills operated four to seven days.

Demand through export channels was moderate. Representatives for mills in Vietnam purchased a moderate volume of 2016-crop cotton for November/December shipment. Peruvian mill buyers purchased a moderate volume of 2016-crop cotton, color 41, leaf 4, and staple 36 for November/December shipment.

Regional Price Information

Southeastern Markets

• No trading activity was reported.

South Central Markets

North Delta

• No trading activity was reported.

South Delta

• No trading activity was reported.

Southwestern Markets

East Texas

• In Texas, a light volume of 2016-crop cotton containing color 21 and 31, leaf 3 and 4, staple 37 and longer, mike 37-43, strength 24-34, and uniformity 80-84 sold for around 69.00 cents per pound, FOB warehouse (compression charges not paid).
• A light volume of color 31, leaf 3 and 4, staple 37 and 38, mike 37-43, strength 28-32, and uniformity 80-83 sold for around 68.50 cents, same terms as above.
• A light volume of mostly color 31 and better, leaf 4 and better, staple 36 and 37, mike 37-42, strength 29-32, and uniformity 80-83 sold for around 65.50 cents, same terms as above.
• A moderate volume of 2016-crop cotton for contract base quality color 41, leaf 4, and staple 34 was forward contracted at around 500 points on ICE December futures. Premiums were paid for qualities better than the contract base quality.

West Texas

• A heavy volume of 2016-crop cotton for contract base quality color 31, leaf 3, and staple 36 was forward contracted for around 250 to 300 points on ICE December futures. Premiums were paid for qualities better than the contract base quality.

Western Markets

Desert Southwest

• No trading activity was reported.

San Joaquin Valley

• No trading activity was reported.

American Pima

• No trading activity was reported.