Weekly Cotton Market Review – USDA

Average quotations were 31 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 70.55 cents per pound for the week ended Thursday, December 15, 2016.

The weekly average was up from 70.24 cents last week and 62.00 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 69.75 cents Friday, December 9 to a high of 70.99 cents Tuesday, December 13. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 15 totaled 79,957 bales.

This compares to 59,630 bales reported last week and 54,208 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 495,618 bales compared to 585,706 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 71.67 cents, compared to 71.42 cents last week.

Holiday Publication Schedule

Weekly Cotton Market Review
No report will be published on December 30.
Regular scheduled publication will resume on January 6, 2016.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #13 FOR UPLAND COTTON December 15, 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 December 22, 2016, allowing importation of 13,866,053 kilograms (63,686 bales) of upland cotton.

Quota number 13 will be established as of December 22, 2016, and will apply to upland cotton purchased not later than March 21, 2017, and entered into the U.S. not later than June 19, 2017. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period August 2016 through October 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 moderate. Supplies of available cotton were moderate. Demand was good. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

Fair-to-mostly cloudy conditions prevailed over the lower Southeast with variable daytime high temperatures in the mid-50s to mid-70s. Widespread showers brought around one-half to three-quarters of an inch of precipitation to portions of the Gulf Coast area, with lesser accumulations observed further inland. The wet weather delayed fieldwork in some areas; harvesting rapidly neared completion and producers mowed stalks.

The larger gins continued pressing operations, but several smaller gins were winding down operations for the season. Mostly clear to partly cloudy conditions prevailed across the Carolinas and Virginia with daytime highs in the mid-40s to mid-60s. Intermittent shower activity brought from trace amounts to around one-quarter of an inch of precipitation to portions of the eastern Carolinas.

Producers completed fieldwork activity and mowed stalks. Many smaller gins finished pressing operations for the season and others had gone to gin days; a few larger gins continued full operating schedules.

South Central Markets

North Delta

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

Cold temperatures and scattered rain showers characterized the weather pattern for the period. Overnight lows were in the 20s to 30s; high temperatures were in the 40s and 50s. Less than 1 inch of precipitation was reported. According to the U.S. Drought Monitor, the drought condition for most of the region remained moderate-to-severe. Most gins in the region had completed annual pressing operations. The remaining gins were making steady progress working through the backlog of modules on their yards. No fieldwork was reported due to cold and wet conditions.

South Delta

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

Cool and cloudy conditions prevailed during the period. Daytime temperatures were in the 40s and 50s. A cold front brought overnight lows in the 30s. No rainfall was reported. According to the U.S. Drought Monitor, the drought condition improved recently, but most of the region remained moderate-to-severe, particularly in the cotton-producing parts of the region. Ginning was rapidly drawing to a close in Mississippi. No fieldwork was reported.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was good. Average local spot prices were firm. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate. Interest was best from China, Pakistan, and Turkey.

In Texas, according to the National Agricultural Statistics Service’s (NASS) December Cotton Production report, production is estimated at 7.40 million bales, 29 percent higher than last season. Yield is forecasted at 670 pounds per acre, compared to 610 pounds per acre in 2015. Acreage harvested is estimated at 5.30 million acres compared to 4.50 million acres last season.

Approximately 10 gins in the Winter Garden and eastern Texas areas intermittently continue to press bales around rainfall. Planted acres are expected to increase next season, according to local expert reports.

In Kansas, production is forecast at 71,000 bales, up 103 percent from last season, according to NASS. Harvested acres are up 94 percent at 31,000 acres. Record yield is estimated at 1,099 pounds per acre, up 49 pounds from last season. Producers were encouraged with yields at 4 plus bales per acre. Harvesting was interrupted because of extremely cold and windy conditions.

Bark had become an issue for some, so harvesting was scaled back until more desirable conditions returned. Local experts estimate harvesting at 60 to 80 percent completed around the state. In Oklahoma, according to NASS, production is estimated at 565,000 bales, up 51 percent compared to 2015.

Yield is forecasted at 952 pounds per acre, compared with 876 pounds the previous year. Acres harvested are 39 percent higher at 285,000 acres compared to 205,000 acres last season. Local reports indicated that harvesting was drawing to a close and ginning neared the half-way mark.

Producers and ginners were making preparations for a cold front that was expected to drop daytime temperatures in the teens and 20s, bring strong winds, and snow.

West Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. Demand was very good. Average local spot prices were firm. Trading of CCC-loan equities was slow. Foreign mill inquiries were moderate. Interest was best from China, Pakistan, and Turkey.

Harvesting was active under clear, cool conditions in the Northern High Plains (NHP). Gins continued pressing services on the accumulation of modules on gin yards. Module haulers were busy transporting modules out of fields. Producers were encouraged with yields and quality results. Some producers had completed harvesting and moved on to sowing the wheat crop. Harvesting and ginning made slow progress in the Southern High Plains (SHP).

Lingering damp conditions from recent rainfall slowed harvesting progress and allowed some gins to process all modules on their yards. Reports indicated that in some locales module trucks were parked and waiting for fields to firm and harvesting to resume.

According to the National Agricultural Statistics Service’s December Cotton Production report released on December 9, the NHP is expected to harvest 745,000 acres compared to 427,000 the previous year, and the SHP will harvest 2,670,000 acres compared to 2,458,000 acres in 2015. Yield per acre is estimated at 844 pounds in the NHP and 604 pounds in the SHP. Statewide district estimates combined are estimated at 7.40 million bales.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Producers delivered previously contracted cotton. Average local prices were firm. No forward contracting or domestic mill activity was reported.

