USDA-Weekly Cotton Market Review: February 1, 2013

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 Spot cotton quotations averaged 130 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 76.56 cents per pound for the week ended Thursday, January 31, 2013. The weekly average was up from 75.26 cents last week, but down from 86.69 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 75.16 cents on Friday, January 25 to a high of 77.54 cents on Wednesday, January 30. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 31 totaled 78,453 bales. This compares to 107,918 bales last week and 26,212 bales reported a year ago. Total spot transactions for the season were 1,380,193 bales, compared to 596,886 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 82.95 cents, compared to 82.89 cents last week.

Prices are in effect from January 25-31, 2013 
Adjustment World Price (AWP) 68.56 ELS Competitiveness Payment 0.00 
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 1.31 
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 1.51

USDA ANNOUNCES SPECIAL IMPORT QUOTA #25 FOR UPLAND COTTON January 31, 2013

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 February 7, 2013 allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 25 will be established as of February 7, 2013, and will apply to upland cotton purchased not later than May 7, 2013, and entered into the U.S. not later than August 5, 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.

Partly cloudy conditions prevailed early week and fieldwork was uninterrupted as producers cut stalks and prepared fields for spring plantings. Daytime temperatures surged into the low 70s as unseasonably warm conditions prevailed ahead of a strong cold front that entered the region late in the period. The system brought a band of damaging thunderstorms that raked across the region producing damaging winds, heavy rainfall, and spawned a violent tornado that damaged buildings, injured several people, and killed at least one person in northwest Georgia. Several gins continued pressing operations in south Georgia; however, ginning was rapidly winding down in south Alabama and South Carolina. Producers attended annual conferences and production workshops.

Local experts anticipated minimal decreases in cotton acreage in south Alabama, Florida, and Georgia; north Alabama and the Carolinas are expected to see the largest reductions in cotton production for the 2013 season as acreage is switched to competing crops.

South Central Markets

North Delta

Spot cotton trading was inactive. Producer offerings were moderate. Demand was good. Average local spot prices were higher. Trading of CCC-loan equities was active. No forward contracting was reported.

Warm, moist air collided with a frigid Arctic front to produce severe weather throughout the region during the week. Rainfall measured up to six inches, which caused flooding and road closures in some areas.

Temperatures fluctuated widely with daytime highs ranging from the mid-70s to the low 50s, while overnight lows ranged from the mid-30s to the high 50s. The high temperatures were well above average for this time of the year. Tornadoes and strong winds were reported to have caused damage to buildings, power lines, and trees in Arkansas and Tennessee. No injuries were reported. No outside activities were reported.

Producers attended trade shows and meetings.

South Delta

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

A warm, moist airflow from the Gulf of Mexico mixed with frigid Arctic air resulted in severe weather throughout the region during the week. Rainfall measured up to three inches, which caused flash flooding and road closures. Temperatures fluctuated widely with daytime highs ranging from the low 70s to the high 40s, while overnight lows ranged from the low 30s to the low 50s. The high temperatures were well above average for this time of the year. Tornadoes and strong winds were reported to have caused damage to buildings, power lines, and trees in some areas. No injuries were reported. No outside activities were reported. Producers attended trade shows and meetings.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate. Supplies were light. Demand was moderate. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCCloan equities was moderate. Foreign mill inquiries were light. Interest was best from Indonesia, Taiwan, and Turkey.

In south Texas, drought conditions left watersheds parched around Corpus Christi. Producers were considering modifications for planted acreage in the area.

In central Texas, rainfall was received in some areas that helped to fortify sub-soil moisture. Reports indicated that some acreage was planted to wheat over cotton, but more precipitation was needed for the crop to progress to harvest. If the wheat acreage fails to advance, it would be plowed and replanted to cotton.

Fertilizer applications were underway in the Blackland Prairies and in the Brazos Bottoms. In Kansas, according to the National Agricultural Statistics Service (NASS), the topsoil moisture was rated 48 percent very short, 37 short, and 15 percent adequate.

Ginning continued as the season moved toward completion.

According to NASS, the topsoil moisture was rated at 75 percent very short, 23 short, and 2 percent adequate in Oklahoma. The entire state was in need  of a period of wet weather to fortify subsoil and topsoil moisture levels. End of season ginning continued.

West Texas

Spot cotton trading was active. Supplies were moderate. Demand was good. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was heavy. Foreign mill inquiries were light. Interest was best from Indonesia, Taiwan, and Turkey.

Gusty winds and blowing dirt delayed tillage activity and limited fieldwork. Spotty, light rainfall was received in areas, but the dry, windy conditions intensified the drought. A light dusting of snow was received in the Northern High Plains, which failed to bring significant moisture. Producers were considering irrigation options such as managing split circles to efficiently use available well water. Some producers outfitted irrigation pivots with enhanced sprinklers to minimize evaporation. The Abilene Classing Office increased the estimate for better-than-expected yields in the Rolling Plains.

All of the organic cotton was ginned and committed. Production was below average because of the drought, but better than the previous year. Some of the bales were shipped to mills. Organic cottonseed sold for $575 to $625 per ton and was committed to dairies that produced organic products.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher, as ICE March futures trended higher. Foreign mill inquiries were light. No forward contracting or domestic mill activity was reported.

