USDA – Weekly Cotton Market Review: December 4, 2015

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Spot cotton quotations were 80 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 61.97 cents per pound for the week ended Thursday, December 3, 2015. The weekly average was up from 61.17 cents last week, and 58.41 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 62.49 cents Friday, November 27 to a low of 61.21 cents Monday, November 30. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended December 3 totaled 112,209 bales. This compares to 35,844 bales reported last week and 83,938 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 392,943 bales compared to 469,289 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 63.95 cents, compared to 63.28 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #17
FOR UPLAND COTTON
December 3, 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 December 10, 2015, allowing importation of 15,287,174 kilograms (70,213 bales) of upland cotton.

Quota number 17 will be established as of December 10, 2015, and will apply to upland cotton purchased not later than March 08, 2016, and entered into the U.S. not later than June 6, 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 higher. Trading of CCC-loan equities was inactive.

Mostly sunny to partly cloudy conditions prevailed across Alabama, the Florida Panhandle, and Georgia the majority of the period. Observed daytime high temperatures were in the mid-70s to low 80s. The clear weather allowed harvesting activities to advance in fields, where soils were firm enough to support equipment, but progress was slow in Alabama and in the wettest areas of Georgia. Fieldwork was interrupted late in the period as a slow moving cold front brought scattered rainfall to much of the lower Southeast and pushed daytime temperatures down into the upper 50s to lower 60s. Producers were making difficult decisions in areas where low-lying fields have remained wet, and lint-quality and yields have continued to decline. In the Carolinas, sunny conditions and mild temperatures, which prevailed early in the period, allowed harvesting activities to advance in dryer areas. In South Carolina, producers expected crop quality to continue being poor-to-fair as they navigated damp fields and harvested salvageable areas. Producers in the Carolinas were also considering abandonment decisions in the wettest fields. Overcast, cold, and damp weather was observed in Virginia during much of the period. Heavy early-morning fog delayed fieldwork, but harvesting activities neared completion in most areas. Ginning continued uninterrupted across the region. According to the National Agricultural Statistics Service’s Crop Progress report, harvesting was 94 percent completed in Virginia, 85 in Alabama and North Carolina, 74 in Georgia, and 64 percent completed in South Carolina. In South Carolina, flood-stricken farmers made plans to attend a workshop hosted by Clemson University Extension at the Santee Convention Center on December 9 to help producers review lending options and crop prices.

South Central Markets

North Delta

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was good for color grades above 41. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Cold and wet conditions prevailed during the period. Daytime temperatures were in the upper 50s and overnight temperatures were in the mid-30s. A massive weather system laden with moisture blanketed the region mid-period. Rainfall accumulations of up to 8 inches were reported over a period of several days. Local experts reported that field operations had mostly concluded for the season, and that few, if any, fields remained to be harvested. A few larger gins were expected to complete pressing operations by December 9. According to the National Agricultural Statistics Service, harvesting had reached 96 percent in Missouri and Tennessee, which was ahead of the five-year average in both states. According to the U.S. Drought Monitor, locally heavy rainfall eliminated a few pockets of abnormally dry areas which had persisted in southeast Arkansas; soil moisture throughout the region was rated at adequate-to-surplus.

South Delta

Spot cotton trading was inactive. Supplies were moderate. Producer offerings were light. Demand was good for color 31 and better. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported.

Cool and wet conditions prevailed during the period. Daytime temperatures were in the low 60s and overnight temperatures were in the low 50s. An extensive weather system laden with moisture from the Gulf of Mexico blanketed the region mid-period. Rainfall accumulations of up to 2 inches were reported. Ginning operations were virtually completed. Fields operations had also concluded for the winter. The National Agricultural Statistics Service reported that harvesting advanced slowly to 96 percent in Mississippi. According to the U.S. Drought Monitor, widespread rainfall eliminated all of the abnormally dry areas, which had persisted in central Mississippi; soil moisture throughout the region was rated at adequate-to-surplus.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was active. Supplies and producer offerings were moderate. Demand was heavy. Average local spot prices were firm. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate. Interest was best from Korea, Taiwan, and Turkey.