Partly cloudy conditions and temperatures were above average in central Arizona. No rainfall was recorded in the period. Harvesting neared completion. Ginning continued, with a couple of gins just cranking up their gins in the past week. Arizona cotton quality is outstanding this season. Harvesting neared completion in New Mexico and El Paso, Texas. Limited second pick harvesting continued. Ginning continued.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Producers delivered previously contracted cotton. Average local prices were firm. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Mills waited on the sidelines and may wait for Australian new-crop cotton to come into marketing channels.

Periods of clouds and scattered showers pushed temperatures in the mid-60s early in the period, which was above normal for this time of year. Overcast skies with steady rainfall and drizzle began on December 15. An Arctic front promises to bring heavy rainfall to the SJV and fresh snowfall to the northern and central Sierra Nevada Mountain range late in the period. Ginning continued. Producers prepared fields for spring plantings.

American Pima (AP)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Producers delivered a moderate volume of previously contracted cotton. Average local prices were steady. No forward contracting was reported. Shippers offering prices were firm. Foreign mill inquiries were slow and for prompt shipments. Most mills were covered for nearby, and shippers were hopeful that China would come into the market after the first of the year. Interest was best from Pakistan and Peru. Merchants were shipping cotton against previous commitments.

Much needed moisture entered California late in the period, with heavier rain amounts expected through the weekend. No rainfall was recorded in the period for the Desert Southwest. Harvesting and ginning continued in Arizona, New Mexico, and El Paso, Texas. Ginning continued in California.

Textile Mill

Domestic mill buyers purchased a moderate volume of color 41, leaf 4 and better, and staple 35 and longer for first quarter 2017 delivery. Domestic mill buyers inquired for a moderate volume of color 52 and better, leaf 5 and better, and staple 32 and longer for June through December 2017 delivery. Domestic mill buyers also inquired for a moderate volume of color 42, leaf and better, and staple 34 and longer for second quarter through fourth quarter 2017 delivery.

No additional sales were reported. The undertone from mill buyers remained cautiously steady. Most mills operated five to seven days and planned four to ten days of downtime for the approaching Christmas and New Year’s holidays.

Demand through export channels was moderate. Agents for mills in Taiwan purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for nearby shipment. Taiwanese mill buyers inquired for a moderate volume of color 42 and better, leaf 5, and staple 33 and longer for December/January 2017 shipment. Agents for mills in Korea and Vietnam inquired for a moderate volume of color 31 and 41, leaf 4 and better, and staple 34 and longer for December/January 2017 shipment.

Regional Price Information

Southeastern Markets

• Even-running lots containing color 41 and better, leaf 4 and better, staple mostly 37 and 38, mike 43-49, strength 28-31, and uniformity 81-83 sold for around 400 points on ICE March futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
• A moderate volume of color 31 and 41, leaf mostly 2 and 3, staple 35-38, mike 43-52, strength 28-32, and uniformity 80-82 sold for around 325 points on ICE March futures, same terms as above.
• A light volume of color 31 and 41, leaf 3 and 4, staple 34-36, mike 43-49, strength 30-32, and uniformity 81-84 sold for around 225 points on ICE March futures, same terms as above.
• Mixed lots containing color 32 and better, leaf mostly 1 and 2, staple 33-36, mike 43-52, strength 28-30, and uniformity 80-83 sold for around 200 points on ICE March futures, same terms as above.
• Mixed lots containing color mostly 31, 41, and 42, leaf mostly 3 and 4, staple mostly 35-37, mike 43-52, strength 30-32, and uniformity 80-82 sold for around 25 points on ICE March futures, same terms as above.

South Central Markets

North Delta

• A light volume of color 42 and better, leaf 4 and better, staple mostly 34, mike 50-56, strength 26-33, and uniformity 79-83 traded for around 72.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

• A light volume of color 42 and better, leaf 4 and better, staple mostly 34, mike 50-56, strength 26-33, and uniformity 79-83 traded for around 72.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
• A light volume of color 52 and better, leaf 4 and better, staple 32 and longer, mike 44-54, strength 25-32, and uniformity 78-82 traded for around 67.50 cents, same terms as above.

Southwestern Markets

East Texas

• In Oklahoma, a heavy volume of color 41 and better, leaf 3 and 4, staple 36 and 37, mike 34-48, strength 29-34, and uniformity 79-82 sold for around 70.25 cents per pound, FOB car/truck (compression charges not paid).
• A heavy volume of color 31 and better, leaf 4 and better, staple 37 and longer, mike 39-46, strength 27-32, uniformity 77-83, and 25 percent extraneous matter sold for around 68.50 cents, same terms as above.
• In Texas, a moderate volume of mostly color 63 and 52, leaf 3-5, staple 33 and longer, mike 37-54, strength 25-32, uniformity 77-82, and 25 percent extraneous matter sold for around 61.00 cents, same terms as above.

West Texas

• A heavy volume of color 11 and 21, leaf 3 and better, staple 36 and longer, mike 45-49, strength 29-35, and uniformity 76-83 sold for around 72.75 cents per pound, FOB car/truck (compression charges not paid).
• A heavy volume of color 31 and better, leaf 3 and better, staple 37 and 38, mike 35-48, strength 27-34, and uniformity 79-83 sold for around 71.50 cents, same terms as above.
• A moderate volume of color 31 and better, leaf 4 and better, staple 37 and longer, mike 27-37, strength 37-33, and uniformity 77-81 sold for around 66.00 cents, same terms as above.
• A light volume of CCC-loan equities traded for around 3.00 cents.

Western Markets

Desert Southwest

• In New Mexico, a light volume of color 31, leaf mostly 2, staple 38, mike 39-42, strength 33-34, and uniformity 81 sold for around 71.00 cents per pound, FOB car/truck (compression charges not paid).

San Joaquin Valley

• No trading activity was reported.

American Pima

• No trading activity was reported.