Weekly Cotton Market Review – USDA

Average spot quotations were 103 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 61.13 cents per pound for the week ending Thursday, October 8, 2020.

The weekly average was up from 60.10 last week and from 58.81 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 60.18 cents Friday, October 2 to a season high of 61.95 cents Thursday, October 7.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 8 totaled 28,834 bales. This compares to 17,490 reported last week and 13,540 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 216,734 bales compared to 130,033 bales the corresponding week a year ago. The ICE Dec settlement price ended the week at 67.49 cents, compared to 65.91 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #25 FOR UPLAND COTTON October 8, 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 October 15, 2020, allowing importation of 5,551,846 kilograms (25,499 bales of 480-lbs) of upland cotton.

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Quota number 25 will be established as of October 15, 2020 and will apply to upland cotton purchased not later than January 12, 2021 and entered into the U.S. not later than April 12, 2021. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period May 2020 through July 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 slow. Supplies and producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was moderate. The COVID-19 Pandemic continues to negatively affect cotton demand and disrupt supply chains.

Mostly sunny to fair conditions were observed across the lower Southeast during most of the period. Daytime high temperatures varied from the low 70s to mid-80s. Scattered shower activity brought very light precipitation to portions of south Alabama and south Georgia early in the week. The crop advanced at a good pace. In Alabama, target spot disease was observed in some areas and producers considered applying fungicides to some fields with less mature plants.

Cotton damage assessments from Hurricane Sally were ongoing; boll rot, seeds sprouting in bolls, and lint loss were reported in fields in the path of the storm. Defoliation was expanding and harvesting was getting underway.

Modules were accumulating on gin yards and ginning was getting started. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 5, cotton bolls opening had reached 81 percent completed in Georgia and 79 percent completed in Alabama; NASS reported cotton harvested at 8 percent in Georgia and 2 percent in Alabama.

Mostly clear to fair conditions prevailed across the upper Southeastern region throughout the period. Daytime high temperatures varied from the upper 60s over the weekend to the low 80s late in the week. Light precipitation was received along some coastal areas. The crop advanced at a slower pace under mild weather conditions and bolls were cracking open. Fieldwork was delayed in some areas where soils remained too soft to support equipment.

Defoliation and harvesting was getting underway. The Florence Classing Office received the first cotton samples of the season. According to the NASS Crop Progress report released October 5, bolls opening had reached 75 percent completed in North Carolina and Virginia, and 72 percent completed in South Carolina; cotton harvested had reached 5 percent in Virginia and 4 percent in North Carolina.

Textile Mill

Buyers for domestic mills inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for first quarter through fourth quarter 2021 delivery. No sales were reported. Additional inquiries from domestic mill buyers were light. Most mills have covered their raw cotton needs through the fourth quarter 2020.

Operating schedules had increased compared to the spring and summer months, but the undertone from mills buyers remained cautious as mills continued to operate at reduced capacity due to the COVID-19 Pandemic. Mills continued to produce personal protective equipment for frontline workers and military supplies.

Demand through export channels was light. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

• A light volume of color 42-54, staple 37 and 38, mike 43-49, strength 28-30, and uniformity 80-82 sold for around 41.25 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
• A light volume mixed lot of 2015-crop cotton, color 63 and better, leaf 3-5, staple 34-36, mike 43-49, strength 23-27, and uniformity 79-81 sold for around 40.00 cents, same terms as above.
• A moderate volume of CCC-loan equities traded for 9.00 to 10.00 cents.

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.

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Mostly clear skies and variable temperatures prevailed during the week. Daytime highs were in the 60s to 80s. Overnight low temperatures were in the 40s and 60s. Rain showers from the remnants of Hurricane Delta are in the forecast for the coming weekend. End-of-season activities, including defoliation, harvesting, ginning, and fall fieldwork gained momentum.

Receipts in both the Dumas and the Memphis Classing Offices increased steadily as more gins commenced annual pressing operations. Producers indicated that they were pleased with the initial grades received. According to the National Agricultural Statistics Service’s Crop Progress report released on October 5, cotton harvested had reached 13 percent completed in Arkansas, 8 in Missouri, and 7 percent in Tennessee. These figures were at least one week behind the five-year average in all states.

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 economic activity around the world.

Hurricane Delta is projected to hit the Louisiana coast on Friday, October 9 in virtually the same spot where Hurricane Laura came ashore less than one month ago. The track of this new storm is projected to curve further to the east than the previous hurricane, which will threaten cotton on the stalk in northeastern Louisiana and Mississippi. Producers were working at a brisk pace to harvest as much defoliated cotton as possible ahead of the anticipated precipitation. Harvesting activities progressed normally in all areas.

According to the National Agricultural Statistics Service’s Crop Progress report released on October 5, harvesting had reached 39 percent completed in Louisiana and 17 percent in Mississippi. These figures were about two weeks behind the five-year average in all states.

Trading

North Delta

• No trading activity was reported.

South Delta

• A moderate volume of CCC-loan equities traded for around 8.00 cents per pound.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was moderate. 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 moderate. Interest was best from China, Pakistan, and Vietnam. An open invitation to bid on a light volume of 2019-crop CCC-Catalog cotton opened on October 6 and will close on October 13. The COVID-19 Pandemic continued to influence market uncertainty and impact global cotton demand.

In the Upper Coast, final harvesting and ginning continued. Most producers had finalized harvesting activities and prepared fields for winter crops. Modules were hauled out of the fields to the gins.

