USDA – Weekly Cotton Market Review: Oct. 23, 2015

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Spot cotton quotations averaged 67 points higher than 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 61.84 cents per pound for the week ended Thursday, October 22, 2015. The weekly average was up from 61.17 cents last week, but down from 62.71 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 62.56 cents Wednesday, October 21 to a low of 60.84 cents Thursday, October 22. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 22 totaled 13,125 bales. This compares to 11,973 bales reported last week and 30,566 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 75,070 bales compared to 119,235 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 62.52 cents, compared to 63.44 cents last week.

USDA ANNOUNCES SPECIALIMPORT QUOTA #11 FOR UPLAND COTTON
October 22, 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 October 29, 2015, allowing importation of 15,287,174 kilograms (70,213 bales) of upland cotton.

Quota number 11 will be established as of October 29, 2015, and will apply to upland cotton purchased not later than January 26, 2015, and entered into the U.S. not later than April 25, 2016. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period April 2015 through June 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 active. Supplies and producer offerings were light. Demand was good. Average local spot prices were higher. Trading of CCC-loan equities was inactive.

Mostly clear and sunny conditions prevailed across the entire southeastern region during the period. Seasonably cool and variable daytime highs prevailed in the upper 60s to lower 80s in the lower southeast. Light, patchy overnight frost was reported in some areas. In Alabama, harvest activity advanced at a rapid pace and was ahead of the 5-year average, about half of the crop has been picked. Producers welcomed the ideal weather conditions in Georgia where defoliation and harvesting progressed without interruption. Modules were arriving at gin yards and ginning activity was expanding. Slightly cooler daytime temperatures were observed throughout the Carolinas and Virginia. In South Carolina, most of the flood waters had receded and ííelds were drying out and firming, but many low-lying areas near rivers remained wet and inaccessible. Local experts are still assessing damage from the floods and reported that Clarendon, Georgetown, Florence, and Williamsburg counties suffered the most damage; in some fields more than half of the crop was lost. Harvest activity was slow to resume as producers assessed which fields were salvageable. Defoliation was expanding in North Carolina and Virginia and harvesting was underway in the earliest planted fields. In North Carolina, gins were resuming pressing schedules. According to the National Agricultural Statistics Service, 25 percent of the crop was rated very poor to poor in North Carolina, and 50 percent was rated very poor to poor in South Carolina.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies and 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.

Clear skies and unseasonably hot conditions prevailed during the week. Daytime temperatures in the low 70s early week warmed  into the low 80s late week. Nighttime temperatures were mostly in the low 50s. According to the U.S. Drought Monitor, areas of extreme drought have developed due to hot and dry conditions, which have existed for several  weeks. Outside activities advanced rapidly under near-ideal harvest conditions, but rain was needed to restore depleted soil moisture. According to the National Agricultural Statistics Service, harvesting in Arkansas advanced rapidly to 58 percent, which was equal to the five-year average. Progress in Tennessee advanced slowly to 23 percent, well behind the five-year average; harvesting also advanced rapidly to 39 percent in Missouri, although it remained about one week behind the five-year average. Local experts reported somewhat lower yields than last season, mostly attributable to the doughty conditions of late summer.

South Delta

Spot cotton trading was slow. Supplies and 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.

Clear skies and unseasonably hot temperatures continued to prevail during the week. Daytime temperatures stayed in the low to upper 90s, approaching high temperature records for the month of October in a few places. Overnight temperatures were mostly in the mid-50s. According to the U.S. Drought Monitor, areas of exceptional drought have developed due to hot and dry conditions which have existed since early July, the last recorded rainfall in some areas. Field operations were winding down in some areas. Activities included defoliation, harvesting, stalk shredding, and ginning. According to the National Agricultural Statistics Service, harvesting advanced to 82 percent in Louisiana and 51 percent in Mississippi. The crop was slightly behind the five-year average in both states. Producers in Louisiana and south Mississippi reported yields up to 1,400 pounds on some irrigated fields, but overall averages are down somewhat from last year. Dryland yields of up to 700 pounds have been reported.

