Average spot cotton quotations averaged over five and three-quarter cents higher 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 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 69.11 cents per pound for the week ended Thursday, June 14, 2012. The weekly average was up from 63.34 cents last week and 150.43 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 66.64 cents on Friday, June 8 to a high of 71.85 cents on Thursday, June 14. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 14 totaled 5,461 bales. This compares to 1,511 bales last week and 28,534 bales reported a year ago. Total spot transactions for the season were 864,371 bales, compared to 642,203 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 78.09 cents, compared to 73.89 cents last week.
Prices are in effect from June 15-21, 2012
Adjustment World Price (AWP) 62.00 ELS Competitiveness Payment 0.00 Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.27 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.47 Source: Farm Service Agency, FSA, USDA
USDA ANNOUNCES SPECIAL IMPORT QUOTA #18 FOR UPLAND COTTON June 14, 2012
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 June 21, 2012, allowing importation of 14,096,929 kilograms (64,747 bales) of upland cotton.
Quota number 18 will be established as of June 21, 2012, and will apply to upland cotton purchased not later than September 18, 2012, and entered into the U.S. not later than December 17, 2012. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period February 2012 through April 2012, 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 Markets
Spot cotton trading was inactive. Supplies were moderate. Demand was light. Producer offerings were light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting activity was reported.
Mostly overcast conditions prevailed during the period with daytime temperatures in the low to mid80s. Widespread scattered thunderstorms brought two to five inches of accumulated precipitation to areas from central Alabama to the Carolinas. Downpours in excess of 10 to 15 inches were reported in areas of coastal Alabama and Florida. Local experts reported that some acreage may be lost to flash flooding in Alabama. Around one-half of an inch of moisture was received in the cotton growing areas of Virginia. Producers would welcome a period of hot and dry weather to allow soils to firm and invigorate young plants. Stunting was reported in some fields in the Carolinas due to cooler temperatures as overcast conditions prevailed during the period. Weed control was problematic in areas where soils remained saturated. Some fields were replanted due to foraging wildlife in Georgia. Fields were sprayed for thrip infestations in the Carolinas and Virginia. Squaring was underway throughout the region.
South Central Markets
North Delta
Spot cotton trading was inactive. Producer offerings and supplies were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported.
A series of thunderstorms brought much needed precipitation during the period. Rainfall totals from two to five inches were reported throughout the region. Soil moisture conditions improved dramatically, and the crop made good progress throughout the region. According to the National Agricultural Statistics Service, squaring surged to 73 percent in Arkansas while it advanced to 25 in Missouri and nine percent in Tennessee. Producers treated fields for thrips and plant bugs as needed and made lay-by fertilizer applications. Some early planted fields with good soil moisture were treated with plant growth regulators. Crews were chopping weeds in a few fields where herbicides had not provided full weed control for glyphosate resistant Palmer amaranth (pigweed).
South Delta
Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported.
General thunderstorms produced four to five inches of much needed moisture in Mississippi and Louisiana. Some flash flooding was reported in areas of Mississippi where soils were already saturated. No crop damage was reported. The crop made excellent progress. In Louisiana, 64 percent of the crop was rated good to excellent by the National Agricultural Statistics Service (NASS) while in Mississippi 73 percent of the crop was rated good to excellent. NASS also reported that squaring had reached 40 percent in Louisiana and 27 percent in Mississippi. Producers treated fields for spider mites, thrips, and plant bugs as needed. Producers also made lay-by fertilizer applications in areas where soils were firm enough to support equipment.
Southwestern Markets
East Texas-Oklahoma
Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was inactive. Foreign mill interest was very light.
In central and east Texas, some areas received beneficial heavy rainfall that advanced stands. Intermittent areas in south Texas remained excessively dry and as a result young plants have begun to bloom early. In the Blackland Prairies producers were optimistic about harvesting a high-yielding crop with the moisture already received. Pests were inconsequential. In Kansas, dryland stands struggled to establish in droughty condition; irrigated stands emerged and presented two true leaves. Thrips moved from harvested wheat fields to cotton stands and were treated as needed. In Oklahoma, insurance planting deadlines expired for some counties. Some parts of the state received beneficial rainfall that helped stands progress, while other parts were still droughty.