In the Coastal Bend (CB) and the Rio Grande Valley (RGV), stalks were destroyed and tilled. Harvesting was completed in the CB, and a few gins finished for the season, but some are expected to operate into January due to exceptional yields. In the RGV, some fields received herbicide treatments and further tillage to control regrowth. Ginning advanced in the Blackland Prairies and harvesting was estimated at 80 percent completed. Modules were transported to the gin yards for pressing services.

In Kansas, cotton bolls opening was 64 percent ahead of 60 last year and 57 percent for the five-year average, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report released on October 5. Producers had begun to spray defoliants and harvesting was expected to expand next week.

Bolls opening in Oklahoma was 68 percent compared to 75 percent last year and the 68 percent five-year average, according to NASS. Defoliant and boll opener applications made good progress with daytime highs in the mid-70s to low 90s, and overnight lows were in the 50s. Bolls cracked open and a few fields had been harvested.

West Texas

Spot cotton trading was moderate. Supplies were moderate. Producer offerings were light. 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 to moderate. Interest was best from China, Pakistan, and Vietnam. The Loan Deficiency Payment remains in effect. The COVID-19 Pandemic continued to impact commodity markets and global cotton demand.

Bolls were popping open under clear conditions with daytime temperature highs in the upper 70s to low 90s, and overnight lows in the 50s. Harvesting and ginning expanded. Producers took advantage of the dry, sunny forecast to spray and harvest fields ahead of any rain events. Many fields were treated with defoliants and boll openers. Dryland fields continued to be shredded, and harvest is expected to move along quickly. Multiple gins across the region started ginning services and began submitting samples to their assigned classing office. The Lamesa Classing Office reported the season average predominate color 11&21 was at 78.9 percent, predominate leaf 1&2 at 98.3 percent, mike averaging 4.30, staple averaging 35.31, strength averaging 29.67, and uniformity averaging 79.24 for season ending October 8.

Trading

East Texas

• In Texas, a heavy volume of new-crop cotton mostly color 21 and 31, leaf 2 and 3, staple 37 and 38, mike averaging 43.9, strength averaging 30.0, and uniformity averaging 81.9 sold for around 66.00 cents per pound, FOB warehouse (compression charges not paid).
• A light volume of mostly color 41, leaf 3 and 4, staple 38-40, mike 47-50, strength 31-34, and uniformity 81-83 sold for around 60.75 cents, same terms as above.
• A light volume of color 21, 22, and 32, leaf 3-5, staple 34 and 35, mike 33-38, strength 29-32, and uniformity averaging 79.6 sold for around 56.75 cents, same terms as above.
• A heavy volume of 2019 CCC-loan equities traded for 0.00 to 11.00 cents.

West Texas

• A light volume of 2019-crop cotton mostly color 22 and 32, leaf 2 and 3, staple 34 and 35, mike averaging 49.0, strength averaging 30.4, and uniformity averaging 79.4 sold for around 57.50 cents per pound, FOB car/truck (compression charges not paid).
• A mixed lot containing a light volume of cotton mostly color 23, 33, and 44, leaf 6 and better, staple 35 and longer, mike 28-48, strength 28-32, uniformity 78-81, and 50 percent extraneous matter sold for around 41.75 cents, same terms as above.
• A heavy volume of 2019 CCC-loan equities traded for 0.25 to 11.25 cents.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Trading of CCC-loan equities was slow. Average local spot prices were higher. The COVID-19 Pandemic continues to pressure the U.S. economy and global cotton demand. No foreign or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the low 100s for central Arizona. The Phoenix area broke records for the hottest summer and now has over 135 straight days of temperatures at 100 degrees and higher nearing the record of 143 days set in 1984. No rainfall was recorded in the period. Ginning continued in Yuma. Defoliation activities gained momentum in central Arizona.

Some early-planted fields were harvested. Modules were trucked to gin yards. Initial ginning began early in the reporting period. New Mexico and El Paso, TX producers continued to defoliate the crop. No ginning was reported in the period.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. The COVID-19 Pandemic continues to negatively impact the U.S. economy and global cotton demand. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the high 90s early in the week and by late week dropped into the high 80s. A cold front pushed through and lowered temperatures. The promise of rain was available for northern California. The Valley will have to be content with clouds and moderate temperatures. Air quality alerts continued due to smoky conditions. Defoliation activities gained momentum. Harvesting continued. Modules were trucked to gin yards. Initial ginning began mid-week. Two saw gins will not operate this season. This leaves six saw gins to operate in the SJV this season.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2019-crop cotton were moderate. Demand was light. The COVID-19 Pandemic slowed the U.S. economy and global cotton demand. Average local spot prices were steady. No forward contracting or domestic mill activity was reported.

Temperatures were in the 80s to low 100s in the region as a cold front moved through late in the week. Rainfall is needed to settle the dust, alleviate wildfire conditions, and clear the air. Wildfire smoke continued to affect air quality in the San Joaquin Valley of California. Bolls are cracking open. Defoliation continued throughout the region. No ginning was reported in the week. Thirteen roller gins will operate in the San Joaquin Valley this season, down from sixteen gins.

Trading

Desert Southwest

• A light volume of New Mexico CCC-loan equities sold for around 3.75 cents per pound.

San Joaquin Valley

• No trading activity was reported.

American Pima

• No trading activity was reported.