USDA-Weekly Cotton Market Review: February 8, 2013

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Spot cotton quotations were virtually unchanged 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 76.36 cents per pound for the week ended Thursday, February 7, 2013. The weekly average was down from 76.56 cents last week, and from 86.97 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 77.45 cents on Friday, February 1 to a low of 75.93 cents on Thursday, February 7. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 7 totaled 37,068 bales. This compares to 78,453 bales last week and 35,961 bales reported a year ago. Total spot transactions for the season were 1,417,261 bales, compared to 632,847 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 81.72 cents, compared to 82.95 cents last week.

Prices are in effect from February 8-14, 2013 
Adjustment World Price (AWP) 69.00 ELS Competitiveness Payment 0.00 
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.92 
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 1.12 
Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON February 7, 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 14, 2013 allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 26 will be established as of February 14, 2013, and will apply to upland cotton purchased not later than May 14, 2013, and entered into the U.S. not later than August 12, 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

pot cotton trading was active. Supplies were heavy.

Demand was good. Producer offerings were heavy.

Average local spot prices were weak. Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures during the period to forward contract a moderate volume of 2013-crop cotton.

Mostly cloudy conditions prevailed during the period, with unseasonably, warm daytime temperatures in the high 60s to low 70s. Light, scattered precipitation was received in areas from coastal Alabama to Virginia throughout the week. A low pressure system developed late-week and heavier localized precipitation was received as the system drifted along the Gulf Coast and tracked east-northeast across the Carolinas.

Ginning neared completion in south Alabama and was winding down in Georgia. Stalks were cut and fields were prepared for spring planting as the weather permitted.

Producers attended crop production workshops and field day meetings.

South Central Markets

North Delta

Spot cotton trading was inactive. Producer offerings were moderate. Demand was good. Average local spot prices were weak. Trading of CCC-loan equities was inactive. Trading of CCC-loan equities was slow.

No forward contracting was reported.

Partly-cloudy conditions with seasonably cool daytime temperatures in the high 50s to low 60s dominated the weather pattern. Moisture received in recent weeks has significantly improved severe drought conditions in western Arkansas, according to the U.S.

Drought Monitor. Local experts projected about a 10 percent decrease in cotton acreage for the North Delta region in the 2013-crop year. No outside activities were reported. Producers attended trade and crop production meetings.

South Delta

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

Overcast conditions prevailed with daytime temperatures in the high 60s to low 70s. Local experts anticipated at least a 30 percent decrease in cotton acreage for the South Delta in the 2013-crop year.

Producers attended annual crop production meetings and considered planting options for competing crops.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was slow. Supplies and demand were light. Average local spot prices were steady.

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

In south Texas, mid-week thunderstorms brought up to two inches of rainfall that caused road flooding and field erosion in some areas. Most of the fieldwork was completed, but some producers plowed around the perimeter of the fields to control weeds. In Kansas, unseasonably warm, dry conditions prevailed.

Ginning continued with approximately 6,000 more bales to press. Producers were busy conducting normal maintenance on field machinery and irrigation systems. Local meetings were well attended.

Drought was expected to dominate another growing season, and producers explored strategies to efficiently manage available water. In Oklahoma, ginning continued as the season neared completion.

West Texas

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

Cool, crisp mornings gave way to mild, sunny conditions in the afternoons with high temperatures in the upper 60s to low 70s. Cold, windy conditions returned at the end of the week as a storm front pushed to the southeastern counties that deposited trace amounts of scattered rainfall. Fieldwork was active as producers broke ground, built rows, and destroyed stalks. The drought continued, and producers considered different strategies ahead of planting to get the cotton up.

Western Markets

Desert Southwest (DSW)

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

Temperatures were in the mid-70s, with no moisture recorded in the period for Arizona. Sample receipts were steady as a few gins remained on daily operations. Some producers were busy managing winter grain crops, mostly barley and wheat. A bleak water outlook continues for producers in New Mexico and El Paso, Texas.

Irrigation districts reported the snowpack was approximately 65 percent of normal. Irrigation districts reminded their membership that last year, the January 1 forecast was for 86 percent of normal spring runoff, and the actual was only about 20 percent.

San Joaquin Valley (SJV)

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

Producers made inquiries for 2013-crop contracts at around the 90.00 cents level. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Dense, heavy fog was prevalent in the Valley for most of the period. Temperatures were in the mid-50s to low 60s. Roller-ginning continued.

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. Producers were not ready to contract cotton at this time. Uncertain water deliveries and competing field crops limited producer interest. Foreign mill inquiries were light.

Ginning continued in the San Joaquin Valley.