West Texas
Spot cotton trading was inactive. Supplies were moderate. Demand was very light. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was inactive. Foreign mill inquiries were very light.
Reports indicated that some seedling stands were lost or damaged from high winds, hail, and standing water from recent rainfall. Lost acreage will likely be planted to grain. Young seedlings planted in wheat-stubble performed better in inclement weather. Precipitation was spotty and measured one-quarter of an inch to three inches of rainfall on cotton growing acreage. Dryland fields displayed strong crop vigor. Some producers planted between the rows in drier fields to position the seedlings closer to the water profile to ensure germination. In areas that lacked moisture, seedlings shriveled after emergence. Planting neared completion in the Rolling Plains.
Western Markets
Desert Southwest (DSW)
Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic activity was reported.
Temperatures were in the low-to-mid-100s in Arizona. No moisture was recorded in the period. Peak flowering was reported in Yuma, Arizona. Boll counting continued and retention was good. No significant insect pressures were reported. Dry conditions continued in New Mexico and El Paso, Texas. Water continues to flow in the upper Rio Grande River and growers are irrigating. Local industry representatives are reporting a significant decrease in acreage for New Mexico and El Paso, Texas, mostly due to the on-going drought. Forage crops for the dairy industry are also competing with cotton acreage. Local industry representatives were anxious to see the National Agricultural Statistic June Acreage report to compare last year’s acreage. The crop was rated mostly fair-to-good condition in the DSW.
San Joaquin Valley (SJV)
Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported.
Hot and dry, typical summer conditions allowed the crop to make excellent progress. The crop was rated mostly good, with squaring progressing normally. Southern and central Valley producers completed first round irrigations. Many fields were treated for lygus and spider mites. Herbicide applications were also made. There have been reports of approximately 10,000 acres of various crops (including cotton) damaged by herbicide drift in Fresno and Merced Counties. Local experts reported that it would take a couple of weeks to know the extent of the damage.
American Pima (AP)
Spot cotton trading was slow. Supplies were moderate. Demand was light. Average local prices were steady. Contracts for 2012-crop cotton were non-existent. No domestic mill activity was reported. Foreign mills inquired for off-quality grades, but inventory of off-quality cotton is limited. The crop made good progress in the far west.
Textile mill
Domestic mill buyers booked a moderate volume of 2012-crop cotton, color 53 and better, leaf 5 and better, and staple 32 and longer for November/December delivery. Additional inquiries for immediate-to-nearby delivery were very light. No additional sales were reported. The undertone from mill buyers remained very cautious as they eyed lower ICE futures in recent weeks and finished product demand was moderate.
Inquiries through export channels were moderate. Taiwanese mill buyers inquired for a moderate volume of color 31, leaf 3, and staple 35 and longer for nearby shipment. Vietnamese mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 32 and longer for June shipment. Representatives for mills in Mexico inquired for a moderate volume of color 41, leaf 4, and staple 35 for July delivery. No sales were reported.
Regional Price Information
Southeastern Markets
No trading activity was reported.
South Central Markets
North Delta
A light volume of CCC-loan equities traded for 8.00 to 11.50 cents per pound.
South Delta
No trading activity was reported.
Southwestern Markets
East Texas
In Texas, a light volume of color 31 and better, leaf 3 and better, staple 35 and longer, mike mostly 42-45, strength 28-31, and uniformity 79-81 sold for around 71.00 cents per pound, FOB car/ truck (compression charges not paid).
Mixed lots containing color mostly 22 and better, leaf 2 and better, staple 31 and longer, mike mostly 52-53, strength 26-28, and uniformity 79-81 sold for 60.00 to 61.50 cents, same terms as above.
A light volume of CCC-loan equities traded for around 13.25 cents.
