USDA – Weekly Cotton Market Review: December 21, 2012

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Due to the holiday, the next report will be released on Friday, January 4, 2013

Spot cotton quotations averaged 129 points 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 71.28 cents per pound for the week ended Thursday, December 20, 2012.

The weekly average was up from 69.99 cents last week, but down from 83.35 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 70.67 cents on Friday, December 14 to a high of 71.50 cents on Tuesday, December 18. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 20 totaled 111,850 bales. This compares to 142,912 bales last week and 23,387 bales reported a year ago. Total spot transactions for the season were 939,952 bales, compared to 354,785 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 75.83 cents, compared to 74.56 cents last week.

Prices are in effect from December 21-27, 2012 
Adjustment World Price (AWP) 63.34 ELS Competitiveness Payment 0.00 
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.74 
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.94 
Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #19 FOR UPLAND COTTON December 20, 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 December 27, 2012, allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 19 will be established as of December 27, 2012, and will apply to upland cotton purchased not later than March 26, 2013, and entered into the U.S. not later than June 24, 2013. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period August 2012 through October 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 active. Supplies were heavy.

Demand was good. Producer offerings were heavy.

Average local spot prices were higher. Trading of CCC-loan equities was inactive.

Unseasonably warm conditions prevailed during the period with daytime highs in the low-to-mid 70s in areas of Alabama and Georgia. Scattered rainfall interrupted fieldwork over the weekend and localized rainfall accumulations totaled one to two inches.

Slightly cooler temperatures were observed in the Carolinas and Virginia and lesser precipitation amounts of around one-inch were recorded. The rainfall helped to recharge subsoil moisture, but droughty conditions expanded in many areas despite wet weather.

Harvesting continued in some areas throughout the region as weather permitted, and the last remaining fields were picked. Many gins increased revised estimates as exceptional yields continued to be reported.

Some gins in North Carolina and Virginia completed pressing operations for the season. However, many gins continued to operate at capacity in order to process backlogs of modules on gin yards. Some gins had scheduled down time for the entire Christmas holiday weekend; a few gins planned to continue pressing operations through Christmas.

South Central Markets

North 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.

A warm, moist air flow early in the week brought light rain showers to the region, but beneficial precipitation measured less than one inch. Seasonably cool daytime temperatures were in the mid-60s, while overnight lows fluctuated between the mid-30s and the mid-40s. Below freezing temperatures and more rain was forecasted for the Christmas holiday. According to the U.S. Drought Monitor, soil moisture conditions improved slightly throughout the region.

No outdoor activities were reported. Most cotton experts expect the amount of cotton acreage to decrease next year. Current estimates range from 20 percent to 30 percent less compared to this season.

South Delta

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 inactive. No forward contracting was reported.

The seasonal pattern of alternating warm and cold fronts continued during the week. High temperatures ranged from the mid-60s to the upper 70s, while overnight lows fluctuated from the upper 20s to the upper 50s. A warm front early in the week brought about two inches of welcome moisture to most of the region.

According to the U.S. Drought Monitor, soil moisture conditions improved slightly in the cotton-producing areas of Louisiana, while droughty conditions remained unchanged in the rest of the region. No outside activities were reported. Most cotton experts expect the amount of cotton acreage to decrease next year. Current estimates range from 20 percent to 30 percent less compared to this season.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was active. Supplies and demand were moderate. Producer offerings were light. Average local spot prices were higher. No forward contracting was reported. Trading of CCC-loan equities was slow. Foreign mill inquiries were good.

In central Texas, one gin continued submitting samples to the Abilene Classing Office. In southern Texas, about five gins continued operations and two gins finished for the season. One gin experienced mechanical delays for most of the week. Harvesting was completed months ago, but the high-yielding crop prolonged the ginning season. In Kansas, harvesting was completed and the remaining gins continued pressing operations. In Oklahoma, most fields were harvested and about five gins continued pressing operations.

Some fields produced less than 60 pounds of lint per acre. Producers were concerned that the soil was dry five feet below the surface, and that the wheat crop critically needed precipitation to progress. Most areas urgently need precipitation to nurture next year’s crops.

West Texas

Spot cotton trading was active. Supplies and demand were heavy. Producer offerings were heavy. Average local spot prices were higher.

No forward contracting was reported. Trading of CCC-loan equities was slow.

Foreign mill inquiries were good.

A severe dust storm moved through the region mid-week that caused havoc and disrupted progress. Module trucks were sidelined for about six hours, due to zero visibility on the roadways. Tarps blew off from some modules.

The high winds further depleted any stored sub-soil moisture; precipitation is urgently needed. Immediately following the dust storm, frigid temperatures returned to the High Plains with lows in the teens and in the 30s for the Rolling Plains. Harvesting was virtually completed, with a few fields remaining. Some ginning operations had finalized for the season, and the Classing Offices responded by reducing shifts and work crews.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local spot prices were higher.

No forward contracting or domestic mill activity was reported.

Approximately three-quarters of an inch of rainfall were received in central Arizona early in the reporting period.

