Spot cotton quotations averaged eight cents lower than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton Program. Quotations for the base quality of cotton (color 41, leaf 4, staple 34, mike 35-36 and 43-49, strength 26.5-28.4, uniformity 81) in the seven designated markets averaged 126.28 cents per pound for the week ended Thursday, July 7, 2011. The weekly average was down from 134.49 cents last week, but up from 74.91 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 129.58 cents on Friday, July 1, to a low of 124.00 cents on Thursday, July 7. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 7 totaled 78 bales. This compares to 467 bales last week and 1,241 bales reported a year ago. Total spot transactions for the season were 643,970 bales, compared to 887,962 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 116.20 cents, compared to 123.69 cents last week. Prices are in effect from July 1-7, 2011
Prices are in effect from July 8-14, 2011
Adjustment World Price (AWP) 108.86 ELS Competitiveness Payment 0.00
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2010 Crop 0.52
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2011 Crop 0.57
Source: Farm Service Agency, FSA, USDA
Southeastern Markets Spot cotton trading was inactive. Supplies were light. Demand was light. Producer offerings were light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Producers welcomed scattered thunderstorms which brought localized rainfall throughout the region during the period. Precipitation totals varied from trace amounts to several inches in the cotton-growing regions of Alabama and Georgia. Crop progress was variable in Georgia; earlier-planted cotton was blooming. Several fields that were re-planted up to three times in late June had failed to emerge, despite recent moisture. Producers were also assessing management options in fields where patches of cotton emerged at various intervals, resulting in uneven stands. Fields were also scouted for emerging pigweed, as herbicide application timing was critical to battle the resistant weed. Isolated thunderstorms brought around one-half of an inch to two inches of rainfall to areas of the Carolinas and Virginia. Daytime highs were in the upper 80s to low 90s and the crop progressed well. Local experts monitored traps for bollworm and tobacco budworm moth populations. The balance of cotton had squared in Georgia, the Carolinas, and Virginia and boll setting was underway.
South Central Markets North Delta
Spot cotton trading was inactive. Supplies and demand were very light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. Temperatures in the mid-to-upper 90s early in the period moderated when light showers brought welcomed moisture and highs in the 80s. Most producers were carefully scouting fields for signs of four-
bract squares, a deformity caused by moisture stress or injury to the plant at an early stage of development. The plant sheds the abnormal squares, which can lead to yield reductions if new squares on higher nodes are not fully mature at harvest time. Pest control measures are usually more aggressive in fields with four-bract squaring in order to maximize squaring retention by minimizing insect damage. Overall, the crop made good progress. Producers applied plant growth regulators, as needed.
Spot cotton trading was inactive. Supplies and demand were very light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. The benefit from welcomed rain showers was somewhat offset by triple-digit temperatures in the cotton-
producing areas. Record highs were set in several areas. Up to one inch of rain was reported; a few fields have not received any rainfall since they were planted. Producers were carefully evaluating the extent of four-bract squaring throughout the region. Wind damage and/or heat and moisture stress are considered to be the main culprits to this potentially yield-reducing condition. Infestations of plant bugs and fleahoppers were easily controlled. Overall, the crop made good progress. A few fields were treated to control excess vegetative growth.
Spot cotton trading was inactive. Supplies were light. Demand was light. Average local spot prices were lower. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was inactive. No domestic mill activity was reported. Foreign mill interest was very light. The Rio Grande Valley initial harvesting activities were delayed because of wet conditions. Fields were too wet to support equipment from recent rains. Isolated thunderstorms persisted and slowed defoliation efforts. Approximately 30 to 40 percent of the crop was defoliated in south Texas. Some harvesting occurred near Corpus Christi. Two to three inches of rain was received in the Blackland Prairies, and plants were blooming. More rain is needed to increase yield potential. In Kansas, dryland stands progressed slowly. Excessive heat, high winds, and a lack of rainfall caused some damage. The irrigated fields progressed and some squaring occurred. Local experts reported that stands were generally about two weeks later than normal. In Oklahoma, cotton began to square, but stands suffered from droughty conditions. Fields were monitored and spot treated for thrips. West Texas
Spot cotton trading was inactive. Supplies were moderate. Demand was very light. Average local spot prices were lower. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was inactive. No domestic mill activity was reported. Foreign mill interest was very light. Some scattered rainfall slightly benefitted irrigated fields, but droughty conditions dominated the region. A lack of moisture and excessive heat slowed overall plant progression. Irrigated fields planted in wheat stubble advanced. Producers watered stands from available wells. The organic-irrigated acreage progressed. The organic and conventional dryland production succumbed to the prevalent hot, dry, and windy conditions. So far, total rainfall received in 2011 is less than one inch. According to the U.S. Drought Monitor, the primary cotton-growing areas are in a D-4 intensity level drought. D-4 drought, also labeled ‘exceptional,’ is the strongest intensity level. Currently, 70.30 percent of the state is experiencing D-4 droughty conditions. Western Markets
