USDA – Weekly Cotton Market Review: March 8, 2013

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Spot cotton quotations averaged 331 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 80.68 cents per pound for the week ended Thursday, March 7, 2013. This was the highest weekly average since May 3, 2012, when the average was 81.24 cents. The weekly average was up from 77.37 cents last week, but down from 83.61 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 79.61 cents on Friday, March 1 to a high of 81.46 cents on Wednesday, March 6. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended March 7 totaled 26,770 bales. This compares to 18,900 bales last week and 13,960 bales reported a year ago. Total spot transactions for the season were 1,518,510 bales, compared to 717,563 bales the corresponding week a year ago. The ICE May settlement prices ended the week at 86.50 cents, compared to 85.29 cents last week.

Prices are in effect from March 8-14, 2013 Adjustment World Price (AWP) 71.23 ELS Competitiveness Payment 0.00 Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.33 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.53 Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #4 FOR UPLAND COTTON March 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 March 14, 2013 allowing importation of 14,776,787 kilograms (67,869 bales) of upland cotton.

Quota number 4 will be established as of March 14, 2013, and will apply to upland cotton purchased not later than June 11, 2013, and entered into the U.S. not later than September 9, 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 fix prices on a heavy volume of previously contracted 2013-crop cotton.

Mostly clear, cold conditions prevailed across south Alabama, the Florida Panhandle, and Georgia during the period. Daytime high temperatures fluctuated from the low 40s over the weekend to the mid- 60s late week. A hard freeze was reported across these areas as overnight lows dipped into the mid-20s early week. Similar conditions were observed in the Carolinas and Virginia. Flood warnings remained in effect in many areas, due to consistent rainfall in recent weeks, but many rivers are expected to begin receding as dry weather prevails. Ginning activity rapidly neared completion for the season. In Alabama and South Carolina, some gins continued daily pressing operations and a few remained on gin days. Several gins in Georgia continued daily pressing operations.

Local extension agents encouraged producers to proactively manage herbicide-resistant weeds ahead of spring planting by developing vigilant burn programs that prevent weed emergence and reduce the need for post-emergence sprays.

South Central Markets

North Delta

 Spot cotton trading was slow. Producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. A light volume of forward contracting was reported.

Winter weather prevailed during the week. A warm air flow brought light precipitation to localized areas mid-week. Less than one inch of rain was reported in most areas. Temperatures fluctuated widely with daytime highs ranging from the mid-30s to the upper 60s, while overnight lows ranged from the low 20s to the upper 30s. Producers in southern Arkansas initiated some fieldwork as spring planting rapidly approached. 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 higher. Trading of CCC-loan equities was inactive. A light volume of forward contracting was reported.

A cold front brought strong wind and a few light showers to the region during the week. Temperatures ranged from daytime highs in the upper 40s to the mid -70s, while overnight lows ranged from the mid-20s to the upper 50s. Producers attended topical workshops while closely monitoring commodity prices. Spring tillage was underway in fields that were firm enough to support equipment. Most producers were finalizing planting decisions.

South Western 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. Producers took advantage of higher ICE futures during the period to forward contract a moderate volume of 2013-crop cotton.

In southern Texas, limited planting on irrigated fields was underway in the Rio Grande Valley. Since the fields lacked adequate soil moisture, irrigation was applied to encourage germination. Dryland acreage needs more rainfall. Field preparation was in progress on drier fields in east Texas. Some fields that received heavy precipitation were too soft to support equipment. Topsoil and subsoil moisture conditions improved with recent precipitation in Kansas and Oklahoma.

According to the National Agricultural Statistics Service’s Oklahoma Crop Weather released on March 4, cotton seedbed preparation was 24 percent completed. In Kansas and Oklahoma, ginning continued.

West Texas

 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. Producers took advantage of higher ICE futures during the period to forward contract a light volume of 2013-crop cotton.

Producer reports for north of Lubbock indicated that soil moisture from recent precipitation was present three feet below the surface, which encouraged spring tillage and cotton seedbed preparation. Local industry members expect Lubbock County to plant about the same amount of acres as last season. Some producers experienced success with weed resistance through diversification of chemicals. Most areas south of Lubbock need more precipitation on dryland fields. Parched fields limited fieldwork and seedbed preparation. According to the Plains Cotton Growers newsletter released on March 1, crop insurance prices for cotton lint are 83.00 cents per pound for counties with a March 15 sales closing date. The cottonseed insurance prices were approved at 11 cents per pound, or $220 per ton.

Western Markets

Desert Southwest (DSW)

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

Forward contracting was active as ICE December futures trended higher. No domestic mill activity was reported.

Foreign mill inquiries were light.

Temperatures in the high 60s with scattered showers slowed planting in Yuma, Arizona. Producers began listing cotton beds, pre-irrigations, and applying herbicide controls in central Arizona. Ginning continued. Dry conditions persisted in New Mexico and El Paso, Texas. The area was in need of a good, soaking rain.

San Joaquin Valley (SJV)

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

Forward contracting was active as ICE December futures trended higher. No domestic mill activity was reported.

Foreign mill inquiries were steady.

Spring-like conditions were the norm with temperatures in the low 70s for most of the period. Producers continued with field preparations. Scattered showers brought less than one-quarter of an inch of moisture late in the period. Manual snow surveys on February 28 confirmed that water content in the Sierra Nevada Mountain snowpack is below normal for the date. This was the driest January/February since 1920 according to the Department of Water Resources. The current snowpack is approximately 66 percent of average for this time of year.

