USDA – Weekly Cotton Market Review: Oct. 12, 2012

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Average spot cotton quotations were about one-half of a cent 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 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 66.35 cents per pound for the week ended Thursday, October 4, 2012. The weekly average was down from 66.91 cents last week, and from 96.81 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 65.43 cents on Friday, September 28 to a high of 66.92 cents on Thursday, October 4. Spot transactions reported in the Daily Spot Cotton Quo­tations for the week ended October 4 totaled 8,825 bales. This compares to 3,353 bales last week and 10,960 bales reported a year ago. Total spot transactions for the season were 98,172 bales, compared to 50,716 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 72.09 cents, compared to 71.53 cents last week.

Prices are in effect from October 5-11, 2012  
Adjustment World Price (AWP) 60.35 ELS Competitiveness Payment 0.00
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.77
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.97
Source: Farm Service Agency, FSA, USDA      

USDA ANNOUNCES SPECIAL IMPORT QUOTA #8 FOR UPLAND COTTON October 4, 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 October 11, 2012, allowing importation of 14,285,630 kilograms (65,613 bales) of upland cotton.

Quota number 8 will be established as of October 11, 2012, and will apply to upland cotton purchased not later than January 8, 2013, and entered into the U.S. not later than April 8, 2013. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period May 2012 through July 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 slow. Supplies were light. Demand was moderate. Producer offerings were light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Some producers decided to forward contract and fix prices on a moder­ate volume of 2012-crop cotton during the period.

Scattered shower activity hampered defoliation and delayed harvesting activity in areas throughout the region. Portions of south Alabama and south Georgia received two to four inches of precipitation early in the period. Cotton growing areas in the Caro­linas and Virginia received around one-half of an inch to one inch of accumulated rainfall throughout the week. The application of defoliants should expand rapidly as producers welcome a period of warm and sunny weather forecast in the near term. Local ex­perts reported that crop conditions had declined slight­ly in some areas due to the persistent wet weather. Boll rot and hard-locked bolls continued to be report­ed in some fields in Alabama and Georgia. Ginning activity was expanding in Alabama and Georgia and slowly getting underway in the Carolinas

South Central Markets

North Delta

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

A cold front brought up to one and one-half inch­es of rain to most of the region early in the week. Clear, sunny conditions returned and by the end of the week some fields had dried out enough to allow har­vesting and defoliation operations to resume. No yield losses were reported, but grade reductions were expected due to the wet conditions. The National Ag­ricultural Statistics Service estimated that the harvest had advanced to 21 percent in Arkansas, 23 in Mis­souri, and 19 percent in Tennessee. Most of the gins in the territory had begun annual pressing operations.

South Delta

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

A cold front brought heavy rain showers to the area early in the week. Precipitation measured about six inches in most of the region and up to eight inches in some areas. Harvesting and defoliation activities were at a standstill. Gusty winds of up to 20 miles per hour contributed to yield losses of around 10 percent in some fields, based on the amount of cotton on the ground, according to local experts. In addition to the yield losses, producers anticipated grade reductions due to the prolonged wet conditions. Producers were hoping for a period of clear, dry weather to allow soft soils to firm enough to support equipment and to dry the cotton in open bolls. According to the National Agricultural Statistics Service, harvesting had reached 60 percent in Louisiana and 25 percent in Mississippi. Aerial defoliation continued on a few later planted fields.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was slow. Supplies were moder­ate. 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. Foreign mill inquiries were moderate. Interest was best from China, Indonesia, and Turkey.

In Texas, heavy rains delayed fieldwork and gin­ning throughout most of the cotton growing areas of the state. The rains interfered with the final harvest­ing efforts in the Winter Garden area. Ginning activi­ty was delayed until saturated yards could support equipment. Warehouses and compresses prepared to raise their handling estimates to keep pace with the high yields coming off both dryland and irrigated acreage. The gins in the Blackland Prairies had mod­ules on the gins yards, but had also experienced rain delays. Yields reported were two to three dryland bales per acre, and two to four irrigated bales per acre in the Brazos Bottoms. In southeastern Kansas, har­vesting and ginning were underway, but other parts were two to three weeks away from harvesting. Pro­ducers were actively defoliating fields. In Oklahoma, harvesting and ginning expanded, but heavy rainfall delayed all activities.