The first freeze warning was issued for Thursday, December 20. Daytime highs were in the low to mid60s, with overnight temperatures in the low-to-high 30s. Harvesting and ginning continued. Five gins were completed for the season. Temperatures were in the mid-to-high 60s under mostly sunny conditions in New Mexico and El Paso, Texas. Dry conditions continued. Rain and snow is desperately needed to replenish subsoil moisture.

Industry representatives reported a bleak outlook for 2013 cotton acreage. Ginning continued uninterrupted.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher. Producers continued to deliver previously contracted cotton. No forward contracting or domestic mill activity was reported.

Snowfall was received in elevations over 5,000 feet in the Sierra Nevada Mountain range. Traces of rain were received in the Valley early in the period. Freezing temperatures in the high 20s and low 30s were recorded late in the week. Approximately 70 percent of saw-gins were finished for the season. Roller-ginning continued uninterrupted.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were steady. Interest was best from India and Pakistan. Some mills showed an interest in 2013-crop cotton, but no new sales were reported.

A Pacific storm brought approximately three-quarters of an inch of rainfall to central Arizona and California received about one-tenth of an inch early in the period. Freeze warnings were issued for the region late in the period. Harvesting was completed. Ginning continued in Arizona, California, New Mexico, and Texas.

Textile Mill

Report Demand from domestic mill buyers was best for discounted styles of cotton such as color 42 and 51, leaf 5 and better, and staple 32 and longer for first through third quarter 2013 delivery. No sales were reported. Some mills planned two-to-five days of down time for the approaching holidays; other mills planned in excess of two weeks of down time, due to lackluster finished product demand entering 2013. Demand for ring-spun and open-end yarn was moderate.

Inquiries through export channels were moderate. Peruvian mill buyers inquired for a moderate volume of color 31, leaf 3, and staple 36 for nearby shipment. Indonesian mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 36 for nearby shipment. Demand was also good for any discounted or low-grade styles of cotton.

Regional Price Information

Southeastern Markets 

Even-running lots containing a moderate volume of color 21, leaf 1 and 2, staple 37, mike 35-49, strength 28-31, and uniformity 80-83 sold for around 400 points on ICE March futures, FOB car/ truck (Rule 5, compression charges paid).

Even-running lots containing color 31, leaf 2 and 3, staple 37, mike 35-49, strength 28-30, and uniformity 81-83 sold for around 275 points on ICE March futures, same terms as above.

A heavy volume of color 21 and 31, leaf 4 and better, staple 35 and longer, mike 43-49, strength 2831, and uniformity 80-83 sold for 76.00 to 77.00 cents per pound, same terms as above.

Mixed lots containing color mostly 31 and 41, leaf 2-4, staple 34-37, mike 37-52, strength 27-29, and uniformity 80-82 sold for 100 to 150 points off ICE March futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

Mixed lots containing color 41, leaf 3-5, staple 34-36, mike 50 and higher, strength 30-32, and uniformity 81-83 sold for around 70.00 cents, same terms as above.

South Central Markets

North Delta

No trading activity was reported.

South Delta

A light volume of old-crop, mixed lots with color mostly 41 and 42, staple 35-37, leaf 5 and better, mike 37-52, strength 28-33, and uniformity 81-83 traded at around 70.50 cents per pound, FOB car/ truck (Rule 5, compression charges paid).

Southwestern Markets

East Texas

In Oklahoma, a moderate volume of color mostly 21, leaf 3 and better, staple 36 and longer, mike 4249, strength 30-33, and uniformity 79-82 sold for around 75.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of color 21 and 31, leaf mostly 3, staple 35 and longer, mike 42-48, strength 29-32, and uniformity 79-81 sold for around 73.25 cents, same terms as above.

A light volume of color 31, leaf mostly 3, staple 36, mike 38-48, strength 30-32, and uniformity 7881 sold for 71.00 to 72.00 cents, same terms as above.

In Texas, mixed lots containing color 21 and 31, leaf 3 and 4, staple 36, mike 44-49, strength 27-31, uniformity 78-81, and 75 percent bark sold for around 68.50 cents, same terms as above.

West Texas

A heavy volume of mixed lots containing color mostly 21, leaf 3 and better, staple 35 and longer, mike 37-50, strength 25-31, uniformity 77-81, and 50 percent bark sold for 69.00 to 71.75 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of color 21 and better, leaf 3 and better, staple 34 and longer, mike averaging 43.7, strength averaging 29.8, uniformity averaging 78.5, and 25 percent bark sold for around 67.50 cents, same terms as above.

Regional Price Information Regional Price Information Southwestern Markets cont.

West Texas

Mixed lots containing color 32 and better, leaf 4 and better, staple 32 and longer, mike 42-50, strength 24-29, uniformity 75-79, and 25 percent bark sold for around 63.00 cents, FOB car/truck (compression charges not paid).

A moderate volume of CCC-loan equities traded for two to fifteen cents.

Western Markets

Desert Southwest

No trading activity was reported.

San Joaquin Valley

No trading activity was reported.

American Pima

A moderate volume of SJV Pima color 2, leaf 2, and staple 46 and longer was sold to foreign mills for January through March shipment.

A moderate volume of SJV Pima color 3, leaf 3, and staple 46 was sold to foreign mills.

Source: USDA

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