West Texas
A light volume of color mostly 21 and better, leaf 2 and better, staple 35 and longer, mike 41-45, strength 29-31, and uniformity 79-81 sold for around 75.00 cents per pound, FOB car/truck (compression charges not paid).
A light volume of mixed lots containing color mostly 22 and better, leaf 2 and better, staple mostly 33, mike 43-46, strength 26-30, and uniformity 78-79 sold for around 60.00 cents, same terms as above.
A light volume of CCC-loan equities traded for around 12.50 cents.
Western Markets
Desert Southwest
No trading activity was reported.
San Joaquin Valley
No trading activity was reported.
American Pima
No trading activity was reported.
The following information was excerpted from the World Agricultural Supply and Demand Estimates released June 12, 2012
This month’s U.S. cotton estimates for 2011/12 and 2012/13 show small revisions in trade, which leave 2012/13 ending stocks unchanged from last month. The 2012/13 production estimate of 17.0 million bales also is unchanged, pending further information about planted area and weather developments. Exports for 2011/12 are raised by 200,000 bales, reflecting recent strong sales and shipments, while exports for 2012/13 are reduced by 200,000 bales, due to lower expected foreign import demand. Domestic mill use is unchanged. The projected range for the 2012/13 season average price received by producers is 60 to 80 cents per pound, 5 cents below last month on each end.
The world 2012/13 cotton projections include lower production, consumption, and trade relative to last month, with beginning and ending stocks projected slightly higher. World production is down 1.4 million bales, as the southern hemisphere producers of Brazil, Australia, and Argentina are expected to make further cuts in area in response to the recent sharp drop in cotton prices. World consumption is reduced about 1.0 million bales, as decreases for China and Thailand are partially offset by an increase for India. With world prices falling, China’s reserve floor price will make it increasingly difficult for mills there to be competitive producers of yarn. China’s 2012/13 imports also are reduced due mainly to larger estimated beginning stocks, accounting for most of the almost 700,000-bale reduction in world trade. World ending stocks projected at a record 74.5 million bales are raised 1 percent from last month, with China expected to hold 42 percent of the total.
The most significant revisions to the world 2011/12 cotton estimates include an increase of nearly 1.8 million bales in China’s imports, reflecting the continued strong pace of deliveries, and corresponding increases in exports for India, Brazil, Australia, the United States, and Malaysia. India’s balance sheet also is revised to reflect recent indications of higher consumption; a residual has been added for each year beginning in 2006/07 to offset a deficit in stocks that would otherwise result from the available statistics for production, consumption, and trade.
The following information was excerpted from the Cotton and Wool Outlook released June 13, 2012
Global Cotton Stocks Forecast at Record High
The latest U.S. Department of Agriculture (USDA) projections for 2012/13 indicate that world cotton stocks are expected to rise for the third consecutive season, reaching a new record. Global ending stocks are currently projected at 74.5 million bales for 2012/13, nearly 11 percent or 7.2 million bales above 2011/12. World cotton stocks have grown considerably as a result of the recent record cotton prices that encouraged area increases in 2010 and 2011 and subsequently led to large crops. Meanwhile, the higher prices promoted fiber substitution at mills and the slowdown in the global economy reduced demand further, exacerbating the stocks rise. The growth in world stocks for the 2011/12 and 2012/13 seasons is largely occurring in China, where purchases for its national reserve program have been extensive and stocks are projected to expand by nearly 20 million bales over the 2-year period. However, most of this cotton will be unavailable to mills outside of China as demand rebounds.
Domestic Outlook
2012 U.S. Cotton Production Projection Unchanged
USDA’s projection for the 2012 cotton crop remains estimated at 17 million bales this month. In 2011, the U.S. cotton crop totaled nearly 15.6 million bales. The higher production is based on an increase in harvested area from last season’s drought-reduced crop despite prospective plantings that reduced cotton area about 11 percent.