 West Texas

Spot cotton trading was slow. 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 active. Foreign mill inquiries were moderate. Interest was best from China, Indonesia, and Turkey.

Widespread rainfall was received in most areas measuring one-half to ten inches of accumulated rainfall ear­ly in the week. During the heavy downpours and high winds, one gin sustained roof damage, and small hail stones coupled with windy conditions caused cotton locks to fall to the ground. Clear, windy conditions returned and the fields began to firm late in the week. A cold front brought high winds out of the north that caused dirt to blow and delayed field activities late in the week. Harvesting activities sluggishly advanced as few producers were able to enter fields until saturated soils dried. Organic dryland cotton fields were evaluated by crop adjust­ers; some were expected to be failed and abandoned from a lack of yield production.

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 inquiries were light. Harvesting neared completion in Yuma, Arizona. Ginning continued. Industry representatives were pleased with cotton quality and yields. Defoliation and harvesting activities continued in central and parts of eastern Arizona. No ginning was reported. Defoliation expanded in New Mexico.

San Joaquin Valley (SJV)

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. Triple-digit temperatures the first week of October shattered records in the SJV. The 100-degree days helped to advance defoliation activities. Harvesting expanded in the Valley. Some modules were stored on gin yards. Ginning was set to begin next week as the high-demand summer rates will no longer be in effect.

American Pima (AP)

Spot cotton trading was inactive. Supplies were light. Demand was steady. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were steady. Tempera­tures were in the high 90s to low 100s in the region. Some producers took advantage of the hot days and began defoliation in the San Joaquin Valley. Open bolls were prevalent as cotton quickly approached cut-out stage. Some harvesting began early in the reporting period. Ginning is expected to begin on October 5.

Textile Mill Report

Domestic mill buyers inquired for a moderate volume of 2012-crop cotton, color 41, leaf 4, and staple 34 and longer for fourth quarter 2012 and first quarter 2013 delivery. No sales were reported. Some mills planned to continue receiving 2011-crop cotton before switching to 2012-crop cotton due to the lateness of the new crop. Most mills operated on a five to seven day schedule.

Inquiries through export channels were moderate. Representatives for mills in Turkey purchased a moder­ate volume of USDA Green Card Class, color 41, leaf 4, and staple 33 and longer for nearby shipment. Demand remained good throughout the Far East for any discounted or low-grade varieties.

Regional Price Information

SoutheastemMarket

  • A moderate volume of 2011-crop cotton, color 41 and better, leaf 3 and better, staple 35 and longer, mike 43-49, strength 27-30, and uniformity 80-82 sold for around 74.50 cents per pound, FOB car/ truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

South Central Markets

North Delta

  • No trading activity was reported.

South Delta

  • A light volume of 2011-crop cotton, color 41 and better, leaf 3 and better, staple 34 and longer, mike 35-49, strength 27-30, and uniformity 80-82 sold for around 72.50 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 better, leaf 3 and better, staple 35 and longer, mike 47-50, strength 27-31, and uniformity 82-83 sold for 68.00 to 69.75 cents per pound, FOB warehouse (compression charges not paid).
  • A moderate volume of color mostly 21 and better, leaf 3 and 4, staple 35, mike 31-36, strength 29-31, and uniformity 78-80 sold for 61.50 to 63.00 cents, same terms as above.
  • A light volume of color mostly 21, leaf 4, staple 32 and longer, mike 27-46, strength 24-28, and uniformi­ty 75-80 sold for 55.00 to 57.50 cents, same terms as above.
  • A light volume of color 63, leaf 5, staple 36, mike 42-49, strength 26-28, and uniformity 79-81 sold for around 50.00 cents, same terms as above.

West Texas

  • A light volume of new-crop cotton containing color mostly 11 and 12, leaf 1 and 2, staple 34 and longer, mike 37-42, strength 30-33, and uniformity 79-81 sold for around 65.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 21 and 12, leaf mostly 3, staple 34, strength 29-31, and uniformity 78-80 sold for 61.00 to 63.25 cents, same terms as above.
  • A light volume of 2011-crop cotton containing color mostly 11, leaf 2 and better, staple 35 and longer, mike 44-46, strength 30-33, and uniformity 80-81 sold for around 68.50 cents, same terms as above.
  • A light volume of color 21, leaf 2-3, staple 36 and 37, strength 30-33, and uniformity 79-82 sold for around 65.50 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for three to four 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.

