USDA – Weekly Cotton Market Review: June 20

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Spot cotton quotations were virtually unchanged from the previous week, according to the USDA, Agricultural Marketing Service’s Cotton and Tobacco 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 62.39 cents per pound for the week ended Thursday, June 18, 2015. The weekly average was down from 62.55 cents last week, and lower than the 79.26 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 61.40 cents on Monday, June 15, to a high of 63.06 cents on Thursday, June 18. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 18, totaled 1,037 bales. This compares to 4,902 bales reported last week and 410 bales reported a year ago. Total spot transactions for the season were 2,078,699 bales, compared to 1,302,162 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 65.88 cents, compared to 65.40 cents last week.

Prices are in effect from June 19 – June 25, 2015

Adjustment World Price (AWP)                      50.51                     ELS       Competitiveness Payment                    0.00

Loan Deficiency Payment (LDP)                        1.49                     Fine       Count Adjustment 2014 Crop             0.23

Coarse Count Adjustment (CCA)                       0.00                     Fine       Count Adjustment 2015 Crop             0.18

Source: Farm Service Agency, FSA, USDA

USDA ANNOUNCES SPECIAL IMPORT QUOTA #19
FOR UPLAND COTTON
June 18, 2015

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 June 25, 2015, allowing importation of 14,667,427 kilograms (67,367 bales) of upland cotton.

Quota number 19 will be established as of June 25, 2015, and will apply to upland cotton purchased not later than September 22, 2015, and entered into the U.S. not later than December 21, 2015. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period November 2014 through January 2015, 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 and producer offerings were light. Demand was moderate. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

Mostly clear to partly cloudy conditions prevailed across the region throughout the period. Scattered afternoon pop-up thunderstorms brought localized precipitation to areas from the Gulf Coast to the Carolinas and Virginia. Precipitation totals measured from one-quarter of an inch of day-to-day moisture in the lower southeast to in excess of two inches of heavy downpours in concentrated areas of the Carolinas late week. However, many areas missed significant precipitation and additional moisture was needed as hot and dry weather had begun to stress plants. Temperatures prevailed in the mid-to-upper 90s and peaked into the low 100s in some areas. Squaring was underway across the region, but crop progress was variable due to re-planting activity in flooded fields and in areas where planting was delayed on dryland acreage, due to lack of moisture. Plant-growth regulator applications were getting underway as the hot weather rapidly advanced the crop. Plant bugs were present in some of the earliest planted fields in Alabama and North Carolina and treatments were underway. Aphids were present in isolated areas. Crews continued to hand pull Palmer amaranth (pigweed) escapes.

South Central Markets
North Delta

Spot cotton trading was inactive. Supplies of available cotton and demand were light. Average local spot prices were steady. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Hot, humid conditions dominated the weather pattern during the week. Isolated thunderstorms brought one-quarter to one-half of an inch of rain to some areas. Daytime temperatures were generally in the low to mid-90s, with the heat index over 100 in a few places. Overnight lows were in the upper 70s to low 80s. The crop benefited from the hot temperatures and generally made good progress. Local experts reported that plant development continued to vary widely. Fields that remain saturated, due to frequent rain showers, and/or were located in low-lying areas were progressing slowly. Cotton specialists reported low levels of root diseases in fields with normal moisture levels. Producers continued to address weed and fertility issues in some saturated fields. Insect pressure was light, although some fields were treated as necessary to control infestations of thrips, plant bugs, and stink bugs. According to the National Agricultural Statistics Service, squaring had reached 9 percent in Arkansas and 9 percent in Tennessee. No squaring was reported in Missouri.

South Delta

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

Scattered thunderstorms and hot conditions prevailed during the period. Temperatures ranged from the low- 90s in the daytime to the low-70s overnight. Despite the rainy weather, producers report that crops have received a good amount of sunlight and heat. Herbicide treatments were administered in areas that were inaccessible in the previous week. Insects have not been a major issue; only a small number of producers have started applying pesticides in the fields. However, farmers have continued to monitor fields for pests. Producers now hope for more sunshine as the crop is progressing through the squaring stage. According to the National Agricultural Statistics Service, squaring advanced to 41 percent in Louisiana and 15 percent in Mississippi. Overall, the crop made good progress.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was light. Average local spot prices were weak. Trading of CCC-loan equities was slow. Foreign mill inquiries were light.

In southern Texas, Tropical Storm Bill made landfall with heavy rains and high winds that flooded some fields. Fields in the Upper Coast received more moisture than fields on the southern side of the storm.

Some fields around Corpus Christi received trace amounts of precipitation and fields around Wharton received as much as 10 inches of rainfall. Producers were hopeful that once fields dried the crop would progress, because a foundation for a good boll load had been established. Eastern Texas received two to eight inches of moisture that saturated fields and caused weeds to grow. Stands were established and continued to advance despite rainy, overcast conditions. In Kansas, stands were established and were at the three to four true leaf stage. No rainfall was reported. Industry experts noted that sunshine would be beneficial for seedling stands to progress. In Oklahoma, widespread rainfall was received over the weekend and Tropical Depression Bill brought 5 to 10 inches of additional moisture late in the reporting period. Industry reports indicated that loss was minimal and concentrated near creeks that had spilled over banks and into nearby fields. Producers were anxious to prevent sand blasting injury and were eager to return to the fields once the soils firmed enough to support equipment.

