USDA – Weekly Cotton Market Review: November 12, 2015

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Spot cotton quotations averaged 59 points lower 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 60.46 cents per pound for the week ended Thursday, November 12, 2015. The weekly average was down from 61.05 cents last week and 60.95 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 60.26 cents Friday, November 6 to a high of 60.77 cents Wednesday, November 11. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended November 12 totaled 32,389 bales. This compares to 35,753 bales reported last week and 32,733 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 158,859 bales compared to 258,147 bales the corresponding week a year ago. The ICE December settlement prices ended the week at 61.84 cents, compared to 61.95 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #14
FOR UPLAND COTTON
November 12, 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 November 19, 2015, allowing importation of 15,287,174 kilograms (70,213 bales) of upland cotton.

Quota number 14 will be established as of November 19, 2015, and will apply to upland cotton purchased not later than February 16, 2016, and entered into the U.S. not later than May 16, 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 moderate. Supplies and producer offerings were moderate. Demand was good. Average local spot prices were steady. Trading of CCC-loan equities was inactive.

Outside activities were slow from the Gulf to Atlantic coasts due to prolonged wet conditions. Up to 1 inch of precipitation was received in most areas of Alabama and Georgia during the period. Similar rainfall amounts were reported throughout the Carolinas and Virginia. In most areas, fields remained too soft to support harvesting equipment. Concerns about lint quality deteriorating as open bolls remained exposed to prolonged wet conditions were foremost in producers’ minds. In the Carolinas, the excessive rainfall continues to negatively impact yield and lint quality; color 52 continues to be the predominate color grade reported by the Florence Classing Office in the Daily Cotton Quality Summary. Harvest and ginning activities were at a standstill in parts of Georgia and most of South Carolina due to continued wet weather. Many gins had processed all of their raw cotton on gin yards and were idle due to inaccessible modules in muddy fields. According to the National Agricultural Statistics Service, harvesting advanced slowly to 68 percent in Alabama, 47 in Georgia, 53 in North Carolina, 46 in South Carolina, and 65 percent in Virginia, all of which were behind the five-year average. Producers in the hardest hit areas were concerned that the inclement weather could result in the abandonment of the cotton remaining on the stalk.

South Central Markets

North Delta

Spot cotton trading was moderate. Supplies were heavy. Producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Rain showers, which occurred at the beginning and end of the period, continued to delay outdoor operations throughout the region. Accumulations of 2 to 4 inches of precipitation were reported. Daytime temperatures were in the mid-60s and overnight temperatures were in the low 40s. Cold air moved in behind the storm-front and brought overnight temperatures in the mid-30s. Very little harvesting was accomplished as wet conditions prevented equipment from entering fields. Ginning was also delayed in some areas due to the inability to retrieve modules from muddy fields. Further harvesting and ginning delays were expected until soft soils firmed enough to support equipment. According to the National Agricultural Statistics Service, harvesting advanced slowly to 89 percent in Arkansas, 76 in Mi ss ouri, and 68 percent in Tennessee, all of which were behind the five-year average. Producers were concerned that the inclement weather could reduce the quality of the cotton remaining on the stalk.

South Delta

Spot cotton trading was slow. Supplies were heavy. Producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Wet weather continued to plague the region during the reporting period. Up to 2 inches of precipitation were reported. Field operations were at a standstill in most areas due to saturated soil conditions. High temperatures dropped into the low 60s and overnight lows were in the low 50s. Ginning was delayed at some gins due to insufficient backlogs of modules on their yards. Soil moisture was mostly adequate throughout the region. According to the National Agricultural Statistics Service, harvesting had reached 87 percent in Mississippi. This was about one week behind the five-year average due to wet field conditions. Producers in Mississippi were concerned that the damp and cloudy weather could negatively impact the color grade of the cotton remaining in the fields.