Textile Mill Report

Domestic mill buyers purchased a moderate volume of color 41, leaf 5, and staple 33 for June through December delivery. Mill buyers bought a moderate volume of color 53 and better, leaf 5 and better, and staple 32 and longer for October through December delivery. No additional sales were reported. Most mills operated on a five to seven day schedule. Load out dates at some warehouses were reported at eight to ten weeks.

Inquiries through export channels were good. Representatives for mills in Bangladesh inquired for a moderate volume of color 41, leaf 5 and better, and staple 33 and longer for February/March shipment. Agents for mills in Thailand inquired for a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for nearby shipment.

Regional Price Information

Southeastern Markets

A heavy volume of color mostly 21 and 31, leaf 3 and better, staple mostly 35-37, mike 37-49, strength 26-29, and uniformity 80-82 sold for around 81.25 cents per pound, FOB car/truck (Rule 5, compression charges paid).

Mixed lots containing color 31 and 41, leaf 2-4, staple 35 and 36, mike 43-49, strength 27-30, and uniformity 80-82 sold for around 175 points off ICE March futures, same terms as above.

A moderate volume of color 21 and 31, leaf 2 and 3, staple 36 and longer, mike 43-49, strength 27- 30, and uniformity 80-83 sold for even to 25 points on ICE May futures, same terms as above.

A moderate volume of color 31 and 41, leaf 2 and 3, staple 35 and longer, mike 43-49, strength 27- 30, and uniformity 80-82 sold for around 250 points off ICE May futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

Mixed lots containing color mostly 41 and 51, leaf 3-5, staple 34-37, mike 37-49, strength 27-30, and uniformity 80-82 sold for 525 to 600 points off ICE May futures, same terms as above.

South Central Markets

North Delta

A moderate volume of CCC-loan equities traded for 16.75 to 20.00 cents per pound.

South Delta

No trading activity was reported.

 Southwestern Markets 

East Texas

In Oklahoma, a light volume of color 42 and better, leaf 4, staple 35 and longer, mike 38-48, strength 29-32, and uniformity 77-81 sold for around 70.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of color 53 and better, leaf 5 and better, staple 31 and longer, mike 44-49, strength 24 -27, and uniformity 77-80 sold for around 63.00 cents, same terms as above.

In Texas, a light volume of color mostly 21, leaf 2 and better, staple 34 and longer, mike 39-47, strength 27-31, and uniformity 79-82 sold for around 72.00 cents, same terms as above.

A light volume of color 42 and better, leaf 4 and 5, staple 36, mike averaging 45.6, strength averaging 29.4, uniformity averaging 82.1, and 75 percent extraneous matter sold for around 69.00 cents, same terms as above.

A light volume of CCC-loan equities traded for 12.00 to 19.00 cents.

West Texas

A moderate volume of color mostly 21 and better, leaf 3 and better, staple 36 and longer, mike 37-46, strength 27-32, and uniformity 77-81 sold for around 78.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of color 31 and better, leaf 3 and better, staple 36 and longer, mike 36-49, strength 28 -32, uniformity 78-81, and 75 percent bark sold for around 72.50 cents, same terms as above.

A light volume of color 31 and better, leaf 3 and better, staple 33 and longer, mike 41-46, strength 26- 30, uniformity 78-79, and 50 percent bark sold for around 70.75 cents, same terms as above.

A light volume of color 11, leaf 2 and better, staple 31 and longer, mike 43-46, strength 23-28, and uniformity 75-79, sold for around 67.75 cents, same terms as above.

A light volume of CCC-loan equities traded for around 19.00 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 on February 8, 2013

This month’s 2012/13 U.S. cotton forecasts include higher exports and lower ending stocks relative to last month. Estimates of production and domestic mill use are unchanged. Exports are raised slightly to 12.5 million bales, due mainly to an increase in projected imports by China. Ending stocks are forecast at 4.5 million bales, accounting for 28 percent of total disappearance. The forecast range for the marketing year average price received by producers of 69-73 cents per pound is raised 3 cents on the lower end and 2 cents on the upper end of the range, reflecting a sharp increase in the price received for December.

The aggregate world 2012/13 production, consumption, and stocks forecasts show only slight revisions this month, but increases in China’s production and imports are raising the expected concentration of stocks there.

World production is estimated marginally higher, as increases for China and Kazakhstan are mostly offset by decreases for Pakistan and Turkey. World consumption likewise is increased marginally, reflecting increases for Turkey and others. China’s imports are raised 1.5 million bales to 14.0 million, increasing world trade by a like amount, based on heavy imports during the first half of the marketing year. Exports are raised for the United States, Australia, Brazil, Uzbekistan, the African Franc Zone, Greece, and others. World ending stocks are virtually unchanged at 81.9 million bales, but China’s stocks are raised 2.0 million bales to 42.6 million, accounting for 52 percent of world stocks.

Source: USDA

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