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.

Fieldwork was active in the region as producers prepared fields for spring planting. Cooler temperatures and the threat of rain slowed planting activity in Yuma, Arizona. Industry representatives reported no cotton was up to stand. Scattered showers produced little moisture in the San Joaquin Valley late in the period. Dry conditions persisted in New Mexico and El Paso, Texas. The area was in need of a good, soaking rain.

Textile Mill Report

 Domestic mill buyers inquired for a moderate volume of color 41 and 42, leaf 5 and better, staple 34 and longer for fourth quarter delivery. No sales were reported. Demand for all styles of yarn remained good and most mills were operating at capacity. Most mills have covered their immediate-to-nearby raw cotton needs.

Demand through export channels was good for yarn. Representatives for mills in Turkey purchased a moderate volume of color 41, leaf 4, and staple 34 for prompt shipment. Demand remained best throughout the Far East for any discounted or low-grade styles of cotton.

Regional Price Information

Southeastern Markets

A moderate volume of color 41 and 51, leaf 3 and 4, staple 36-38, mike 43-49, strength 29-31, and uniformity 82-84 sold for around 86.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

A moderate volume of color 41, leaf 3 and 4, staple 35 and 36, mike 43-49, strength 29-30, and uniformity 79-81 sold for around 83.00 cents, same terms as above.

A moderate volume of color 51 and better, leaf 3-5, staple 36 and longer, mike 43-47, strength 30-32, and uniformity 83-85 sold for around 500 points off ICE May futures, same terms as above.

Mixed lots containing color 41 and 51, leaf 3-6, staple 35 and 36, mike 43-49, strength 27-30, and uniformity 80-82 sold for around 82.75 cents, FOB car/truck (Rule 5, compression charges paid).

South Central Markets

North Delta

 A light volume of color 41 and better, leaf 3 and better, staple 33-36, mike 45-55, strength 28-33, and uniformity 78-83 sold for around 73.75 cents per pound, FOB car/truck (rule 5, compression charges paid).

Producers booked a light volume of 2013-crop bales at 325 points off ICE December futures.

South Delta

 Producers booked a light volume of 2013-crop cotton at 300 to 350 points off ICE December 2013 futures.

East Texas

In Oklahoma, a light volume of color 21 and better, leaf 2 and better, staple 36 and longer, mike 40- 43, strength 29-32, and uniformity 79-81 sold for around 81.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of color 31, leaf 3, staple 36 and longer, mike 35-39, strength 31-32, uniformity 80- 81, and 75 percent bark sold for around 77.00 cents, same terms as above.

A light volume of mixed lots containing color 42 and better, leaf 4 and better, staple 34 and longer, mike 39-44, strength 24-31, uniformity 76-80, and 25 percent bark sold for 73.00 to 74.50 cents, same terms as above.

A light volume of CCC-loan equities traded for 17.00 to 20.00 cents.

West Texas

 A heavy volume of mixed lots containing color mostly 21 and better, leaf 3 and better, staple mostly 35 and longer, mike 42-46, strength 27-30, and uniformity 78-82 sold for 78.00 to 80.00 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of mixed lots containing color 31 and better, leaf 3 and better, staple 34 and longer, mike 31-35, strength 27-29, uniformity 77-80, and 50 percent bark sold for 73.50 to 75.00 cents, same terms as above

South Western Markets

West Texas

 A light volume of color 21 and better, leaf 3 and better, staple 32 and longer, mike averaging 40.0, strength averaging 26.5, uniformity averaging 78.0, and 25 percent bark sold for around 72.50 cents, same terms as above.

A light volume of CCC-loan equities traded for 17.00 to 20.00 cents.

Western Markets

 Desert Southwest

A moderate volume of 2013-crop cotton was forward contracted at 84.00 to 85.00 cents per pound.

San Joaquin Valley

A light volume of 2013-crop saw-ginned Upland cotton was forward contracted at 700 to 800 points on ICE December 2013 futures.

American Pima

No trading activity was reported.

The following information was excerpted from the World Agricultural Supply and Demand Estimates, released on March 8, 2013

COTTON: The 2012/13 U.S. cotton estimates include larger exports and lower ending stocks relative to last month. Production and domestic mill use are unchanged. Exports are raised 250,000 bales based on strong sales and shipments in recent weeks. Ending stocks are now forecast at 4.2 million bales, equal to 26 percent of total use. The forecast range for the average price received by producers of 70 to 73 cents per pound is raised 1 cent on the lower end.

This month’s 2012/13 world cotton estimates show higher production, consumption, and trade, with ending stocks reduced marginally. World production is raised about 900,000 bales from last month, including a 1.0-million-bale increase in the China crop, based on recent statistical reports for the eastern provinces and on classification data for Xinjiang. Production also is raised for Uzbekistan, Mexico, and Turkmenistan, but is reduced for Pakistan and Brazil. Consumption is raised for China, India, and Bangladesh. World trade is raised 1.5 million bales, due mainly to higher imports by China, Pakistan, and Bangladesh. Exports are raised for India, the United States, Australia, Turkmenistan, and Uzbekistan, but are lowered for Pakistan.

Global ending stocks are now forecast at 81.7 million bales.

 Source: USDA

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