West Texas

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were weak. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light.

Weekend rainfall in the High Plains proved beneficial to the fields that had been sown during the past two weeks because the top soil had become dry and crusty. Marginal fields showed vigor following rainfall and sunshine. Some areas near Abilene received two inches of heavy rainfall, and some areas east around Big Spring received no moisture. Heat units increased and that helped the later planted fields to progress. A significant amount of acres were lost because of hail and wind damage. Rainfall continued to wash away colonies and plant bugs were observed in small numbers. Producers continued vigilant weed management.

Western Markets

Desert Southwest (DSW)

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

Temperatures were in the mid-100s and reached a high temperature of 113 degrees in Arizona late in the period. Nighttime temperatures were in the mid-to-high 80s, giving cotton plants little time to rest. Some fields exhibited signs of heat stress. Some producers irrigated the crop to minimize stress. The crop made good progress. Temperatures were in the high 90s for New Mexico and El Paso, Texas. Local sources reported that some early-planted fields were behind schedule, due to a cool spring. Fields planted in late May were progressing. Sunny, dry weather advanced the crop. Overall, the crop was considered late for this time of year.

San Joaquin Valley (SJV)

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

Temperatures were in the high 90s into the low 100s. The crop was blooming, squaring, and setting small bolls. Local sources reported that the crop was early, due to extreme heat. Irrigations were ongoing, but water is limited. The crop made good progress.

American Pima (AP)

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

Temperatures were in the high 100s for Arizona and in the high 90s to low 100s for California. Parts of eastern Arizona received around one-third of an inch of rainfall. Temperatures in New Mexico and El Paso, Texas were in the high 80s to mid-90s. The crop was blooming and setting bolls in Arizona and California. Overall, the crop made good progress in Arizona, California, New Mexico, and Texas. Industry representatives attended the AP Grade Standards and Guide Box review in Visalia, CA on June 18, 2015.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2014 and 2015 -crop cotton, color 41, leaf 4 and 5, and staple 34 and longer for fourth quarter 2015 through third quarter 2016 delivery. No sales were reported. Re­ports indicated some mills had covered their raw cotton needs through the November and December of 2015, while others would require additional fill-in third quarter needs. Demand for open-end and ring-spun demand was moderate to good. Most mills operated five to seven days.

Inquiries through export channels were moderate. Representatives for mills in Vietnam purchased a moderate volume of color 31, leaf 3, and staple 36 for July shipment. Agents for mills throughout the Far East inquired for any discounted or low-grade styles of cotton.

Regional Price Information

Southeastern Markets

No trading activity was reported.

South Central Markets

  • North Delta

No trading activity was reported.

  • South Delta

No trading activity was reported.

Southwestern Markets

  • East Texas

In Oklahoma, a light volume of color 41, leaf 2 and 3, staple 33 and 34, mike 48-52, strength 27-31, and uniformity 77-80 sold for around 53.00 cents per pound, FOB car/truck (compression charges not paid).

In Texas, a light volume of CCC-loan equities traded for 8.00 cents.

  • West Texas

A light volume of color 21 and 31, leaf 4 and better, staple 36 and longer, mike 30-38, strength 28-32, and uniformity 76-83 sold for around 60.00 cents per pound, FOB car/truck (compression charges not paid).

Western Markets

  • Desert Southwest

No trading activity was reported.

  • San Joaquin Valley

No trading activity was reported.

  • American Pima

No trading activity was reported.

Cotton & Wool

The following information was excerpted from the Cotton & Wool Outlook report, released on June 12, 2015

USDA’s 2015 U.S. cotton crop projection remains at 14.5 million bales this month and is 11 percent below the final 2014 crop. While the Southwest precipitation that occurred in May was generally beneficial, uncertainty remains as to its effect on area and yield as planting was delayed and is still in progress. The planting estimate of 9.55 million acres will be updated in USDA’s Acreage report, which will be released June 30th. This report will include actual plantings as of early June, as well as estimates for any remaining cotton to be planted. As of June 7th, 81 percent of the expected cotton area had been planted, below last season’s 87 percent and the 2010-14 average of 89 percent. Crop development has followed similarly, with 7 percent of the cotton area squaring by June 7th, compared with 8 percent last season and a 5-year average of 10 percent. Based on current projections, U.S. cotton harvested area is forecast at 8.6 million acres for 2015, reflecting a below-average abandonment rate of 10 percent. Last season’s abandonment rate was 15 percent. The 2015 U.S. cotton yield is forecast at 809 pounds per harvested acre, compared with 838 pounds per harvested acre in 2014. USDA’s National Agricultural Statistics Service will begin “in field” production surveys in August.

Global 2015/16 cotton production is projected to decline 6 percent from the previous season to 111.3 million bales. Lower crops are forecast for most major cotton-producing countries in 2015/16, with India and Uzbekistan production level with 2014/15. India—expected to be the leading producer in 2015/16—is forecast to produce 29.5 million bales, or 26.5 percent of global cotton production. Lower area and higher yields, compared with 2014/15, are expected to keep production in India unchanged.

 

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