The planting estimate-currently at 13.2 million acres-will be updated in the Acreage report released by USDA on June 29th. This report will include actual plantings as of early June as well as estimates for any remaining cotton to be planted. As of June 10th, 96 percent of the expected cotton area had been planted, slightly above both last season and the 5-year average. In addition to planting progress, cotton development is running ahead as well with 19 percent of the cotton area squaring, compared with 11 percent for both 2011 and the 5-year average.
Based on the current projections, U.S. harvested area is forecast at 10.5 million acres, implying an abandonment rate of 20 percent; last season’s final abandonment reached a record 36 percent. The U.S. cotton yield remains forecast at 777 pounds per harvested acre for 2012, compared with 790 pounds per harvested acre for 2011. USDA will begin “in field” production surveys in August.
Revisions to to Supply and Demand Estimates
Adjustments to June’s U.S. cotton supply and demand estimates were limited to exports and stocks. Offsetting export changes were made in 2011/12 and 2012/13 as foreign import demand was increased for 2011/12 but reduced for 2012/13. The U.S. cotton export estimate for 2011/12 was increased 200,000 bales this month to 11.6 million bales based on recent shipment data, while the 2012/13 forecast was reduced by an equal amount to 11.8 million bales. Based on the current export estimates, the U.S. share of world trade in 2012/13 is expected to rise from an 11-year low of 27 percent to 32 percent.
As a result of the export adjustments in June, U.S. ending stocks were lowered for 2011/12, but were unchanged for 2012/13. Stocks are now estimated at 3.2 million bales for 2011/12 and 4.9 million bales for 2012/13, for stocks-to-use ratios of 21 percent and 32 percent, respectively. Based on the latest supply and demand estimates, the forecast for the 2012/13 U.S. average farm price is projected to range between 60 and 80 cents per pound, with the midpoint of this range well below the latest estimate of 91 cents per pound for 2011/12.
U.S. Cotton Textile Trade Update
U.S. cotton textile trade during the first quarter of 2012 declined from that of a year earlier as consumer demand for apparel products has been affected by the sluggish growth in the economy. During January-March 2012, cotton product imports approached only 1.9 billion (raw-fiber equivalent) pounds, 10 percent below the amount imported in the corresponding period of 2011. Similarly, cotton textile and apparel exports for the first 3 months of 2012 were below a year earlier at 413 million pounds. As a result, the cotton product trade deficit for first-quarter 2012 was 1.4 billion pounds, compared with 1.6 billion for the comparable period in 2011. Cotton continues to account for the largest share of the total fiber product deficit, contributing more than 50 percent during first-quarter 2012.
Although the volume of U.S. cotton product imports was lower from most sources, the five leading suppliers’ combined share rose slightly during first-quarter 2012 at the expense of other countries. Among the top five countries, however, only India and Bangladesh experienced share growth from the most recently completed calendar year. During the first 3 months of 2012, India’s share approached 10 percent, compared with 8 percent for both 2010 and 2011 calendar years, while Bangladesh’s share rose less than 2 percentage points to 7.6 percent. Meanwhile, the share for China—the single largest source for U.S. cotton products- reached 28.5 percent during the first 3 months of 2012. While above the corresponding period of 2011, the share is considerably lower than both 2010 and 2011.
U.S. cotton product exports remain more concentrated than imports. During January-March 2012, the top five countries accounted for 85 percent of the total, compared with 84 percent a year earlier. Although the share for the leading destinations was similar to a year ago, individual country shares varied. For Honduras- the top destination for U.S. cotton products-the share declined from 40 percent a year ago to 36 percent. In contrast, the shares for Mexico, El Salvador, and Canada each increased during first-quarter 2012, combining to capture the share lost by Honduras.
International Outlook
World 2012/13 Cotton Crop Forecast Revised Downward
Global 2012/13 production is forecast to decline 6 percent from the preceding year to 115.3 million bales. The revised forecast reflects a 1.4-million-bale reduction from the previous month due to expectations that Australia, Argentina, and Brazil will reduce area (and thus production) in response to the continuing decline in world cotton prices. Australia and Brazil are forecast to produce 4.25 million bales and 7.0 million bales in 2012/13, respectively, a decline of 10 percent and 23 percent from the previous year. Area harvested in 2012/13 is expected to decline 18 percent to 475,000 hectares in Australia, while Brazil’s area is forecast to contract 23 percent to 1.1 million hectares.
