USDA-Weekly Cotton Market Review: Sept 13, 2013

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Average spot cotton quotations were 160 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 81.05 cents per pound for the week ended Thursday, September 12, 2013. The weekly average was up from 79.45 cents last week, and 70.19 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 79.89 cents on Friday, September 6 to a high of 82.41 cents on Thursday, September 12. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended September 12 totaled 7,274 bales. This compares to 4,344 bales last week and 7,202 bales reported a year ago. Total spot transactions for the season were 30,517 bales, compared to 61,544 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 85.88 cents, compared to 82.40 cents last week.

Prices are in effect from September 13-19, 2013 
Adjustment World Price (AWP) 67.99 ELS Competitiveness Payment 0.00 
Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2012 Crop 0.61 
Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2013 Crop 0.76 
Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #5 FOR UPLAND COTTON September 12, 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 September 19, 2013 allowing importation of 13,544,062 kilograms (62,207 bales) of upland cotton.

Quota number 5 will be established as of September 19, 2013, and will apply to upland cotton purchased not later than December 17, 2013, and entered into the U.S. not later than March 17, 2014. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period December 2012 through February 2013, 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 inactive. Supplies were light.

Demand was moderate. Producer offerings were light. Average local spot prices were higher. Trading of CCC-loan equities was inactive.

Producers welcomed the mostly dry, warm conditions, which prevailed from Alabama to Virginia during the period. Daytime high temperatures in the upper 80s to lower 90s brought beneficial heat units to plants suffering from low vigor and improved crop conditions. Top soil moisture levels deteriorated in areas that have missed significant rainfall in recent weeks and timely rainfall is needed to alleviate stress on plants with shallow root systems. Irrigation was underway in some fields. Crop maturity was highly variable, due to the wet, cool growing conditions during the season. Bolls were cracking open in the earliest-planted fields, but later-planted fields remained weeks behind. Some limited defoliation was reported in Georgia. Insecticide treatments continued in most areas to combat infestations of stinkbugs. Whitefly populations were building in Alabama and Georgia and fields were sprayed that met threshold limits. The undertone from producers was cautiously optimistic; a few more weeks of similar weather would greatly enhance top-crop development and yield potential.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light.

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

Thunderstorms early in the week brought heavy rain showers and high winds to parts of the region.

Rainfall accumulations of up to two inches were reported, along with downed tree limbs and power outages in localized areas. The crop benefitted from the moisture, but drier areas are in need of more rain to help the crop finish. Irrigation continued uninterrupted in most areas. Heat indexes pushed daytime highs into the low 100s. Overnight lows were mostly in the mid-70s. The high temperatures helped the crop make good progress. The National Agricultural Statistics Service reported that boll opening advanced to 44 percent in Arkansas, 7 in Tennessee, and 5 percent in Missouri. Most producers applied the final treatment to control plant bugs.

Defoliation was underway in southern Arkansas. No harvesting was reported.

South Delta

Spot cotton trading was inactive. Supplies were light.

Producer offerings were light. Demand was light.

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

Hot, dry conditions prevailed during the week.

High temperatures were mostly in the upper 90s, with heat indexes in the low 100s and overnight lows in the low 70s. Local experts reported that some fields were moisture-stressed and in need of rainfall. Cotton extension specialists reminded producers that defoliants work best on unstressed plants. According to the National Agricultural Statistics Service, boll opening advanced to 71 percent in Louisiana and 25 percent in Mississippi. Crop protection treatments gave way to the application of harvest aid chemicals as defoliation gained momentum throughout the region. Harvesting slowly expanded. No ginning was reported.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate. Supplies and demand were moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive.

Harvesting and ginning were at full-capacity in the Upper Coast and Winter Garden areas. Most gins completed the season in the Coastal Bend and the Rio Grande Valley. Harvesting and ginning was in full swing in central Texas. In Kansas, both irrigated and dryland fields advanced under hot, dry conditions.

Most producers terminated watering efforts. Some estimate 1,200 to 1,500 pounds of lint per acre. In Oklahoma, local reports indicated that some dryland fields in Jackson County advanced, with yield expectations of two-thirds to three-fourths of a bale per acre. According to the National Agricultural Statistics Service, boll setting was 94 percent completed and 35 percent had open bolls.

West Texas

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

Trading of CCC-loan equities was inactive.

Cloudy conditions prevailed most of the week with spotty areas receiving some light rainfall. Temperatures gradually cooled into the high 80s during the daytime, and into the low 60s during the evenings. The change in conditions was beneficial for the crop and helped reduce heat-related stress. Overall, fruit retention is good and producers are encouraged. Bolls had begun to crack open at the base of the plants. Initial reports indicated that boll size appeared smaller than normal. Gaines County produced the first bale of the season on September 11. The bale is on display in downtown Seminole.

Western Markets

Desert Southwest (DSW)

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

Remnants from Tropical Storm Lorena combined with monsoon moisture to produce strong winds and heavy rains for much of southern Arizona. Approximately two to four inches of rainfall was received. Flash flooding conditions were common as low-lying areas quickly flooded. Local representatives reported standing water in gin yards and some fields. Wet conditions delayed defoliation in Parker (along the Colorado River) and some areas of central Arizona. Some producers will have to defoliate the crop a second time. A few fields have some bolls knocked off, but damage was not widespread. Harvesting was 75 percent completed in Yuma. Local experts estimated average yields were around 2.6 bales per acre. Ginning continued without delays as modules were already on the yard. The Visalia Classing Office received the first new-crop samples from Yuma early in the period. Thunderstorms brought one-half of an inch to one and one-half inches of rainfall to parts of New Mexico and El Paso, Texas. Cotton fields approached cut-out stage.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light and purchases of non-US growths were active. Australian cotton continued to put pressure on the SJV basis especially in sawginned cotton.