Widespread rainfall in the Blackland Prairies continued to delay final harvesting and ginning progress. Industry reports indicated that some gins planned to delay pressing operations until the middle of December, after all modules are delivered. Ginning continued in the Winter Garden area. Generally, most gins had finalized the season. In Kansas, snow and freezing rain stopped all harvesting activities. Precipitation collected between the rows and left fields too saturated to support equipment. Some county roads were flooded and prevented module hauling to the gin yards. Industry experts reported that approximately 10 percent was harvested in western Kansas, 25 in central, and 80 percent in the Winfield area. Oklahoma producers were encouraged with quality and yields from fields that have been processed. Winter weather slowed harvesting in Tillman County, but harvesting neared completion in Jackson County.

West Texas

Spot cotton trading was active. Supplies and producer offerings were heavy. Demand was heavy. Average local spot prices were firm. Trading of CCC-loan equities was inactive. Foreign mill inquiries were moderate. Interest was best from Korea, Taiwan, and Turkey.

During the weekend of November 27, around one-half to four inches of rainfall was received that became icy when below freezing temperatures persisted. Field progress was interrupted. Muddy field conditions continued and slowed module transportation. Some reports indicated that modules were frozen in the fields. Ginning progressed slowly. Some gins cut operations to one shift, while other gins in the panhandle entered peak production. Meetings were attended.

Western Markets

Desert Southwest (DSW)

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

Temperatures were in the high 60s for Arizona. No rainfall was recorded in the period. Ginning progressed steadily with no interruptions. Local sources reported that growers intend to increase 2016 plantings by 20 to 30 percent. Producers noted that prices for competing row crops such as wheat and hay were lower. Spotty showers occurred early in the period, but harvesting and ginning advanced in New Mexico and El Paso, Texas. Freezing conditions were reported late in the period. Sources reported approximately 95 percent of cotton was in modules. Ginning continued. Local reports indicated that New Mexico and El Paso, Texas producers intend to increase cotton acreage in 2016. Depressed silage prices offered by dairies may help make the switch to more cotton.

San Joaquin Valley (SJV)

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

Temperatures were in the mid-to-high 50s for most of the week. Cloudy conditions and rain entered the Valley late in the period. Ginning continued. Producers may plant more cotton in 2016 if irrigation water is available. All Californians are hopeful that the forecasted El Nino will build upon the Sierra Nevada Mountains snowpack. Local experts reported that tomato contracts were not viable as there appears to be a large 2014-crop carryover of tomatoes. This year was one of the largest tomato crops planted and produced on record for California.

American Pima (AP)

Spot cotton trading was slow. Supplies were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Interest was best from China, Japan, and Pakistan. According the Foreign Agriculture Service, approximately 166,700 bales of AP was committed to export sales for week ending November 26. This compares to 121,700 bales last year at this time.

Temperatures were in the mid-to-high 60s in the Far West. Cloudy conditions moved into the San Joaquin Valley late in the period. Ginning continued. Industry experts reported a possible increase in AP acreage for 2016. Sources cited crop rotation practices, depressed prices for competitive crops, and depending upon water availability.

Textile Mill

Domestic mills inquired for a moderate volume of color 42, leaf 5, and staple 35 and longer for April through December 2016 delivery. Demand was also good for color 41, leaf 4, and staple 34 for second and third quarter 2016 delivery. No sales were reported. The undertone from mill buyers was cautious as they assessed finished product demand entering the new year, and adjusted orders of raw cotton accordingly. Most mills operated five to seven days; some mills scheduled limited downtime to control finished product inventories as yarn orders had tapered at some locations.

Inquiries through export channels were moderate. Agents for mills in Bangladesh inquired for a moderate volume of color 41, leaf 4, and staple 35 and longer for nearby shipment. Representatives for mills in Pakistan inquired for a moderate volume of color 42 and 51, leaf 5 and 6, and staple 34 and longer for nearby shipment. No sales were reported.