Southwestern Markets

East Texas-Oklahoma

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

Ginning operations neared completion in the Rio Grande Valley. Local reports indicated that harvesting was around 75 to 90 percent completed in the Blackland Prairies. Ginning was reported at 60 to 70 percent completed in some areas. Ginning in the Winter Garden and Upper Coastal areas were passed peak production. In Kansas, boll opener and defoliant applications were underway. Producer reports indicated that harvesting activities were three weeks away. Southwestern Kansas remained dry, but eastern areas received some precipitation. In Oklahoma, rainfall was received. Harvesting and ginning were underway.

West Texas

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

Cool, wet conditions prevailed with daytime temperatures in the 60s and 80s. Strong thunderstorms brought two to six inches of heavy rainfall that immobilized harvesting activities mid-week. Producers hurried harvesting activities ahead of the storms to get as much cotton off the stalk as possible. After the storms, some ííelds were ílooded and plants were standing in water. Producers waited for the soils to firm before returning to the fields. According to industry experts, around 35 to 40 percent of fields were defoliated. Harvesting was estimated around 5 to 10 percent completed. Gins continued pressing operations. Night shifts were expanded at the Abilene, Lamesa, and Lubbock Cotton Classing Offices to accommodate the increased volume of samples receipts.

Western Markets

Desert Southwest (DSW

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.

Cotton-growing areas of Arizona received precipitation every day in the period. Rainfall amounts varied from one-quarter of an inch up to one inch. Heavy showers and thunderstorms were scattered and produced strong winds and hail. Some producers reported acreage losses of 40 percent, due to hail around the Casa Grande area and points south. Hail damage was also reported in Safford. Muddy fields stopped harvesting. Ginning continued. Strong winds damaged and destroyed 17 cotton warehouses in Glendale, Arizona early in the period. Accommodations were made to deliver new-crop bales to another warehouse location, as the facility will remain closed for several weeks for clean-up. Storm conditions moved into New Mexico and El Paso, Texas. Up to one inch of rainfall was received in New Mexico. El Paso, Texas received around three-quarters of an inch. Flash flood warnings were in effect for both states late in the period. Hail was also reported. It is unknown at this time if crop damage was sustained. Harvesting activities were limited in the period. No ginning was reported.

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.

Approximately one and one-quarter inches of rainfall was received in the SJV early in the period. Portions of Highway 58 and Interstate 5 were closed due to mudslides on October 15, which delayed deliveries of Arizona cotton samples to the Visalia Classing Office. Both are major roadways into the SJV. Interstate 5 re-opened late afternoon on October 16. Highway 58 re-opened late evening on October 21. Harvesting was delayed in Tulare County as fields were too wet to support equipment. Ginning continued. Sources estimated that about 60 percent of the crop was harvested. Modules accumulated in fields and gin yards.

American Pima (AP)

Spot cotton trading was inactive. Supplies of 2014-crop were moderate and slowly increasing for 2015-crop cotton. Demand continued light for 2014- and 2015-crop cotton. Average local spot prices were steady. No domestic mill activity was reported. Foreign mill inquiries were light. Inquiries from China, India, and Pakistan were noticeably absent. Interest was best from Egypt.