Parts of central Arizona received one and one-quarter inches of rainfall in the period. Flash flooding was reported in several locales. This slowed gins down as gin yards were too wet to support equipment. Private sources estimated a 20-30 percent reduction in planted cotton acreage for 2013 in Arizona and around 40 percent for New Mexico and El Paso, Texas. Moisture was desperately needed in New Mexico and El Paso, Texas.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher, as ICE March futures trended higher. Some producers took advantage of the run-up and fixed prices on remaining bales under contract. Foreign mill inquiries were light, while some mills bought cotton as needed and others fixed prices on current crop for prompt shipment No domestic mill activity was reported. Producers inquired for 2013-crop contracts. No contracts were signed.

Temperatures were in the mid-50s to low 60s. Roller-ginning continued. Industry representatives estimated a about 20-30 percent decrease in cotton acreage for 2013, which was attributed to on-going water issues and planting permanent crops. Snow surveyors reported the water content in California’s mountain snowpack was slightly below average. Manual and electronic readings recorded the snowpack’s statewide water content at 93 percent of average for this time of year.

American Pima (AP)

Spot cotton trading was slow. Supplies and demand were moderate. Average local prices were steady. The higher ICE futures helped maintain prices in the American Pima market. Producers inquired for 2013-crop contracts.

No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Interest was best from China, India, and Pakistan.

Ginning continued in the San Joaquin Valley (SJV). Adequate irrigation water supplies are an on-going concern.

The moisture outlook for the far west remains dry. Some SJV producers considered planting permanent crops. Producers in New Mexico and El Paso, Texas considered spring planting options. Based on current reservoir levels, water districts informed customers to prepare for allotment deliveries of around six inches to start in June.

Textile Mill

Report Domestic mill buyers purchased a moderate volume of color 41, leaf 5, and staple 33 and longer for nearby delivery.

Demand was good for any low-grade or discounted styles of raw cotton for March through May delivery.

Finished product demand was steady. Demand for ring-spun and open-end yarn was moderate. Most mills operated on a five to seven day schedule.

Inquiries through export channels were good. Turkish and Taiwanese agents inquired for a moderate volume of USDA Green Card Class, color 31 and 41, leaf 3 and 4, and staple 34 and longer for immediate-to-nearby shipment.

Demand remained good throughout the Far East for any discounted or low-grade styles of cotton.

 Regional Price Information

Southeastern Markets

A moderate volume of color 31, leaf 3 and better, staple 35-37, mike 43-52, strength 26-28, and uniformity 80-82 sold for around 50 to 100 points off ICE March futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

A moderate volume of color mostly 31 and 41, leaf 3-5, staple 35 and longer, mike 43-49, strength 28 -32, and uniformity 80-82 sold for 250 to 300 points off ICE March futures, same terms as above.

A moderate volume of color 41 and 51, leaf 4 and 5, staple 34 and longer, mike 43-52, strength 29- 32, uniformity 81-83, and containing approximately 40 percent bark sold for 425 to 525 points off ICE March futures, same terms as above.

A moderate volume of color 41 and 51, leaf 3 and 4, staple 35 and 36, mike 43-52, strength 28-31, and uniformity 81-83 sold for around 525 points off ICE March futures, FOB car/truck (Rule 5, compression charges paid).

South Central Markets

North Delta

A moderate volume of CCC-loan equities traded for around 17.50 to 19.50 cents per pound.

South Delta

A light volume of CCC-loan equities traded for around 18.50 cents per pound.

East Texas

In Kansas, a moderate volume of color 21, leaf 2, staple 33 and longer, mike 38-48, strength 25-28, and uniformity 77-79 sold for 72.00 to 77.25 cents per pound, FOB car/truck (compression charges not paid).

Southwestern Markets

East Texas

In Oklahoma, a light volume of color 21 and better, leaf 2 and better, staple 32 and longer, mike 40- 44, strength 26-29, and uniformity 76-80 sold for 68.50 to 70.00 cents, same terms as above.

In Texas, a moderate volume of color mostly 41 and better, leaf 3 and better, staple 33 and longer, mike 45-56, strength 26-34, and uniformity 76-82 sold for 68.00 to 70.50 cents, FOB warehouse (compression charges not paid).

A moderate volume of CCC-loan equities traded for fourteen to nineteen cents.

West Texas

A light volume of color mostly 21, leaf 3 and better, staple 36 and longer, mike 41-45, strength 28- 32, and uniformity 79-80 sold for around 80.00 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of color 31 and better, leaf 2 and 3, staple 35 and longer, mike 42-45, strength 24 -32, uniformity 77-79, and 25 percent bark sold for around 74.50 cents, same terms as above.

A moderate volume of color 22 and better, leaf 3 and better, staple 36 and longer, mike 27-34, strength 27-32, uniformity 78-82, and 50 percent bark sold for around 68.25 cents, same terms as above.

A heavy volume of color mostly 21, leaf 3 and better, staple 34 and longer, mike 27-43, strength 27- 29, uniformity 78-82, and 75 percent bark sold for 66.00 to 67.25 cents, same terms as above.

A heavy volume of CCC-loan equities traded for thirteen to seventeen cents.

 Western Markets

Desert Southwest

Some producers fixed prices on remaining bales under contracts for around 83.00-84.00 cents.

San Joaquin Valley

Prices were fixed at around 93.00-94.00 cents for saw-ginned Acala and 98.00-99.00 cents for rollerginned.

American Pima

A moderate volume of DSW pima, color 2 and better, leaf 2 and better, and staple 46 and longer sold for around 115.00 cents per pound, uncompressed FOB warehouse.

A light volume of SJV pima, color 2 and better, leaf 2 and better, and staple 46 and longer sold for around 124.00 cents, UD free, FOB warehouse.

Full Report (PDF file)

 Source: USDA

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