USDA-Weekly Cotton Market Review: February 22, 2013

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Average spot cotton quotations averaged 79 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 77.31 cents per pound for the week ended Thursday, February 21, 2013.

The weekly average was up from 76.52 cents last week, but down from 84.12 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 76.67 cents on Friday, February 15 to a high of 78.01 cents on Wednesday, February 20. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 21 totaled 37,561 bales. This compares to 18,018 bales last week and 13,137 bales reported a year ago. Total spot transactions for the season were 1,472,840 bales, compared to 670,452 bales the corresponding week a year ago. The ICE May settlement prices ended the week at 83.23 cents, compared to 82.79 cents last week.

Prices are in effect from February 22-28, 2013 
Adjustment World Price (AWP) 69.43 ELS Competitiveness Payment 0.00 
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.86 
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 1.06 
Source: Farm Service Agency, FSA, USDA

 USDA ANNOUNCES SPECIAL IMPORT QUOTA #2 FOR UPLAND COTTON February 21, 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 28, 2013 allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 2 will be established as of February 28, 2013, and will apply to upland cotton purchased not later than May 28, 2013, and entered into the U.S. not later than August 26, 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 moderate.

Demand was good. Producer offerings were moderate. Average local spot prices were higher.

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 clear and partly cloudy conditions prevailed throughout Alabama, Georgia, and the Florida Panhandle during the period with daytime temperatures in the mid-50s to low 60s. Scattered precipitation was received in localized areas. Rainfall accumulations of up to one inch were reported. Outside activities were generally uninterrupted where soils were firm enough to support field equipment. The pattern of above normal precipitation in recent weeks has significantly reduced droughty conditions in areas and left some fields water logged. A few gins in Georgia were still operating multiple shifts and some others had gone to gin days; all indicated they may continue pressing operations into March. Similar weather conditions were observed in the Carolinas and Virginia, with cooler daytime temperatures in the mid-40s.

Several gins continued daily pressing operations in the Carolinas. Producers eyed higher ICE futures prices during the period and considered planting options.

South Central Markets

 North Delta

Spot cotton trading was inactive. Demand was light.

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

A cold front brought severe thunderstorms to the region during the week. Strong winds resulted in downed limbs, which caused some damage to a few buildings. Up to three inches of rain was reported.

Temperatures fluctuated widely with daytime highs ranging from the upper 30s to the low 60s, while overnight lows ranged from the upper 20s to the upper 30s. Temperatures were near average for this time of the year. No outside activities were reported. Producers attended trade shows and meetings.

South Delta

Spot cotton trading was inactive. Demand was light.

Average local spot prices were higher. Producer offer ings were light. Trading of CCC-loan equities was inactive. No forward contracting was reported.

A line of severe thunderstorms brought strong winds and up to two inches of rain to most areas.

Some damage to trees and buildings occurred, but no injuries were reported. Temperatures ranged from daytime highs in the upper 60s to the low 50s, while overnight lows ranged from the low 30s to the mid- 40s. No outside activities were reported. Producers attended trade shows and meetings, while closely monitoring commodity prices.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate. Supplies were light. Demand was very light. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCCloan equities was slow. Foreign mill inquiries were light.

According to the National Agricultural Statistics Service’s Texas Crop Progress and Condition released on February 19, the top soil moisture condition was mostly short to adequate in the Blackland Prairies.

Severe storms brought moisture to counties in eastern Texas, helping to fortify sub-soil moisture levels. In the Rio Grande Valley, the top-soil moisture condition was rated 91 percent very short. The area is in need of soaking rain ahead of planting to attain average and above average crop yields. The Upper Coast and Winter Garden areas received beneficial rainfall and have adequate soil moisture to progress crops. In Kansas and Oklahoma, winter storms brought freezing rain and snow measuring one to six inches to some of the driest parts in the country. The entire two-state region was in need of a period of wet weather to fortify sub-soil moisture levels and improve yield potential for all crops.

West Texas

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

Producers were encouraged that dryland acreage contained enough moisture to begin fieldwork compared to last year when breaking ground was not possible until planting season. Soil moisture conditions were improved and permitted producers to work fields in 30 miles per hour winds with minimal blowing dirt. Pest and weed controls were incorporated. Multiple, mid-week storm fronts brought rainfall measuring one-quarter to one-half of an inch that helped to fortify sub-soil moisture. Light snow fell in some parts of the Northern High Plains and brought beneficial precipitation to the Panhandle. Wet, windy conditions prevailed and interfered with field activities. According to the National Agricultural Statistics Service’s Texas Crop Progress and Condition released on February 19, the top soil moisture condition was mostly very short and short. A trend noted at the meetings was a shift in planted acres from sorghum and peanuts to cotton because of market prices and a lack of moisture. Producers are waiting and considering options.

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. Foreign mill inquiries were light.

Field activity was slowed as a winter storm brought high winds, rain, and a light dusting of snow to cottongrowing areas of Arizona late in the period. Temperatures dipped into the mid-40s. Approximately one-quarter of an inch of precipitation was received. Four gins remained in operation. Producers attended local production meetings. The water outlook for New Mexico and El Paso, Texas remained bleak. Although there has been a slight improvement in the snowpack, irrigation districts are bracing for the worst. Water-management workshops were offered to producers.

San Joaquin Valley (SJV)

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. Foreign mill inquiries were light.

