USDA – Weekly Cotton Market Review: Sept 7, 2012

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Average spot cotton quotations averaged 19 points higher from 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 71.59 cents per pound for the week ended Thursday, September 6, 2012. The weekly average was up from 71.40 cents last week, but down from 106.22 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 72.59 cents on Friday, August 31 to a low of 70.96 cents on Wednesday, September 5.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 6 totaled 16,435 bales. This compares to 7,827 bales last week and 6,918 bales reported a year ago. Total spot transactions for the season were 54,342 bales, compared to 17,450 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 75.59 cents, compared to 76.15 cents last week.

Prices are in effect from September 7-13, 2012

Adjustment World Price (AWP) 65.82 ELS Competitiveness Payment 0.00
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 1.53
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 1.73
Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #4

FOR UPLAND COTTON

September 6, 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 September 13, 2012, allowing importation of 13,516,971 kilograms (62,083 bales) of upland cotton.

Quota number 4 will be established as of September 13, 2012, and will apply to upland cotton purchased not later than December 11, 2012, and entered into the U.S. not later than March 11, 2013. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period April 2012 through June 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 light.

Demand was moderate. Producer offerings were light. Average local spot prices were firm. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Mostly overcast conditions prevailed during the period with daytime high temperatures in the high 80s to low 90s. Widespread scattered thundershowers brought one to two inches of weekly accumulated moisture to areas from Alabama to Virginia. Local experts reported isolated damage in areas of coastal Alabama that were affected by strong winds and flooding from Tropical Storm Isaac. Crops were blown around and tangled; boll rot and hard-locked bolls were reported, due to excessive moisture in south Georgia and the Florida Panhandle. Some producers sprayed later planted fields for a variety of pests as warranted, and defoliation was getting underway on dryland acreage. Harvesting was underway in some of the earliest planted fields in Alabama and Georgia, and the first modules of the season had arrived at gin yards. Insect pressure was declining in the Carolinas and Virginia, but producers continued to scout late-maturing fields and apply insecticides as needed. Fungicide applications continued throughout the region as weather permitted. Despite the inclement weather pattern, the undertone from producers remained positive as yield potential continued to look good. However, areas throughout the entire region report that dry and warm weather is needed in the weeks ahead to increase heat units and help advance the crop to maturity.

South Central Markets

North Delta

Spot cotton trading was slow. Producer offerings and supplies were light. Demand was light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Hot temperatures and windy conditions dominated the weather pattern during the week. Daytime highs were mostly in the upper 90s with heat indexes in the mid-to upper 100s. Overnight lows were mostly in the low 70s. Most producers reported negligible damage to the crop from the wind and rain (up to six inches) brought by Tropical Storm Isaac. Defoliation and harvesting were underway. Limited ginning was reported in Arkansas. The National Agricultural Statistics Service estimated that boll opening had expanded to 65 percent in Arkansas, 43 in Missouri, and 66 percent in Tennessee. Insect pressure was very light and easily controlled in later planted, irrigated fields.

South Delta

Spot cotton trading was inactive. Supplies were light.

Producer offerings were light. Demand was light.

Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Hot, windy conditions prevailed during the latter part of the week, which allowed fields to dry out following heavy rains from Tropical Storm Isaac. Producers in Louisiana and Mississippi reported negligible damage to the crop from the wind and rain brought by the storm. Very few fields had actually been defoliated and the leaf canopy provided protection to the open bolls. Fields that received the heaviest amount of rain suffered some damage. Producers were monitoring fields for hard-lock and boll rot. According to the National Agricultural Statistics Service, boll opening was estimated at 67 percent in Louisiana and 70 percent in Mississippi. Defoliation and harvesting were underway throughout the region. Limited ginning was reported in Louisiana. Insect pressure was negligible.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was heavy. Supplies were moderate.

Demand was moderate. Average local spot prices were steady. Producer offerings were moderate.

No forward contracting was reported. Trading of CCC-loan equities was active. Foreign mill inquiries were light.

In south Texas, harvesting was mostly completed.