Southwestern Markets

East Texas-Oklahoma

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

More rainfall was received in the Blackland Prairies and interrupted field activities. Harvesting was approximately 90 percent completed, but ginning continued in some areas. According to ginner’s reports, pressing operations were 50 to 100 percent completed. Some gins had as many as 200 modules on the gin yards. Weather and equipment

interruptions had delayed some ginning activity. Light sample receipts from the Winter Garden and the Blackland Prairies continued to be delivered to the Corpus Christi Classing Office. Most of the fields in the Brazos Bottoms had been harvested, but a few fields were resprayed with defoliants following rainfall events that spurred regrowth. In Kansas, harvesting was underway in the eastern side of the state with approximately 20 percent completed. High winds halted harvesting on November 11. According to the National Agricultural Statistics Service Crop Progress report, Oklahoma fields were 47 percent harvested.

West Texas

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

Sunny conditions prevailed early in the period and harvesting and ginning advanced. Harvesting progress varied from starting in the panhandle to around 70 percent completed in counties around Lubbock and Lamesa. Modules were actively hauled from the fields to the gins. Harvesting was interrupted late in the period; outside conditions became foggy, and windy. Some areas received overnight freezing temperatures that will help the plants drop the remaining leaves. High temperatures were in the upper 50s and 70s and overnight lows were in the upper 20s to mid-40s. Organic fields have not yet been harvested. Limited harvesting was expected to begin by November 19.

Western Markets

Desert Southwest (DSW)

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

Temperatures were in the mid-70s to low 80s. No rainfall was recorded in the period. Harvesting and ginning continued uninterrupted. Local sources in Safford reported that some saw-ginned Fiber-Max varieties had averaged a 39 staple length. Higher leaf content was a concern in Safford, as a result of heavy rains and hail prior to harvest. According to the National Agricultural Statistics Service (NASS) Crop Progress report for week ending November 8, harvesting was 50 percent completed in Arizona, slightly higher than the five-year average of 47 percent. The Visalia Classing Office reported the season average Upland length at 36.54 for the week ending November 12, compared to 35.99 the same time last year. Strength averaged 30.93 compared to 29.70 last year in Arizona. Temperatures were in the 60s and 70s for New Mexico and El Paso, Texas. The crop condition was rated mostly fair-to-good in New Mexico. Cotton harvesting was at 55 percent completed in New Mexico, compared to 22 percent the previous year, according to NASS.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Daytime high temperatures were in the mid-to-high 60s. Nighttime temperatures were mostly in the low 40s. Scattered showers produced one-tenth to one-quarter of an inch of moisture in the central Valley. Cotton-growing areas of Madera and Merced Counties received one-third to one-half of an inch of rainfall. The storm was cold, and produced heavy snowfall in the Sierra Nevada Mountain range at the 5,000 foot level. Snow on the Sierra’s was visible from the Valley floor, a most welcomed sight. Ginning continued. Saw-ginned Upland length and strength are outstanding this season. The Visalia Classing Office reported the season average length at 37.23 for week ending November 12, compared to 36.98 for the 2014-crop. Strength for the season averaged 34.22 compared to 33.22 the same time last year. Roller-ginned Upland length averaged 39.35, up slightly from 39.19 in 2014. Strength averaged 35.07 compared to 33.74 the previous year.

American Pima (AP)

Spot cotton trading was slow. Supplies of 2014 and 2015-crop and demand were moderate. Average local spot prices were lower. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate.

Temperatures were mostly in the 60s and 70s for Arizona, California, New Mexico, and El Paso, Texas. No rainfall was received in the Desert Southwest in the period. Clear weather allowed New Mexico and El Paso, Texas producers to continue harvesting. Ginning continued uninterrupted. The San Joaquin Valley recorded one-tenth to one-half of an inch of precipitation. The storm was cold and produced heavy snowfall in the Sierra Nevada Mountain range at the 5,000 foot level. Snow on the Sierra’s was visible from the Valley floor, a most welcomed sight. Ginning continued. Recent heavy rains and hail in the far west deteriorated color quality slightly. The Visalia Classing Office reported 91 percent of AP classed at color 2 and better for week ending November 12, compared to 98 percent at this same time last year. Season-to-date strength averaged 43.37 compared to 42.83 for the 2014-crop. Leaf and length qualities were similar to the previous year.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 5, and staple 35 and 36 for April/May 2016 delivery. Buyers for domestic mills inquired for a moderate volume of color 53 and better, leaf 5 and better, and staple 32 and longer for April through August 2016 delivery. No sales were reported. Reports indicated that yarn demand remained light and some mills reduced operating schedules to manage finished product inventories.