A very cold system originating from the Gulf of Alaska dropped temperatures into the low 50s for the region.

Approximately one-half of an inch of precipitation was recorded in Bakersfield and Fresno. Cotton-growing areas of the Sacramento Valley recorded about one-quarter of an inch of rainfall. Snowfall was received in the Sierra Nevada Mountain range, which is beneficial for replenishing Valley reservoirs. No field activities were observed.

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 Egypt, India, Indonesia, and Japan. Export sales were for prompt to June shipments.

Ginning was completed in the San Joaquin Valley (SJV). Classing totals were just over 750,000 bales. It was a high-yielding crop for California. Inclement weather interrupted spring fieldwork in the SJV late in the period. Spring fieldwork was underway in the far west. Producers were pre-irrigating and used herbicide controls.

Producers in Yuma, Arizona readied equipment for planting. Planting could start as early as March 1.

Textile Mill

Report Domestic mill buyers purchased a moderate volume of color 41, leaf 3, and staple 35 for November 2013 through March 2014 delivery. Mill buyers also inquired for a moderate volume of color 42, leaf 4, and staple 34 and 35 for June through September delivery. Reports indicated most mills have covered their raw cotton needs through the near term. Demand for ring-spun yarn was good; open end yarn was moderate; and denim was good. Most mills operated on a five-to-seven day schedule. Some mills requested earlier delivery dates for previously scheduled raw cotton, due to increased demand. However, load out dates at some warehouses that were reported into May hampered logistics.

Demand through export channels was good for yarn. However, inquiries for raw cotton were moderate and had tapered, due to rising ICE futures prices. Representatives for mills in Korea purchased a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 37 for March shipment. Agents for mills in Thailand inquired for a moderate volume of USDA Green Card Class, color 41 and better, leaf 4 and better, and staple 35 and longer for nearby shipment. Taiwanese mill buyers inquired for a moderate volume of color 42, leaf 4, and staple 33 and 34 for April/May shipment.

Regional Price Information

Southeastern Markets

 A moderate volume of color 21 and 31, leaf 2 and 3, staple 36-38, mike 43-49, strength 28-30, and uniformity 81-83 sold for around even ICE May futures, FOB car/truck (Rule 5, compression charges paid).

A moderate volume of color 31 and 41, leaf 3 and 4, staple 34 and 35, mike 37-49, strength 26-28, and uniformity 80-82 sold for around 425 points off ICE May futures, same terms as above.

A moderate volume of color 31-51, leaf 3-5, staple 35-37, mike 37-49, strength 28-30, and uniformity 80-82 sold for 81.00 to 82.00 cents per pound, same terms as above.

Similar lots containing 80 percent bark sold for around 75.00 cents, same terms as above.

A moderate volume of color 21 and 31, leaf 2 and 3, staple 36-38, mike 43-49, strength 28-30, and uniformity 81-83 sold for 25 to 75 points on ICE May futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

Heavy volume mixed lots containing color mostly 31 and 41, leaf mostly 3 and 4, staple 34-37, mike 37-49, strength 28-30, and uniformity 80-82 sold for around 150 points off ICE May futures, same terms as above.

A moderate volume of color 31 and 41, leaf 4 and 5, staple 35 and 36, mike 37-49, strength 29-31, uniformity 80-82, and containing approximately 55 percent bark sold for around 79.85 cents, same terms as above.

South Central Markets

 North Delta

No trading activity was reported.

South Delta

No trading activity was reported.

East Texas

In Kansas, a light volume of color 21 and better, leaf 2 and better, staple 35 and longer, mike 29-36, strength 27-32, uniformity 77-80, and 50 percent bark sold for around 72.00 cents per pound, FOB car/truck (compression charges not paid).

Southwestern Markets  

East Texas

In Oklahoma, a light volume of color 31 and better, leaf 4 and better, staple 35 and longer, mike 38- 42, strength 29-32, and uniformity 80-81 sold for around 74.00 cents, same terms as above.

In Texas, a light volume of color 31, leaf 2 and 3, staple 35 and longer, mike 43-46, strength 26-29, and uniformity 79-81 sold for around 78.00 cents, FOB warehouse (compression charges not paid).

A light volume of CCC-loan equities traded for 17.00 to 18.00 cents.

West Texas

A moderate volume of color mostly 21 and better, leaf 2 and better, staple 35 and longer, mike 37-52, strength 24-32, and uniformity 77-82 sold for 75.50 to 77.50 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of color 31 and better, leaf 3 and better, staple 34 and longer, mike 37-49, strength 27-30, and uniformity 79-82 sold for 73.25 to 74.50 cents, same terms as above.

A light volume of mixed lots containing color mostly 32 and better, leaf 4 and better, staple 36 and longer, mike 27-43, strength 29-33, uniformity 77-81, and 50 percent bark sold for 67.75 to 68.50 cents, same terms as above.

A light volume of CCC-loan equities traded for 17.00 to 18.00 cents.

Western Markets

Desert Southwest

No trading activity was reported.

San Joaquin Valley

 No trading activity was reported.

American Pima

A moderate volume of San Joaquin Valley (SJV) Pima, color 2 and better, leaf 3, staple 46, and mike 35-49 was sold to mills in Indonesia.

A moderate volume of 2013-crop SJV Pima was sold to foreign mills.

 Source: USDA

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