Hazy conditions were prevalent in the Valley, due to smoke drifting in from the Rim fire. Unseasonably, warm temperatures were in the high 90s to low 100s. Some producers began defoliating as some of the earliestplanted fields were ready. Whitefly populations continued to build, prompting some producers to prep fields for harvest.

American Pima (AP)

Spot cotton trading was inactive. Producer offerings were moderate. Market indicators are bullish and continue to influence producers to hold on to 2012-crop supplies. Supplies and demand were light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Moderate temperatures in the mid-to-high 90s were recorded in the Desert Southwest for most of the period.

Tropical storm moisture combined with monsoon activity brought heavy rains and winds to Arizona. Localized flooding was reported in several areas. Little-to-no crop damage was reported. Harvesting was delayed by the storm in Yuma, Arizona. Beneficial rains were also received in New Mexico and El Paso, Texas. The moisture provided little benefit to the crop, but added to the soil profile. San Joaquin Valley producers prepared equipment for harvest. Local experts reported that the top crop was heavy and may have slowed crop progress.

Treatments continued for aphids and whitefly. Reports indicated that defoliation could begin around September 16 in the earliest-planted fields.

Textile Mill Report

Domestic mill buyers inquired for a moderate volume of color 41, leaf 3, and staple 35 for delivery April through June 2014. No sales were reported. Most mills had covered their raw cotton needs through the first quarter of 2014. Mill buyers reported domestic cotton shippers were reluctant to offer raw cotton beyond first quarter of 2014 until harvest begins and classing data on crop quality becomes available. Yarn demand was good with increased demand for 100 percent cotton yarn reported at some mills. Most mills operated on a five to seven day schedule.

Demand through export channels was moderate. Vietnamese mill buyers purchased a moderate volume of color 31, leaf 3, and staple 35 for October shipment. Representatives for mills in Taiwan inquired for a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for September through December shipment.

Regional Price Information

Southeastern Markets

A light volume of mixed lots of color mostly 41 and better, leaf 5 and better, staple 33 and longer, mike averaging 46.5, strength averaging 28.5, and uniformity averaging 81.0 traded for around 82.50 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Central Markets

North Delta

No trading activity was reported.

South Delta

No trading activity was reported.

Southwestern Markets

East Texas

In Texas, a moderate volume of new-crop cotton, color 31 and better, leaf 3 and better, staple 36 and longer, mike 44-50, strength 27-32, and uniformity 79-83 sold for around 82.00 cents per pound, FOB warehouse (compression charges not paid).

A light volume of color 41 and better, leaf 3 and better, staple 35 and longer, mike 48-50, strength 29-30, and uniformity 81-82 sold for around 80.00 cents, same terms as above.

A moderate volume of color mostly 41, leaf 4 and better, staple 37 and longer, mike 45-51, strength 29-34, uniformity 80-84, and 25 percent extraneous matter (bark) sold for around 78.75 cents, same terms as above.

Mixed lots containing a moderate volume of color 12 and better, leaf 3 and better, staple 34, mike 49-52, strength 30-31, and uniformity 81-83 sold for around 76.00 cents, same terms as above.

West Texas

No trading activity was reported.

Western Markets Desert Southwest A moderate volume of 2012-crop cotton, color 41 and better, leaf 3 and better, staple 35 and longer, mike averaging 33.7, strength averaging 29.3, with 25 percent extraneous matter (mostly bark) sold at 78.75 cents per pound, uncompressed, FOB warehouse.

San Joaquin Valley

No trading activity was reported.

American Pima

A heavy volume of 2013-crop cotton was sold to foreign mills for December shipment.

The following information was excerpted from the Crop Production report, released on September 12, 2013

All cotton production is forecast at 12.9 million 480-pound bales, down 1 percent from last month and down 26 percent from last year. Yield is expected to average 796 pounds per harvested acre, down 91 pounds from last year. Upland cotton production is forecast at 12.3 million 480-pound bales, down 26 percent from 2012. Pima cotton production, forecast at 625,500 bales, is down 20 percent from last year. Producers expect to harvest 7.78 million acres of all cotton, down 17 percent from 2012. This harvested total includes 7.58 million acres of Upland cotton and 198,800 acres of Pima cotton.

The following information was excerpted from the World Agricultural Supply and Demand report, released on September 12, 2013

This month’s 2013/14 U.S. cotton supply and demand estimates include marginally lower production and lower exports compared to last month, resulting in a slight increase in ending stocks. Beginning stocks are raised 100,000 bales to 3.9 million based on revised stocks data for July 31, 2013. Domestic mill use is unchanged, but exports are lowered 200,000 bales due to increased competition for market share, mainly from India. The forecast range for the marketing year average price received by producers is lowered 3 cents on each end to 69 to 85 cents per pound, reflecting recent market activity and prospects.

The world 2013/14 cotton supply and demand estimates show higher ending stocks resulting mainly from increased production. Production is raised 1.0 million bales, based on improved crop prospects for India, Brazil, and Greece, partially offset by reductions for the United States and Syria. A small net decrease in global consumption includes reductions for India and South Africa, partially offset by increases for Indonesia and Turkey. Higher estimated world trade reflects increases in both imports and exports for India, as well as higher imports for Indonesia and Turkey. The China balance sheet is largely unchanged this month, based on currently announced reserve purchase, release, and import quota policies for 2013/14.

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Source: USDA

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