Weekly Cotton Market Review – USDA

Spot cotton quotations were 230 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, uniformity 81.0-81.9) in the seven designated markets averaged 67.60 cents per pound for the week ended Thursday, September 8, 2016.

The weekly average was up from 65.30 cents last week and 60.56 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 66.26 cents Friday, September 2 to a high of 68.27 cents Wednesday, September 7. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 8 totaled 3,217 bales.

This compares to 2,630 bales reported last week and 3,827 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 14,213 bales compared to 22,556 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 69.25 cents, compared to 68.01 cents last week.

Prices are in effect from September 9-15, 2016

• Adjusted World Price (AWP) – 58.51
• ELS Competitiveness Payment – 0.00
• Loan Deficiency Payment (LDP) – 0.00
• Fine Count Adjustment 2015 Crop – 0.21
• Coarse Count Adjustment (CCA) – 0.00
• Fine Count Adjustment 2016 Crop – 0.31
  Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #25 FOR UPLAND COTTON September 8, 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 15, 2016, allowing importation of 13,614,466 kilograms (62,530 bales) of upland cotton. Quota number 25 will be established as of September 15, 2016, and will apply to upland cotton purchased not later than December 13, 2016, and entered into the U.S. not later than March 13, 2017.

The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period May 2016 through July 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 higher. Trading of CCC-loan equities was inactive.

Hurricane Hermine made landfall along the Florida panhandle early in the period with reported sustained winds of 80 miles per hour. Heavy thunderstorms caused local flash flooding and damaging winds knocked down trees and left hundreds of thousands without power. Hermine was downgraded to a tropical storm as it drifted inland and slid along the Atlantic coast over the weekend.

Much of southeast Georgia, the eastern Carolinas, and Virginia received several inches of drenching rainfall, with some coastal areas reporting locally heavier totals approaching 10 inches. Reports indicated plants were blown around and strong winds laid plants over in some fields. Clear and warm conditions with daytime highs in the mid-90s prevailed across the region during most of the remainder of the period.

The hot and dry weather helped soft soils to firm and invigorate plants as bolls finished developing in the top of the crop. Bolls were cracking open across the region and the sunny weather helped to bleach out discolored lint from the wet conditions. Producers continued to monitor later planted fields that remained susceptible to stink bugs and applied sprays where thresholds were met.

Defoliation was expanding and picking commenced in some of the earliest-planted fields in Georgia. Gins conducted routine maintenance and prepared machinery for the approaching harvest. The first bales of the 2016-crop cotton have been ginned, and the Macon Classing Office has received the first samples for the season.

South Central Markets

North Delta

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

Hot, dry weather conditions dominated the climatic pattern during the period. No measurable precipitation was reported. High temperatures were in the upper 90s and overnight lows were in the low 70s. Most fields have finished and no longer require the application of crop protection chemicals. Producers have reported higher-than-average levels of boll-rot and leaf diseases, including target spot. What effect these will have on yield remains to be seen.

Limited defoliation has begun as producers continue to harvest other crops. Defoliation is expected to expand rapidly within a week to 10 days. Many gins in Arkansas expect to begin annual pressing operations by the last week of September, while some gins in Missouri may not get started until October.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 6, boll opening had reached 53 percent in Arkansas, 17 in Missouri, and 29 percent in Tennessee. Excellent yields are expected in some areas that were unaffected by inclement weather.

South Delta

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

Hot, clear weather conditions prevailed during the period. No rainfall was reported. High temperatures were in the upper 90s and overnight lows were in the low 70s. The good weather conditions allowed harvesting activities to gain momentum as soft soils firmed and open bolls dried out. Defoliation expanded throughout the region. Producers have reported higher-than-average levels of boll-rot, boll-lock, and leaf diseases, including target spot. Actual yield reductions will not be fully known until fields are harvested.

Ginning is underway on a limited basis in Louisiana. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released September 6, boll opening had reached 83 percent in Louisiana and 46 percent in Mississippi. Producers are hoping for above average yields after inclement weather reduced earlier prospects for record yields.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was slow. Supplies were light. Demand was moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Forward contracting was light. Foreign mill inquiries were moderate. Interest was best from China, Indonesia, Pakistan, and Taiwan.

Harvesting continued in southern Texas and advanced in the Winter Garden area as outside conditions permitted. Ginning continued uninterrupted. Some producers considered reapplying defoliants to manage regrowth. Harvesting was initiated in the northern Blackland Prairies and is expected to expand after corn harvesting is completed. Rio Grande Valley received some rain showers that slowed fieldwork.