The final modules were transported to the gins for processing. Yields in the Winter Garden and Upper Coastal areas were dependent on the amount of rainfall received during the growing season. Producers reported that some fields that received timely moisture yielded three and one-half to four bales per acre. A few fields with less rainfall averaged around one and  one-half bales per acre. In the Blackland Prairies, harvesting neared completion and was expected to conclude next week. The Brazos River Bottom, which is picker harvested, was about 50 percent completed. Industry experts reported good yields with one and one-half bales on dryland fields, and two and one-third bales per acre on irrigated fields. In Kansas, local reports indicated that most of the dryland had begun to open, and had deteriorated under droughty conditions. The irrigated fields had advanced and producers continued to irrigate. A cool front moved through with isolated rainfall, but above normal temperatures quickly returned. In Oklahoma, the crop remained rated mostly poor to very poor according to the National Agricultural Statistics Service’s Oklahoma Crop Weather report, released on September 4. Droughty conditions continued to plague the cotton crop.

West Texas

Spot cotton trading was light. Supplies were light. Demand was light. Average local spot prices were steady.

Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was moderate.

Foreign mill inquiries were light.

Daytime temperature highs were in the upper 90s, and the nighttime lows were in the 70s. Heavy rainfall brought as much as three inches of precipitation to some fields. Bolls continued to open across most fields. Preharvest chemical applications gained momentum in several counties. Harvesting had begun in isolated areas.

Ginning activity is expected to begin next week. Some irrigation continued, as producers considered variables that indicated the optimum time to finalize watering efforts. The region geared-up for an early harvesting season.

Seasonal maintenance was performed on harvesting equipment. In the Concho Valley, industry reports indicated that most wells had run dry, and that the crop had begun to deteriorate under hot, dry conditions.

 Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. No forward contracting was reported. Foreign mill inquiries were light.

Harvesting gained momentum in Yuma, Arizona. Most gins in western Arizona were operating. The first new-crop samples were delivered to the Visalia Classing Office in the reporting period. Afternoon thunderstorms brought moisture to central Arizona cooling temperatures into the high 90s. Cotton condition was rated fair to excellent in New Mexico and El Paso, Texas. The crop made good progress.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were steady. Producer interest in 2012-crop contracting declined as December futures trended lower. No domestic mill activity was reported. Foreign mill inquiries were light.

Cloudy, humid conditions prevailed in the period. Remnants from Tropical Storm John produced scattered showers for the Valley. The crop made good progress in the SJV. Most producers were preparing fields for defoliation.

Initial defoliation began in southern Kern County. Some treatments were made to combat aphids and whitefly.

American Pima (AP)

Spot cotton trading was active. Supplies were moderate. Demand was steady. Average local prices were higher.

No forward contracting or domestic mill activity was reported. Foreign mill inquiries were steady and for prompt shipment. Sales were made to mills in China, Peru, and Thailand.

Cloudy, humid conditions kept temperatures around the high 90s for most of the region. Monsoon activity produced afternoon thunderstorms in the Desert Southwest. Isolated showers were reported in the San Joaquin Valley (SJV) late in the period. Harvesting continued in Yuma. Ginning was scheduled to begin once Upland ginning was completed. Initial defoliation began in the southern SJV.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2012-crop cotton, color 41, leaf 4, and staple 34 and longer for November 2012 through first quarter 2013 delivery. No sales were reported. Most mills operated on a five-to-seven day schedule.

Inquiries through export channels were moderate. Demand was best throughout the Far East for any discounted or low-grade qualities.

Regional Price Information

Southeastern Markets

•        Mixed lots containing color mostly 41 and 51, leaf 3-5, staple 35 and longer, mike 43-49, strength 30-32, and uniformity 80-82 sold for around 73.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

South Central Markets

North Delta

•        A light volume of color 41 and better, leaf 5 and better, staple 36 and longer, mike 34-47, strength 28-36, and uniformity 77-83 sold for 77.00 cents per pound, FOB car/truck, (Rule 5, compression charges paid.

South Delta

•        A light volume of color 51 and better, leaf 4 and better, staple 36 and longer, mike 34-47, strength 28-36, and uniformity 77-83 sold for 77.00 cents per pound, FOB car/truck, (Rule 5, compression charges paid).

Southwestern Markets

East Texas

•        In Texas, a moderate volume of new-crop cotton, color mostly 31 and 41, leaf 3, staple 35 and long¬er, mike 43-52, strength 27-33, and uniformity 80-83 sold for around 74.50 cents per pound, FOB warehouse (compression charges not paid).

•        A moderate volume of color mostly 21 and 31, leaf 3, staple 36, mike 46-48, strength 28-30, and uniformity 81-82 sold for around 73.00 cents, same terms as above.