Precipitation was received in Arizona, New Mexico, and El Paso, Texas. One-half of an inch up to one inch of moisture was recorded throughout the Desert Southwest (DSW). Hail damage was reported in some ííelds near Casa Grande and Safford, Arizona. Strong winds damaged and destroyed 17 cotton warehouses in Glendale, Arizona early in the period. Accommodations were made to deliver new-crop bales to another warehouse location, as the facility will remain close for several weeks for clean-up. Flash flood warnings were in effect for New Mexico and El Paso, Texas late in the period. Muddy fields slowed harvesting in the DSW. Ginning continued in Arizona, but was yet to start in New Mexico and El Paso, Texas. Approximately one and one-quarter inches of rainfall was received in the San Joaquin Valley (SJV) early in the period. Portions of Highway 58 and Interstate 5 were closed due to mudslides on October 15, which delayed deliveries of Arizona cotton samples to the Visalia Classing Office. Both are major roadways into the SJV. Interstate 5 re-opened early in the period. Highway 58 re-opened on the evening of October 21. Harvesting was delayed in Tulare County as fields were too wet to support equipment. Ginning continued uninterrupted in the SJV. Local sources reported that approximately 60 to 70 percent of first pick harvesting was completed.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 35 for first and second quarter 2016 delivery. No sales were reported. Mill buyers also inquired for a moderate volume of color 53 and better, leaf 5 and better, and staple 32 and longer for nearby fill-in needs. Demand for ring-spun yarn was good; open-end yarn demand was moderate. Most mills operated five to seven days.

Inquiries through export channels were moderate. Representatives for mills in Indonesia inquired for a moderate volume of color 21, leaf 3, and staple 36 for nearby shipment. Japanese mill buyers also inquired for a moderate volume of color 31, leaf 3, and staple 36 for nearby shipment. Agents throughout the Far East inquired for any discounted or low-grade styles of cotton. No additional sales were reported.

Regional Price Information

Southeastern Markets

  • A moderate volume of color 21 and 31, leaf 2 and 3, staple 35 and 36, mike 43-49, strength 29-31, and uniformity 81-83 sold for around 400 points on ICE December futures, FOB car/truck (Rule 5, compression charges paid).
  • Mixed lots containing color mostly 31 and 41, leaf 2-4, staple mostly 34-37, mike 43-52, strength
  • 31, and uniformity 80-82 sold for around 275 to 300 points on ICE December futures, same terms as above.
  • Mixed lots containing color 31-42, leaf 2-4, staple 34-36, mike 43-52, strength 27-29, and uniformity 80-82 sold for around 200 points on ICE December futures, same terms as above.
  • Mixed lots containing color mostly 31, leaf mostly 2 and 3, staple 34-37, mike mostly 50-52, strength
  • 31, and uniformity 80-83 sold for around 150 points on ICE December futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).

South Central Markets

North Delta

  • No trading activity was reported.

South Delta

  • A moderate volume of color 21 and 31, leaf 3 and better, staple 37 and 38, mike 42-50, strength 27-31, and uniformity 79-82 traded at around 69.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

Southwestern Markets

East Texas

  • In Texas, a light volume of color 11 and 21, leaf 2 and 3, staple 36 and longer, mike 39-44, strength
  • 32, and uniformity 78-82 sold for around 66.00 cents per pound, FOB warehouse (compression charges not paid).
  • A light volume of color 31 and 41, mostly leaf 4, staple 37 and longer, mike 37-50, strength 29-34, and uniformity 80-83 sold for around 64.25 cents, same terms as above.
  • A moderate volume of mostly color 41 and 42, leaf 3 and 4, staple 37 and longer, mike 44-50, strength
  • 34, and uniformity 79-83 sold for around 59.00 cents, same terms as above.
  • A light volume of CCC-loan equities traded for around 4.00 cents.

West Texas

  • A light volume of color 11 and 21, leaf 1 and 2, staple 39 and longer, mike averaging 43.2, strength averaging 31.9, and uniformity averaging 82.4 sold for around 65.00 cents per pound, FOB car/truck (compression charges not paid).
  • A light volume of color 11 and 21, mostly leaf 3 and 4, staple 37 and longer, mike 29-36, strength 27-32, and uniformity 78-82 sold for around 58.50 cents, same terms as above.
  • A light volume of mostly color 21 and 22, mostly leaf 2 and 3, staple 36 and longer, mike 34-41, strength 30-32, and uniformity 80-82 sold for around 57.75 cents, same terms as above.
  • A moderate volume of CCC-loan equities traded for around 8.00 cents.

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