USDA-Weekly Cotton Market Review: March 1, 2013

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Average 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 77.37 cents per pound for the week ended Thursday, February 28, 2013.

The weekly average was up from 77.31 cents last week, but down from 83.65 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 75.76 cents on Monday, February 25 to a high of 79.53 cents on Thursday, February 28. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 28 totaled 18,900 bales. This compares to 37,561 bales last week and 33,151 bales reported a year ago. Total spot transactions for the season were 1,491,740 bales, compared to 703,603 bales the corresponding week a year ago. The ICE May settlement prices ended the week at 85.29 cents, compared to 83.23 cents last week.

Prices are in effect from March 1-7, 2013
Adjustment World Price (AWP) 68.75 ELS Competitiveness Payment 0.00
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.58
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.78
Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #3 FOR UPLAND COTTON February 28, 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 March 7, 2013 allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 3 will be established as of March 7, 2013, and will apply to upland cotton purchased not later than June 4, 2013, and entered into the U.S. not later than September 2, 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 steady.

Trading of CCC-loan equities was inactive. Producers took advantage of higher ICE futures in the period to forward contract a moderate volume of 2013-crop cotton.

 Areas from Alabama, Florida, Georgia, and the Carolinas benefitted from significant rainfall in recent weeks. According to the U.S. Drought Monitor, extreme drought conditions were eradicated from the entire region for the first time since August of 2010.

The moisture helped lake levels to rise and replenish irrigation ponds. River flood warnings remain in effect in areas of Alabama, Florida, Georgia, and South Carolina. Portions of Alabama and Georgia received around three to six inches of accumulated precipitation early in the period, and slightly lesser amounts of one to two inches were recorded in the Carolinas and Virginia. The wet weather gave way to sunny, clear conditions late week. Sunny skies and warmer temperatures were forecast in the near term. No outside activities were reported; many fields remained too soggy to support equipment. Some remaining gins continued pressing operations in Georgia and the Carolinas.

Producers attended production meetings and eyed rising ICE futures prices as they considered planting options for the 2013 crop season.

South Central Markets

North 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.

 A typical, winter weather pattern prevailed during the week. A band of rain showers brought heavy precipitation to localized areas. Up to one inch of rain was reported. Temperatures fluctuated widely with daytime highs ranging from the upper 40s and 50s, while overnight lows ranged from the low 30s and 40s. Temperatures were near average for this time of the year. No outside activities were reported. Producers attended agricultural seminars on a variety of topics.

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. A light volume of forward contracting was reported.

A band of thunderstorms brought strong winds and up to one inch of rain to most areas. No injuries or property damage 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. The temperatures were near average for this time of the year. The spring planting season is rapidly approaching, but no outside activities were reported due to saturated soil conditions. Producers attended topical workshops while closely monitoring commodity prices.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate. Supplies were light. Demand was light. Average local spot prices were higher. Producer offerings were light. Trading of CCC-loan equities was slow. Foreign mill inquiries were moderate. Interest was best from China, Mexico, and Turkey. Producers took advantage of higher ICE futures in the period to forward contract a moderate volume of 2013-crop cotton.

 In central Texas, some rain and light snow flurries were received that moistened the fields and encouraged the planting of grain crops. The winter wheat progressed with the additional moisture, at the expense of potential cotton acres. In southern Texas, field preparations were underway, but delayed on Monday (2/25/13) because of high winds and blowing dirt. In Kansas and Oklahoma, heavy snowfall was received and increased accumulation amounts to 20 inches in some areas improving soil moisture. The precipitation helped fortify the parched dryland fields.

Ginning continued in Kansas. The ground was too warm in southwestern Oklahoma for the snow to linger, but about one and one-quarter of an inch of precipitation was received that improved the wheat crop, which occupies most of the acreage that was dedicated to cotton last season.

West Texas

Spot cotton trading was slow. Supplies were light. Demand was light. Average local spot prices were higher.

Producer offerings were light. Trading of CCC-loan equities was slow. Foreign mill inquiries were moderate.

Interest was best from China, Mexico, and Turkey. Producers took advantage of higher ICE futures in the period to forward contract a moderate volume of 2013-crop cotton.

A blizzard brought heavy snowfall, high winds gusting to 75 miles per hour, and beneficial moisture to the High Plains. The area from Lubbock south received lighter amounts measuring one to six inches of snow, and from Plainview north received upwards of 20 inches of snowfall. From Lubbock south, most of the snow was blown from the fields to the bar ditches where drifts were formed, with limited moisture benefits for the fields.

However, fields containing cotton stalks from last season caught more snowfall and encouraged the precipitation to remain in those fields. The snow melted in the fields the next day as the temperatures were in the 40s to 60s across the Plains the remainder of the week. In the area from Lubbock north, the snow covered fields benefited from the slow melt as temperatures increased, and became inaccessible for fieldwork.

Western Markets

Desert Southwest (DSW)

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

Foreign mill inquiries were light. No domestic mill activity was reported.

Optimal weather and soil conditions prompted producers to begin initial planting in Yuma, Arizona. Some fields received the first irrigation in the period. No cotton was up to stand. Local experts indicated that acreage could be down as much as 10 percent in Yuma. Dry conditions continue for parts of New Mexico and El Paso, Texas. Moisture is needed for the region. The Elephant Butte Irrigation District of New Mexico estimated six inches of water for the initial seasonal allotment. The water will be available for release in June. Local industry representatives reported that overall plantings could be reduced 50 percent in some areas.

San Joaquin Valley (SJV)

Spot cotton trading was slow. Supplies and demand were moderate. Average local spot prices were weak. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were steady. Interest was best from Europe, India, Japan, and Turkey.