•        Mixed lots containing color mostly 41 and better, leaf 4 and better, staple 33 and longer, mike 42¬47, strength 26-30, and uniformity 78-82 sold for 67.00 to 68.00 cents, same terms as above.

•        A moderate volume of color 21 and better, leaf 2 and better, staple 32, mike averaging 52.0, strength averaging 29.1, and uniformity averaging 80.1 sold for around 64.50 cents, same terms as above.

•        A heavy volume of CCC-loan equities traded for seven to fifteen cents.

Southwestern Markets cont.

West Texas

•        A light volume of 2011-crop cotton containing color mostly 11, leaf 2, staple 35, mike 32-35, strength 27-31, and uniformity 76-81 sold for around 67.00 cents per pound, FOB car/truck (compression charges not paid).

•        A light volume of color mostly 31, leaf 4, staple 37, mike averaging 39.3, strength averaging 30.5, and uniformity averaging 80.4, and 100 percent combination of seed coat fragments and bark sold for around 65.00 cents, same terms as above.

•        A light volume of CCC-loan equities traded for seven to twelve cents.

Western Markets

Desert Southwest

•        No trading activity was reported.

San Joaquin Valley

•        A moderate volume of 2012-crop roller-ginned Acala was contracted for around 1500 points on ICE December futures.

American Pima

•        A heavy volume of 2011-crop of cotton color 2, leaf 2, and staple 46 was sold for 120.00 cents per pound, UD free, FOB warehouse.

•        A light volume of mostly color 2 and better, leaf 2 and better, and staple 46 and longer was sold for 115.00 cents, same terms as above.

Prices received by farmers for upland cotton averaged 70.40 cents per pound mid-August 2012, according to the National Agricultural Statistics Service, USDA. This compares with 76.70 cents for July 2012 and 94.00 cents in August 2011.

Upland cotton growers in the United States had booked about 13 percent of their expected acreage by the end of August this season. This was below the 38 percent booked through the same period last year. Contracting has been most active in the south central states where about 31 percent of the crop was under contract by the end of August and compares with 66 percent a year earlier. Southeastern states’ growers had forward contract­ed about 17 percent, compared with 32 percent in 2011. Southwestern states’ growers had contracted about 5 percent of the crop, compared to 30 percent last year. Growers in the western states had 5 percent of the crop under contract and compares with 3 percent at the end of August last year. These estimates were based on the National Agricultural Statistics Board’s August Acreage for Harvest report and informal surveys made by the USDA, Agricultural Marketing Service, Cotton Program.

Forward contracting of Upland cotton by growers, as of September 1, crops of 2003-2012

States

Acreage for Harvest 2/
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pct. Pct. Pct. Pct. Pct. Pct. Pct. Pct. Pct. Pct. 1,000 acres
Alabama 10 16 17 15 1 10 3 13 42 28 387
Florida 2 14 10 25 25 8 112
Georgia 15 16 10 2 * 12 12 27 23 19 1,245
North Carolina 5 10 8 4 2 11 3 19 47 15 545
Virginia * 11 1 1 13 2 28 33 11 84
South Carolina 7 13 16 5 * 11 18 27 7 278
Southeastern States 10 14 11 5 1 12 7 23 32 17 2,651
Arkansas 7 * 12 12 3 5 1 65 33 570
Louisiana * 5 19 20 34 67 2 47 55 49 220
Mississippi 2 1 7 14 14 6 13 1 55 17 570
Missouri 18 22 3 19 * * 86 32 355
Tennessee 8 13 1 * * 74 38 375
South Central States 6 1 13 11 9 16 2 6 66 31 2,090
Oklahoma 3/ 242
Texas 2 5 5 3 2 8 2 21 31 5 5,200
Southwestern States 2 4 4 3 2 8 2 20 30 5 5,442
Arizona 1 1 4 5 1 5 198
California * * 24 6 7 149
New Mexico 47
Western States * * 2 3 9 3 5 394
United States 5 5 8 6 3 10 3 18 38 13 10,577

1/ Contracting estimates do not include cotton consigned to marketing organizations but do include cotton contracted with marketing organizations.

2/ August 2012, Agricultural Statistics Board, NASS, USDA. 3/ Includes Kansas, 2003-2012 crops. * Less than 0.5 percent.

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Source: USDA

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