Inquiries through export channels were light. Japanese mill buyers inquired for a moderate volume of USDA Green Card Class, color 31 and 41, leaf 3 and 4, staple 34 and 35 for March through July 2016 shipment. Agents for mills in Vietnam inquired for a light volume of USDA Green Card Class, color 31, leaf 3, and staple 36 for prompt shipment. Indonesian mill buyers inquired for a moderate volume of color 42, leaf 4, and staple 34 for December through March 2016 shipment. No sales were reported. Domestic cotton shippers indicated foreign mill buyers were sourcing more competitively priced raw cotton from other countries, most notably Brazil.

Regional Price Information

Southeastern Markets

• A light volume of color 31 and better, leaf 3 and better, staple 36 and 37, mike 50-52, strength 28-31, and uniformity 80-84 traded for around 68.25 cents per pound, FOB car/truck (Rule 5, compression charges paid).

• A light volume of color 31 and better, leaf 3 and better, staple 36, mike 41-49, strength 28-32, and uniformity 80-84 traded for around 66.00 cents, same terms as above.

• A light volume of color 31 and 32, leaf 3 and better, staple 34 and longer, mike 48-54, strength 27-30, and uniformity 79-81 traded for around 60.50 cents, same terms as above.

South Central Markets

North Delta

• A moderate volume of color 31 and better, leaf 3 and better, staple 37 and 38, mike 37-49, strength 29-35, and uniformity 81-84 traded for around 67.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

• A light volume of mostly color 41 and better, leaf 4 and better, staple 34 and longer, mike 50-55, strength 29-35, and uniformity 79-83 traded for around 60.75 cents, same terms as above.

South Delta

• A moderate volume of color 42 and better, leaf 4 and better, staple 32 and longer, mike 45-55, strength 26-36, and uniformity 79-84 traded for around 62.00 cents per pound, FOB car/truck (Rule 5 compression charges paid).

Southwestern Markets

East Texas

• In Texas, a moderate volume of mostly color 11 and 21, leaf 2, staple 36, mike averaging 47.8, strength averaging 32.1, and uniformity averaging 81.9 sold for around 64.00 cents per pound, FOB car/truck (compression charges not paid).

• In Oklahoma, a light volume of color 11, leaf 2, staple 36 and 37, mike 35-36, strength 32-33, and uniformity 80-81 sold for around 62.25 cents, same terms as above.

• A light volume of color 11, leaf 1 and 2, staple 34, mike 41-46, strength 29-31, and uniformity 80-81 sold for around 57.25 cents, same terms as above.

• A light volume of color 12 and better, leaf 1 and 2, staple 34 and longer, mike 39-41, strength 27-30, and uniformity 79-82 sold for around 56.25 cents, same terms as above.

West Texas

• A moderate volume of color 21 and 31, leaf 2 and 3, staple 37, mike averaging 43.1, strength averaging 32.5, and uniformity averaging 81.32 sold for around 62.00 cents per pound, FOB car/truck (compression charges not paid).

• A moderate volume of color 21 and 31, leaf 3 and better, staple 35 and longer, mike 42-47, strength 27-32, and uniformity 79-83 sold for around 58.50 cents, same terms as above.

• A light volume of color 11, leaf 1 and 2, staple 33-34, mike 41-45, strength 28-30, and uniformity 77-80 sold for around 56.50 cents, same terms as above.

Western Markets

Desert Southwest

• A light volume of 2015-crop cotton, mostly color 21 and better, leaf 3 and better, staple 37, mike averaging 48, strength averaging 30.8, and uniformity averaging 81.2 traded for around 63.50 cents per pound, uncompressed, FOB warehouse.

• A light volume of cotton, color 21 and 31, leaf 4, staple 37, mike averaging 48, strength averaging 31.0, and uniformity averaging 81.1 traded for around 56.75 cents per pound, same terms as above.

San Joaquin Valley

• No trading activity was reported.

American Pima

• A heavy volume of 2014-crop cotton, color 2, leaf 2, and staple 46 and longer traded for around 140.00 cents per pound, UD free, FOB warehouse.

• A moderate volume of 2015-crop cotton, color mostly color 2 and better, leaf 2 and better, staple 48 and longer traded for around 130.00 cents per pound, same terms as above.

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