Regional Price Information

Southeastern Markets

  • Even-running lots containing color 41, leaf mostly 2 and 3, staple 36 and 37, mike 43-49, strength 28-30, and uniformity 81-83 sold for around 67.00 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).
  • Mixed lots containing color mostly 31 and 32, leaf mostly 3 and 4, staple 34-37, mike 43-49, strength 30-33, and uniformity 80-82 sold for around 64.75 cents, FOB car/truck (Rule 5, compression charges paid).
  • Mixed lots containing color mostly 51, 52, and 62, leaf mostly 3-5, staple 36-38, mike 37-49, strength 26-29, and uniformity 80-82 sold for around 56.75 cents, same terms as above.

South Central Markets

North Delta

  • A light volume of color 31 and better, leaf 3 and better, staple 36 and longer, mike 50-54, strength 29-35, and uniformity 80-84 sold for around 65.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).

South Delta

  • A light volume of color 31 and better, leaf mostly 3 and better, staple 36 and longer, mike 50-54, strength
  • 35, and uniformity 80-84 sold for around 65.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  • A light volume of color mostly 41 and better, leaf 4 and better, staple 33 and 34, mike 45-51, strength 30-34, and uniformity 81-83 sold for around 59.00 cents, same terms as above.

Southwestern Markets

East Texas

  • In Texas, a moderate volume of color 11 and 21, leaf 3 and better, staple 36, mike 43-47, strength 30-31, and uniformity 81-82 sold for around 64.00 cents per pound, FOB warehouse (compression charges not paid).
  • In Oklahoma, a light volume of color 21 and 31, leaf 3 and 4, staple 37 and longer, mike 38-44, strength
  • 34, and uniformity 80-83 sold for around 65.00 cents, FOB car/truck (compression charges not paid).
  • A light volume of color 21 and 31, leaf 2 and 3, staple 36-37, mike 41-44, strength 31-34, and uniformity 81-83 sold for around 64.75 cents, same terms as above.

West Texas

  • A heavy volume of color 31 and better, leaf 3 and better, staple 37, mike averaging 39.0, strength averaging 32.6, and uniformity averaging 80.6 sold for around 64.00 cents per pound, FOB car/truck (compression charges not paid).
  • Mixed lots containing a moderate volume of color 22 and better, leaf 3 and better, staple 35 and 36, mike 44-50, strength 27-32, and uniformity 79-81 sold for around 59.50 cents, same terms as above.
  • A moderate volume of color 31 and better, leaf 4 and better, staple 36 and longer, mike 37-40, strength 29-31, and uniformity 78-81 sold for around 57.00 cents, same terms as above.
  • A heavy volume of mostly color 42 and better, leaf 5 and better, staple 35 and longer, mike 37-47, strength 29-33, uniformity 76-82, and 50 percent extraneous matter sold for around 54.00 cents, same terms as above.

Western Markets

Desert Southwest

  • In Arizona, a moderate volume of mostly color 21 and better, leaf 2 and better, staple 36 and longer, mike 35-49, strength 27-33, and uniformity 78-83 sold for around 275 points on ICE March futures, uncompressed, FOB warehouse.
  • In New Mexico, a moderate volume of color 32 and better, leaf 4 and better, staple 36 and longer, mike
  • 48, strength 29.5-32.0, and uniformity 79-82 sold for around 60.50 cents per pound, FOB car/truck (compression charges not paid).

San Joaquin Valley

  • A heavy volume of saw-ginned Acala, color mostly 21 and better, leaf 2 and better, staple 37-40, mike 37-49, strength averaging 35.9, and uniformity averaging 82 sold for around 96.00 cents per pound, UD free, FOB warehouse.

American Pima

  • A light volume of 2015-crop Desert Southwest Pima color 2, leaf 1 and 2, staple 46 was purchased.
  • Mixed lots of a moderate volume of descriptive 2014-crop San Joaquin Valley Pima color 4 and better, leaf 4 and better, staple 46 and longer, and 100 percent extraneous matter sold for around 100.00 to 105.00 cents per pound, landed Far East.

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