Producers were eager to cut and plow under stalks. Fall weed control programs were engaged. Industry experts reported dryland yields at 3 to 4 bales per acre, outperforming irrigated production. Producers were encouraged by the quality and yield results.

In Kansas, the crop was rated mostly fair-to-good, setting bolls was 78 percent, and bolls opening was 11 percent, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report. Producers hoped for a dry September and late October freeze to finish the crop before harvesting.

In Oklahoma, conditions were mostly fair-to-good and boll-setting had reached 90 percent, according to NASS. Bolls opening was 11 percent. Experts monitored for bacterial blight. Some layby herbicide applications were applied as needed, but generally residuals worked well to control weed growth.

According to the Cotton and Tobacco Program’s Quality of Cotton Classed by Classing Office, released on September 9, the Corpus Christi Classing Office had classified 528,721 samples for the season that were submitted by 36 gins.

West Texas

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. Foreign mill inquiries were moderate. Interest was best from China, Indonesia, Pakistan, and Taiwan.

Hot, humid conditions prevailed with temperature highs in the upper 80s and lower 90s. Heat units accumulated and helped to finish the bolls ahead of pre-harvest aid applications. Tropical storm Newton brought rainfall into the region. Eastern New Mexico received heavy widespread rainfall that helped the crop advance. Lower positioned bolls began to crack open in dryland fields that had reached early cut-out.

Some producers shut down wells to conserve water. Industry experts carefully monitored for diseases as a result of the precipitation. The first bale from Gaines County was ginned on September 2. The celebratory bale will be auctioned at the annual Oil and Agriculture Appreciation Day. Ginning meetings were attended.

Western Markets

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.

Triple-digit temperatures dropped briefly into the high 80s and low 90s as showers passed through Arizona. Remnants from Hurricane Newton brought cloudy conditions, lightning, and scattered showers into central and eastern Arizona on Wednesday, September 7. Precipitation accumulations were around one-third of an inch to three-quarter inches. Flash-flood warnings were in effect for eastern Arizona, New Mexico, and El Paso, Texas.

Defoliation and harvesting continued uninterrupted in Yuma, Arizona. Ginning continued uninterrupted. The first 2016-crop samples were received at the Visalia Classing Office from Yuma late in the period. Approximately 30-40 percent of the crop was harvested. Defoliation activities were active in central Arizona. Initial harvesting began in some of the earliest-planted fields.

Scattered shower activity halted defoliation in several locals late in the period. One to two inches of rainfall was received in cotton-growing areas of southern New Mexico and El Paso, Texas. The crop made good progress. 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.

Sunny, warm conditions advanced the crop. Producers prepared equipment for harvest. The crop continued to make good progress.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand were light. Average local prices were steady. No domestic mill activity was reported. Foreign mill inquiries were moderate.

Remnants from Hurricane Newton brought cloudy conditions, lightning, and scattered showers into central and eastern Arizona, southern New Mexico, and El Paso, Texas late in the period. One-third of an inch of rainfall was received in Arizona and close to two inches was received in southern New Mexico and El Paso, Texas.

Defoliation and harvesting continued uninterrupted in Yuma, Arizona. Ginning of AP will begin after all Upland ginning is completed. The crop quickly approached cut-out in the San Joaquin Valley. Producers prepared equipment for harvest.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2016-crop cotton, color 41, leaf 4, and staple 34 for first and second quarter 2017 delivery. No sales were reported. Demand was light as most mills have covered their immediate to nearby raw cotton needs. Some mills had canceled or sold previously purchased cotton due to lackluster yarn demand. The undertone from mill buyers remained cautious due to lighter demand from the apparel sector. Most mills operated four to seven days.

Demand through export channels was moderate. Demand was good throughout the Far East for discounted or low grade styles of cotton.

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 mostly color 31, leaf 3 and 4, staple 37 and 38, mike 32-45, strength 28-30, and uniformity 80-83 sold for around 70.00 cents per pound, FOB warehouse (compression charges not paid).
• A light volume of color 31, leaf 4, staple mostly 36, mike 35-49, strength 29-35, and uniformity 80-83 sold for around 67.50 cents, same terms as above.
• A light volume of mostly color 31 and 41, leaf 2, staple 36 and 37, mike 38-47, strength 26-30, and uniformity 80-82 sold for around 66.00 cents, same terms as above.

West Texas

• A light volume of old-crop cotton containing mostly color 21 and 31, leaf 2 and 3, staple 35, mike 36-48, strength 29-35, and uniformity 77-83 sold for around 65.75 cents per pound, FOB car/truck (compression charges not paid).

Western Markets

Desert Southwest

• No trading activity was reported.

San Joaquin Valley

• No trading activity was reported.

American Pima

• No trading activity was reported.