Weekly Cotton Market Review – USDA

Average spot quotations were 73 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 56.23 cents per pound for the week ending Thursday, June 25, 2020.

The weekly average was up from 55.50 last week, but down from 59.90 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 55.86 cents Friday, June 19 to a high of 56.74 cents Monday, June 22.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 25 totaled 4,549 bales. This compares to 6,220 reported last week and 21,086 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 1,545,920 bales compared to 1,252,055 bales the corresponding week a year ago. The ICE Oct settlement price ended the week at 60.39 cents, compared to 59.37 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #10 FOR UPLAND COTTON June 25, 2020

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 July 2, 2020, allowing importation of 7,445,241 kilograms (34,195 bales of 480-lbs) of upland cotton.

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Quota number 10 will be established as of July 2, 2020 and will apply to upland cotton purchased not later than September 29, 2020 and entered into the U.S. not later than December 28, 2020. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period February 2020 through April 2020, 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 moderate. Demand was 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 affect cotton demand and disrupt supply chains.

The crop progressed normally as mostly fair to partly cloudy conditions dominated the weather pattern across the lower Southeastern region throughout the period. Daytime high temperatures varied from the upper 70s to low 90s. Widespread thundershowers brought moisture to areas throughout Alabama, the Florida Panhandle, and Georgia throughout the week.

Weekly accumulated precipitation totals measured from 2 to 4 inches in areas throughout Alabama, with lesser accumulations of 1 to 2 inches in Georgia and the Florida Panhandle. The moisture was beneficial to the crop in most areas, but seedling disease was reported in portions of the Florida Panhandle that has received excessive moisture in recent weeks.

Producers applied herbicides and nitrogen as dry conditions allowed. Aphids were building in some areas and plant bugs were appearing at treatable levels in some fields. Local experts reported grasshopper populations were high in the Florida Panhandle, but had begun to decline.

According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released June 22, cotton squaring had reached 39 percent completed in Georgia and 30 percent completed in Alabama.

The crop advanced at a slower than normal pace as mostly fair to cloudy conditions prevailed across the upper Southeastern region during the period. Daytime high temperatures were in the mid-80s to low 90s. Scattered thunderstorms brought moderately heavy rainfall to areas throughout South Carolina and cotton growing areas of eastern North Carolina and Virginia throughout the week. Weekly accumulated precipitation totals measured from one-half of an inch to three inches of moisture, with heavier amounts recorded in some areas.

Local experts reported heavy pressure from thrips in North Carolina, but many fields were past thrip susceptibility. In South Carolina, aphid populations were heavy in some older cotton fields. Wet weather helped to beat back spider mite populations. As squaring advances, producers will begin scouting fields for plant bugs.

According to the NASS Crop Progress report released June 22, cotton squaring had reached 28 percent completed in Virginia, 20 in South Carolina, and 17 percent completed in North Carolina.

Textile Mill

Inquiries from domestic mill buyers were light. No sales were reported. The undertone from mill buyers remained very cautious, due to very weak end product demand and reduced operating schedules associated with the COVID-19 virus. Mills continued to operate at minimal capacity with incremental increases as warranted by demand. Mills continued to produce personal protective equipment for frontline workers and military supplies in response to the COVID-19 Pandemic.

Demand through export channels was very light. No inquiries were reported. Demand centered around any discounted styles of cotton.

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 higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 Pandemic continues to disrupt travel, trade, and many normal activities.

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The crop progressed normally as a mix of sunny to overcast conditions was observed during the period. Daytime high temperatures were in the mid-80s to mid-90s. Overnight lows were in the mid-60s to low 70s. Scattered thunderstorms brought moderate precipitation to areas of southern Arkansas, west Tennessee, and the bootheel of Missouri over the weekend and early in the week. Weekly accumulated rainfall totals measured from one-half of an inch to two inches of moisture, with heavier accumulations observed in some areas. The moisture activated residual herbicides producers applied ahead of the rain events.

Squaring was well underway in Arkansas and was getting underway in Tennessee and Missouri. Insect pressure from thrips was declining and plant bug pressure had begun to build, but remained light in most areas. According to the National Agricultural Statistics Service’s Crop Progress report released June 22, squaring had reached 49 percent in Arkansas, 17 in Tennessee, and 4 percent in Missouri; all figures lagged behind the five-year average.

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. The COVID-19 Pandemic continues to disrupt travel, trade, and many normal activities around the world.

The crop progressed well under sunny and warm conditions, which prevailed early in the period. Daytime high temperatures in the low 90s over the weekend dropped into the low to mid-80s as thunderstorms brought moisture to the region later in the week. Overnight lows were in the upper 60s to low 70s. Weekly accumulated precipitation totals measured from 1 to 2 inches, with heavier amounts observed in some locations.

Producers welcomed the moisture on dryland fields which will invigorate young plants. Older plants in irrigated fields that missed significant precipitation were watered. Producers applied plant growth regulators. Squaring gained momentum and boll-setting has begun in the oldest fields. Producers treated fields for plant bug and aphid infestations, but insect pressure was not heavy.