Number of Bales in Certificated Stocks

Delivery Points Stocks as of 10-4-2012 Awaiting Review Non-Rain Grown Cotton
Galveston, TX 1,603 0 90
Greenville, SC 976 0 0
Houston, TX 239 0 0
Memphis, TN 6,777 450 0
New Orleans, LA 0 0 0
Total 9,595 450 90

Source: USDA, AMS and ICE U. S. Futures

Average Price for 41-4-34

Fri Mon Tue Wed Thu
Market 28-Sep 1-Oct 2-Oct 3-Oct 4-Oct

SE 67.15 67.70 68.35 68.66 68.84
ND 66.40 66.95 67.60 67.91 67.84
SD 66.40 66.95 67.60 67.91 67.84
ETX 63.75 64.25 64.75 65.00 65.25
WTX 63.25 63.75 64.25 64.50 64.75
DSW 65.15 65.70 66.35 66.66 66.59
SJV 65.90 66.45 67.10 67.41 67.34
7-Mkt Avg. 65.43 65.96 66.57 66.86 66.92

Source: USDA, AMS, Cotton and Tobacco Programs

Average Price for 31-3-35

Fri Mon Tue Wed Thu
Market 28-Sep 1-Oct 2-Oct 3-Oct 4-Oct

SE 70.15 70.70 71.35 71.66 71.84
ND 67.90 68.45 69.10 69.41 69.34
SD 67.90 68.45 69.10 69.41 69.34
ETX 68.50 69.00 69.50 69.75 70.00
WTX 69.00 69.50 70.00 70.25 70.50
DSW 71.65 72.20 72.85 73.16 73.09
SJV 76.55 77.10 77.75 78.06 77.99
7-MktAvg. 70.24 70.77 71.38 71.67 71.73

Source: USDA, AMS, Cotton and Tobacco Programs

Spot Transactions
Market Fri Mon Tue Wed Thu

28-Sep 1-Oct 2-Oct 3-Oct 4-Oct
Upland

SE 0 0 0 0 530
ND 0 0 0 0 0
SD 578 0 0 0 0
ETX 93 0 1,138 2,795 1,545
WTX 864 360 409 50 328
DSW 0 0 0 0 0
SJV 135 0 0 0 0
Total 1,670 360 1,547 2,845 2,403

Pima 278 0 0 0 0

Source: USDA, AMS, Cotton and Tobacco Programs

 Forward contracting of 2012-crop cotton. Upland cotton growers in the United States had booked about 14 percent of their expected acreage by the end of September this season. This was below the 37 percent booked through the same period last year. Contracting has been most active in the south central states where about 33 percent of the crop was under contract by the end of September and compares with 63 percent a year earlier. Southeastern states’ growers had forward contracted about 17 percent, compared with 30 per­cent in 2011. Southwestern states’ growers had contracted about 5 percent of the crop, compared to 31 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 September last year. These estimates were based on the National Agricultural Statistics Board’s September 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 October 1, crops of 2003-2012

States Cotton crops 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 12 33 18 15 2 10 3 14 41 30 377
Florida 2 14 10 10 18 8 105
Georgia 14 17 10 2 * 12 13 28 20 18 1,285
North Carolina 7 13 13 4 4 11 3 28 44 14 580
Virginia 5 10 9 1 1 13 4 30 33 11 85
South Carolina 8 22 17 5 6 11 2 20 24 7 296
Southeastern States 11 19 12 5 2 12 9 17 30 17 2,728
Arkansas 6 * 11 12 3 5 17 63 33 580
Louisiana 18 8 22 20 39 67 2 47 56 49 220
Mississippi 3 2 7 14 14 6 13 1 54 20 460
Missouri 18 22 3 19 * 9 78 35 330
Tennessee 9 13 1 * 10 69 38 375
South Central States 9 2 13 11 9 16 2 14 63 33 1,965
Oklahoma 3/

227
Texas 2 5 6 3 3 8 2 22 33 5 4,900
Southwestern States 2 5 6 3 3 8 2 21 31 5 5,127
Arizona 1 1 4 5 16 1 5 198
California * * 14 7 8 141
New Mexico 47
Western States * * * 2 3 3 5 386
United States 3 7 9 6 4 10 4 4 37 14 10,206