Desert Southwest (DSW)
Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquires were light. Temperatures reached 118 degrees in many areas throughout south-central Arizona early in the reporting period. Producers irrigated fields to help reduce heat stress. The crop made progress, but remains later than normal. San Joaquin Valley (SJV)
Spot cotton trading was inactive. Supplies were light. Demand was moderate. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Temperatures reached 106 degrees early in the reporting period. Water releases from local dams prompted flood advisories for fast-flowing rivers through the central Valley. The crop was blooming. Lygus populations increased and were monitored for spot treatments, as needed. American Pima (AP)
Spot cotton trading was inactive. Supplies were light. Demand was good. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light for 2010 and 2011-crop cotton. Industry representatives estimated that approximately 50 percent of the 2011 crop is committed to foreign mills. Severe drought and limited irrigation water in parts of the far west limited shipper and producer offerings for new crop. Excessive heat warnings were issued for most of the far west, as temperatures reached triple digits early in the reporting period. Organic acreage was blooming. The hot temperatures helped to advance the crop. Textile Mill
Domestic mill buyers purchased a moderate volume of 2011-crop cotton, color 41, leaf 3 and 4, and staple 34 and 35 for January through December 2012 delivery. Mill buyers also purchased a moderate volume of 2011-crop, San Joaquin Valley cotton, color 41, leaf 3 and 4, and staple 34 and 35 for January through September 2012 delivery. Additional inquiries were light. Several mills had taken scheduled time off during the holiday week for regular maintenance and re-tooling. The undertone remained cautious for the third and fourth quarter of 2011, as mill buyers attempted to assess finished-product demand and maintain balanced-yarn inventories.
Inquiries through export channels were light. Demand was best throughout the Far East for any discounted styles of cotton for nearby shipment. Southeastern Markets
* No trading activity was reported.
South Central Markets
* No trading activity was reported.
* No trading activity was reported.
Southwestern Markets East Texas
* A light volume of color 31 and better, leaf 4 and better, staple 34-39, mike 33-50, strength 27-
34, uniformity 77-84, and around 75 percent extraneous matter sold for around 112.00 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. Aided by warm weather across much of the South, squaring of this year’s cotton crop advanced 17 percentage points during the week. At 49 percent complete, progress was 13 percentage points behind last year and 6 points behind the 5-year average. In Texas, poor seed germination and emergence of dryland cotton across parts of the Plains left crop development behind normal. By July 3, bolls were setting on 14 percent of the nation’s cotton acreage, on par with both last year and the 5-year average. Overall, 28 percent of the cotton crop was reported in good-to-excellent condition, up slightly from last week, but 37 percentage points below the same time last year.
Global Cotton Consumption Down in 2010/11
World cotton consumption is estimated at 24.5 million tons in 2010/11, 3 percent lower than in 2009/10, despite firm, global economic growth, according to the International Cotton Advisory Committee (ICAC) report released July 1, 2011. Demand from spinning mills was strong in the first half of this season, but is now much weaker. Spinners, faced with high prices of cotton and difficulties to access credit on the one side, and declining prices of cotton yarn on the other side, have reduced their activity. Stocks of cotton yarn have accumulated at many mills. Prices of chemical fibers have remained much lower than cotton prices, encouraging an increased switch to chemical fibers at the spinning level. Cotton mill use is expected to rise by 3 percent to 25.2 million tons in 2011/12, driven by projected global economic growth and boosted by increased production, but moderated by relatively high cotton prices and competition from chemical fibers.
World cotton production is expected to increase by 11 percent to 27.4 million tons in 2011/12, driven by the high cotton prices received by farmers in 2010/11. Production will grow in most large producing countries, with the exception of the United States.
Global cotton trade is projected up by 5 percent to 8.2 million tons in 2011/12, fueled by larger production and consumption. Imports by China are expected to increase by 24 percent to 3.3 million tons, assuming a rebound in mill
use and a rebuilding of stocks from historically low levels. The increase in exports will be driven by Brazil and
Australia, while U.S. exports could decrease due to reduced exportable supplies.
The Cotlook A Index averaged $1.64 in 2010/11, 112 percent higher than in the previous season. The Secretariat believes that the season-average Cotlook A Index will decline significantly in 2011/12, although it will probably remain above the 10-year average of $0.60 per pound (2000/01 to 2009/10).
Forward contracting of 2011-crop cotton. Upland cotton growers in the United States had booked about 26 percent of their expected acreage by the end of June this season. This was above the 16 percent booked through the same period last year. Contracting has been most active in the south central states where about 64 percent of the crop was under contract by the end of June and compares with 4 percent a year earlier. Southeastern states’ growers had forward contracted about 31 percent, compared with 19 percent in 2010. Southwestern states’ growers had contracted about 14 percent of the crop, compared to 19 percent last year. Growers in the western states had 3 percent of the crop under contract and compares with no contracting at the end of June last year. These estimates were based on the National Agricultural Statistics Board’s June Planted Acreage report and informal surveys made by the USDA, Agricultural Marketing Service, Cotton Program.