 Clear, sunny conditions allowed producers to continue field activities. Pre-planting irrigation was performed and herbicide controls were applied. Shippers were concerned about a 25 to 35 percent decrease in cotton acreage.

Lack of irrigation water and planting of new nut orchards put pressure on cotton acreage. The Westlands Water District announced an initial water allotment of 25 percent of requested amounts to agricultural contractors.

Water allotments are subject to change if snow pack and reservoir levels improve.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand were moderate. Average local prices were steady. Newcrop contracts were offered at 130.00 to 135.00 cents. No forward contracting was reported. Shippers indicated that producer interest was at the 150.00 cents level. No domestic mill activity was reported. Foreign mill inquiries were steady. Offering prices to foreign mills were firm. Most foreign mill sales were for prompt shipment.

Producers began initial planting in Yuma, Arizona. Widespread planting will begin as soon as soil temperatures get warmer. Pre-planting irrigation was performed and herbicide controls were applied.  No moisture was recorded in the period for the region. Some Far West producers were reluctant to commit to planting AP this season, with no 2013 contract pricing, current water issues, and competitive crops. The on-going drought in New Mexico and El Paso, Texas will significantly reduce acreage.

 Textile Mill 

Domestic mill buyers inquired for a moderate volume of color 41 and 42, leaf 5 and better, and staple 34 and longer for fourth quarter delivery. No sales were reported. Demand for ring-spun yarn was very good; open end yarn was moderate to good. Most mills were operating at capacity; some were operating abbreviated schedules of three or four days of 24-hour shifts as dictated by demand. Most mills had covered their raw cotton needs through May. Load out dates at a few warehouses reported into June presented logistical challenges for some domestic cotton shippers.

Demand through export channels was good for yarn. Inquiries for raw cotton continued to taper, due to rising ICE futures prices. Representatives for mills in Indonesia, Turkey, and Taiwan inquired for a moderate volume of USDA Green Card Class, color 31 and 41, leaf 4, and staple 36 for May shipment. Demand was best through out the Far East for any discounted styles of cotton.

Regional Price Information

Southeastern Markets

Mixed lots containing color 31-42, leaf 3-5, staple 35-37, mike 37-49, strength 29-31, and uniformity 80-82 sold for around 150 points off ICE May futures, FOB car/truck (Rule 5, compression charges paid).

A moderate volume of color mostly 41, leaf 3 and 4, staple 34-36, mike 37-49, strength 27-29, and uniformity 79-81 sold for 300 to 350 points off ICE May futures, same terms as above.

A moderate volume of color 31 and 41, leaf 2-4, staple 36 and 37, mike 43-52, strength 28-30, and uniformity 81-83 sold for around 81.50 cents per pound, same terms as above.

A moderate volume of color mostly 41, leaf 3-5, staple 36-38, mike 43-52, strength 29-31, and uniformity 81-83 sold for 80.00 to 81.00 cents, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

A heavy volume of mixed lots containing color 52 and better, leaf 3-5, staple 35-37, mike 43-49, strength 29-31, and uniformity 80-82 sold for around 80.00 cents, same terms as above.

South Central Markets

North Delta

A light volume of color 31 and better, leaf 3 and better, staple 31-33, mike 43-52, strength 27-32, and uniformity 78-80 traded at around 77.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

Producers booked a light volume of 2013-crop cotton at 350 points off ICE December 2013 futures.

Southwestern Markets

East Texas

In Oklahoma, a light volume of color 31 and better, leaf 4 and better, staple 35 and longer, mike 4549, strength 31-32, uniformity 79-80, and 100 percent bark sold for around 74.50 cents per pound, FOB car/truck (compression charges not paid).

A light volume of mixed lots containing color 31, leaf 3, staple 35 and longer, mike 36-40, strength 27-29, uniformity 78-81, and 25 percent bark sold for around 71.75 cents, same terms as above.

A light volume of mixed lots containing color 41, leaf 3, staple 34 and longer, mike 36-48, strength 26-29, uniformity 77-79, and 25 percent bark sold for around 78.00 cents, same terms as above.

A light volume of CCC-loan equities traded for 16.00 to 18.00 cents.

West Texas

A light volume of color mostly 21, leaf 3, staple 37 and longer, mike 37-52, strength 26-35, and uniformity 78-81 sold for around 70.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of mixed lots containing color 23 and better, leaf 3, staple 36 and longer, mike 35-40, strength 27-29, uniformity 77-80, and 100 percent bark sold for around 69.50 cents, same terms as above.

A light volume of color 31 and better, leaf 4 and better, staple 37 and longer, mike averaging 26.0, strength averaging 29.9, uniformity averaging 79.0, and 100 percent bark sold for around 64.75 cents, same terms as above.

A light volume of CCC-loan equities traded for 16.00 to 18.00 cents.

Western Markets

Desert Southwest

A moderate volume of 2013-crop cotton was contracted at around 100 points off ICE December 2013 futures.

San Joaquin Valley

A light volume of color 31 and better, leaf 3 and better, and staple 36 and better was sold for around 1100 points on ICE May futures, UD free, FOB warehouse.

American Pima

No trading activity was reported.

Forward contracting of 2013-crop cotton. United States upland cotton growers had forward contracted about 498,558 acres of the 2013 crop by February 28. This compares to 591,106 acres booked by the end of February last season. In the Southeastern states, growers had contracted around 493,808 acres and the South Central states had booked around 4,750 acres. In the Southwestern and Western states, no acreage was reported under contract. These estimates were based on informal surveys made by the USDA, Agricultural Marketing Service’s Cotton Program.

Source: USDA

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