China and India are forecast to produce 30.5 million bales and 25.0 million bales, respectively, down 9 percent and 6 percent from the previous year. Pakistan’s 2012/13 crop is forecast to decline 6 percent from a year earlier to 10 million bales. The United States is the only major producer where the 2012/13 crop (17 million bales) is expected to increase (9 percent) from the preceding year, the result of last season’s devastating drought. Global harvested area is forecast at 33.7 million hectares, down 6 percent from the previous year, while yield is forecast at 746 kg/ha, similar to 2011/12.
World 2012/13 Mill Use To Rebound; Ending Stocks To Reach a Record
Although world 2012/13 cotton consumption is revised downward by a million bales (1 percent) from the previous month, the forecast of 109 million bales represents an increase of nearly 3 percent from a year earlier. China is forecast to consume 40 million bales in 2012/13, down 2 percent from the previous year. This would be the lowest mill use in 8 years, if realized. The forecast contraction in consumption by China is expected to be more than offset by increased mill use in India, where 2012/13 cotton consumption is forecast at
21.3 million bales, up 6 percent from the preceding year. In Pakistan and Turkey, 2012/13 mill use is forecast at 11.0 million bales and 5.6 million bales, respectively, up 7 percent and 6 percent from the previous year. Brazil is forecast to consume nearly 4.3 million bales, up 6 percent from the preceding year, while in the United States 2012/13 consumption is expected to rise 3 percent to 3.5 million bales. Thailand is expected to consume nearly 1.6 million bales in 2012/13—a 22 -percent increase from the preceding year, as mills there recover from the severe flood problems experienced in 2011/12.
Global 2012/13 ending stocks are forecast at a record 74.5 million bales, an increase of 11 percent from the previous year, as expected production outpaces forecast consumption. Not surprisingly, the resulting increase in the stocks-to-use ratio to 68 percent is expected to weaken global cotton prices. China’s 2012/13 ending stocks are forecast at 31.3 million bales, a 15-percent increase from the preceding year, leaving the world’s top cotton consumer to account for 42 percent of global ending stocks. India and Brazil are forecast to account for 12 percent and 10 percent of global 2012/13 ending stocks, respectively. The United States, Pakistan, and Australia are expected to account for 7 percent, 5 percent, and 4 percent, respectively.
Global Cotton Trade To Contract in 2012/13
China’s 2012/13 imports are forecast at 13.5 million bales, down 42 percent from a year ago due to a record level of 2012/13 beginning stocks, estimated at 27.3 million bales. The decline from previous year’s imports is made more pronounced by the June WASDE’s revision of China’s 2011/12 imports to 23.3 million bales, an increase of nearly 1.8 million bales from the previous month’s estimate, as shipments continue to arrive from Australia, Brazil, India, and the United States.
Bangladesh and Indonesia are forecast to import 3.6 million bales and 2.1 million bales in 2012/13, an increase of 14 percent and 6 percent, respectively, from the previous year. Pakistan and Turkey are forecast to import 2.2 million bales and 3.0 million bales, respectively, up 83 percent and 30 percent, from the previous marketing year.
Global 2012/13 exports are forecast at 37 million bales, down 15 percent from the previous year. The 2percent export increases forecast in 2012/13 in Australia (4.3 million bales) and the United States (11.8 million bales) are far less than the declines projected in Brazil and India. Brazil is forecast to export 4.1 million bales in 2012/13, a 16-percent contraction from the preceding marketing year due to a smaller expected crop from which some of the exports will be derived. India, usually the world’s second largest exporter, is expected to export only 4 million bales in 2012/13, down 60 percent from the previous year. If realized, India will lag behind Australia as the third largest exporter globally. Uzbekistan’s 2012/13 cotton exports are forecast at 2.6 million bales, up 4 percent from the preceding year.
Source: USDA