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

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

World market prices for upland cotton, in cents per pound, in effect from 12:01 a.m., EDT, FViday throught midnight, EDT, Thursday

Description 2012/2013
Aug 31 Septem ber September September Sep 28 October
Sep 6 7-13 14-20 21-27 Oct 4 5-11
Adjusted world price 1/ 65.73 65.82 64.53 64.15 61.56 60.35
Coarse count adjustment 0.00 0.00 0.00 0.00 0.00 0.00
Loan Deficiency Payment (LDP) 0.00 0.00 0.00 0.00 0.00 0.00

1/ Color 41, leaf 4, staple 34, mike 35-36 & 43-49, strength readings of 25.5-29.4 grams per tex, length uniformity of 79.5-82.4 percent. Source: Farm Service Agency, USDA.

ICE futures contract settlement, designated spot market average for color 41, leaf 4, staple 34, and Far Eastern ’A’ Index

Date Color 41, Leaf 4, Staple 34 7-Market

Average

Far Eastern A Index 1/
Futures Settlement
Oct-12 Dec-12 Mar-13 May-13 Jul-13 Oct-13
Sep 28 69.15 70.65 71.68 72.76 73.91 75.63 65.43 81.30
Oct 1 69.71 71.20 72.20 73.14 74.08 75.78 65.96 80.45
Oct 2 70.30 71.85 72.69 73.42 74.12 75.94 66.57 80.85
Oct 3 70.54 72.16 72.97 73.71 74.45 75.41 66.86 81.15
Oct 4 70.40 72.09 73.09 73.91 74.68 75.65 66.92 81.35

1/ Far Eastern A Index furnished by Cotton Outlook of Liverpool.

Color 41, Leaf 4, Staple 34

Date Cents per Pound 7-Market

Average

Southeast North Delta South Delta East TX/OK West Texas Desert SW SJ Valley
Sep 28 67.15 66.40 66.40 63.75 63.25 65.15 65.90 65.43
Oct 1 67.70 66.95 66.95 64.25 63.75 65.70 66.45 65.96
Oct 2 68.35 67.60 67.60 64.75 64.25 66.35 67.10 66.57
Oct 3 68.66 67.91 67.91 65.00 64.50 66.66 67.41 66.86
Oct 4 68.84 67.84 67.84 65.25 64.75 66.59 67.34 66.92

Source: USDA, AMS, Cotton and T obacco Programs, Cotton Market News.

Description Marketing Years
2011 -2012 2012-2013

Through September 29, 2011 Through Se rtem ber 27, 2012

Week Mkt. Year Week Mkt. Year
Outstanding sales 5,776,400 4,021,000
Exports 69,800 845,400 184,600 1,303,600
Total export commitments 6,621,800 5,324,600
New sales 229,500 264,600
Buy-backs and cancellations 140,900 26,200
Net sales 88,600 238,400
Sales next marketing year 2,200 181,700 2,600 192,400

Net Upland sales of 238,400 running bales for the 2012/2013 marketing year were primarily for China (114,800 RB), Turkey (38,400 RB), Vietnam (36,100 RB), Mexico (20,900 RB), Taiwan (9,600 RB), and Guatemala (7,600 RB). Decreases were reported for India (700 RB). Net sales of 2,600 RB for delivery in 2013/2014 were reported for South Korea. Exports of 184,600 RB were primarily to China (105,300 RB), Mexico (18,800 RB), Taiwan (12,100 RB), and Turkey (11,100 RB). Net American Pima sales of 7,000 RB resulted as increases for Turkey (4,900 RB), China (3,100 RB), and Thailand (400 RB), were partially offset by decreases for India (1,500 RB). Exports of18,100 RB were primarily to China (5,000 RB), Pakistan (3,300 RB), India (3,200 RB), and Indonesia (2,200 RB).

Optional Origin Sales: For MY 2012/2013, decreases in optional origin sales were reported for Vietnam (12,100 RB). Outstanding optional origin sales total 400,500 RB, and are for China (343,500 RB), South Korea (22,800 RB), Turkey (17,600 RB), Thailand (9,300 RB), and Vietnam (7,300 RB).

Exports for Own Account: Exports for own account to China (3,800 RB) were applied to new or outstanding sales. The current exports for own account balance is 76,100 RB, all China.

Source: Export Sales Reporting Division, Foreign Agricultural Service, USDA. NOTE: Data may not add due to rounding.

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