According to the National Agricultural Statistics Service’s Crop Progress report released June 22, squaring had reached 45 percent in Louisiana and 17 percent in Mississippi; both figures lagged behind the five-year average.

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 moderate. Demand was light. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was active. Foreign inquiries were light. The lack of demand and the COVID-19 Pandemic continued to impact commodity markets.

The first two bales of the nation were harvested in the Rio Grande Valley on June 18 and delivered to a gin in Mercedes, TX, according to the Pest Cast newsletter published on June 19. Insecticidal treatments were applied for Verde bugs and whitefly. Fields were soggy in some areas following recent rainfall. In south Texas, producers were hopeful for high yielding stands at 2 to 4 bales per acre. Stands were setting bolls with a few beginning to show opened bolls. Moderate to heavy rainfall was received in the Upper Coast. Harvest was expected to start in mid-August. Stands were squaring and progressing in the Blackland Prairies. Intermittent, heavy rainfall was received on already saturated fields. Kansas and Oklahoma received up to 5 inches of beneficial rainfall. Cotton progress varied from emerged seedlings to initial squaring. Producers were encouraged because the rainfall gave seeds planted in dry soil a chance to emerge and advance.

West Texas

Spot cotton trading was slow. Supplies and producer offerings were moderate. Demand was light. Average local spot prices were higher. Producer interest in forward contracting was light. Trading of CCC-loan equities was active. Foreign inquiries were light. The COVID-19 Pandemic continued to impact commodity markets.

Planting was completed with daytime temperature highs in the upper 80s to upper 90s, and overnight temperatures in the 60s and 70s. Replanting was underway. Most areas received beneficial rainfall that gave stands a boost. Precipitation was reported at a few tenths up to around 3 inches, according to local reports. Maturity was in a wide range from emerged to squaring in earlier-planted fields.

Emergence has been erratic depending on how much rainfall was received. Fields quickly dried under hot, windy conditions. Fleahoppers and bollworms were present. According to the Texas A&M Agrilife Concho – St. Lawrence Integrated Pest Management update, wildlife caused problems looking for anything green to eat. Deer and rabbits were the main culprits eating from new stands.

Trading

East Texas

• In Texas, a light volume of mostly color 23 and 33, leaf 2 and 3, staple 34 and longer, mike 34-47, strength 26-33, uniformity 78-81, and 25 percent extraneous matter sold for around 43.25 cents per pound, FOB warehouse (compression charges not paid).
• In Oklahoma, a moderate volume of mostly color 22 and better, leaf 4 and better, staple 35 and longer, mike 38-52, strength 28-30, uniformity 80-81, and 25 percent extraneous matter sold for around 56.75 cents, FOB car/truck (compression changes not paid).
• A heavy volume of 2019 CCC-loan equities traded for 1.25 to 5.75 cents.

West Texas

• A light volume containing mostly color 31, leaf 3, staple 33 and 34, mike averaging 45.6, strength averaging 28.5, and uniformity averaging 81.0 sold for around 55.50 cents per pound, FOB car/truck (compression charges not paid)
• A light volume of mostly color 11 and 21, leaf 1, staple 34, mike averaging 46.5, strength 28-35, and uniformity averaging 79.8 sold for around 51.00 cents, same terms as above.
• A heavy volume of 2019 CCC-loan equities traded for 1.75 to 5.50 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. The effects of the COVID-19 Pandemic slowed the marketing chain for cotton. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Triple-digit temperatures were the norm, and daytime highs reached 111 degrees late in the period. Producers monitored the crop for heat stress. Cotton squaring stage was at 75 percent compared to the five-year average of 47 percent as reported by the National Agricultural Statistics Service (NASS) for week ending June 21. Local sources reported the crop made good progress. Boll-setting advanced in Yuma. No insect activity was reported. Warehouses were busy shipping cotton, but light volumes.

Temperatures were in the low 100s for New Mexico and El Paso, TX. Good, solid stands were established. The crop made good progress. Insect pressures were easily controlled. According to NASS, cotton squaring was 6 percent on track with the five-year average.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. The COVID-19 Pandemic continued to impact the U.S. economy. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Warehouses were shipping cotton as some mills were ready to receive previously delayed shipments.

Triple-digit temperatures were prevalent for the week. Heat advisories are in effect through Saturday, June 27. The crop made excellent progress. Cotton at squaring stage was 35 percent near the five-year average of 39 percent as reported by the National Agricultural Statistics Service for week ending June 21. No insect pressures were reported.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. The COVID-19 Pandemic continues to affect demand for cotton. Foreign mill inquiries were light. Hot, dry conditions were reported throughout the region.

Temperatures were in the low to high 100s. No rainfall was recorded in the period. Boll-setting advanced in Arizona. The crop was squaring in the San Joaquin Valley fields of California. Overall, the crop made excellent progress in the Far West. Early returns on the annual Variety Survey indicate significant reductions in AP acreage for California.

Trading

Desert Southwest

• No trading activity was reported.

San Joaquin Valley

• No trading activity was reported.

American Pima

• No trading activity was reported.