USDA – Weekly Cotton Market Review: January 8, 2016

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Spot cotton quotations were 134 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 61.07 cents per pound for the week ended Thursday, January 7, 2016.

The weekly average was down from 62.41 cents last week, but higher than the 58.93 cents reported the corresponding period a year ago.

Daily average quotations ranged from a high of 61.52 cents Tuesday, January 5 to a low of 60.34 cents Thursday, January 7. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended January 7 totaled 24,911 bales. This compares to 79,199 bales reported last week and 74,424 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 762,908 bales compared to 1,056,121 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 61.43 cents, compared to 63.28 cents last week.

 USDA ANNOUNCES SPECIAL IMPORT QUOTA #22 FOR UPLAND COTTON January 7, 2016

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 January 14, 2016, allowing importation of 14,665,803 kilograms (67,359 bales) of upland cotton. Quota number 22 will be established as of January 14, 2016, and will apply to upland cotton purchased not later than April 12, 2016, and entered into the U.S. not later than July 11, 2016. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period September 2015 through November 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.

Prices are in effect from January 8-14, 2016 
    
Adjusted World Price (AWP)      47.60  ELS Competitiveness Payment           0.00
Loan Deficiency Payment (LDP)    4.40  Fine Count Adjustment 2014 Crop       1.01
Coarse Count Adjustment (CCA)    0.00  Fine Count Adjustment 2015 Crop       0.96
Source:  Farm Service Agency, FSA, USDA

 Regional Summaries

Southeastern Markets

Spot cotton trading was moderate. Supplies were moderate.

Demand was good. Producer offerings were moderate. Average local spot prices for the week ending December 31, 2015 were firm, but lower for the week ending January 7, 2016. Trading of CCC-loan equities was inactive.

Mostly cloudy and overcast conditions prevailed across the entire southeastern region during much of the extended two-week reporting period, along with breaks of intermittent sunny weather. Most areas remained very soggy as rivers and floodwaters receded after recent weeks of drenching rainfall. Unseasonably warm daytime high temperatures were observed in the upper 60s to upper 70s early in the period. A cold front pushed into the region over New Year’s day and temperatures plunged into the high 40s to low 50s. In the lower southeast, fieldwork was nearing completion as producers continued harvesting accessible fields on higher ground, but in many areas soggy low-lying fields remained inaccessible and unharvested.

In Alabama, Florida, and Georgia, a few larger gins continued to operate at capacity, but most smaller gins had finished pressing operations for the season or had gone to gin days. Similar conditions prevailed in the upper southeast where producers were finishing harvesting activities and winter fieldwork in areas were soils were firm enough to support equipment. Ginning activity was rapidly nearing completion for the season in the Carolinas. Producers considered spring planting options and made plans to attend approaching crop seminars and meetings.

 South Central Markets

North Delta

Spot cotton trading was slow. Supplies of available cotton were light.

Demand was light. Average local spot prices were firm for the week ending December 31, 2015, but lower for the week ending January 7, 2016.

Trading of CCC-loan equities was inactive. No forward contracting was reported.

An unusual winter weather pattern characterized climatic conditions during the two-week reporting period. Daytime temperatures varied from the mid-30s to the upper 70s. Overnight lows were in the low 20s to the upper 50s. An extended period of unseasonably warm weather caused flowering trees and shrubs to produce buds in the Memphis territory. Up to 4 inches of rain was reported throughout the region. Flood warnings were in effect throughout the Lower Mississippi River Valley due to local rainfall as well as very heavy precipitation in the Upper Mississippi River Valley. The Mississippi River was expected to crest late week in Memphis at around 40 feet, 6 feet above flood stage.

Producers considered planting options, including new cotton varieties, and attended various workshops in anticipation of next season’s crop. Many producers focused their attention on weed control strategies, as resistance to crop protection chemicals remains a major problem. Some producers have already booked some of their cottonseed for the coming season.

South Delta

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

Demand was light. Average local spot prices were firm for the week ending December 31, 2015, but lower for the week ending January 7, 2016. Trading of CCC-loan equities was inactive. No forward contracting was reported.

An unusual winter weather pattern characterized climatic conditions during the two-week reporting period. Daytime temperatures varied from the low 40s to the low 80s. Overnight lows were in the low 30s to the upper 50s. Up to 3 inches of rain was reported throughout the region. Flood warnings were in effect throughout the Lower Mississippi River valley, due to local rainfall.

Heavy precipitation throughout the Mississippi River watershed also played a factor. The Mississippi River was expected to crest late next week in Vicksburg, MS at around 53 feet, 10 feet above flood stage. Producers considered planting options, including new cotton varieties, and attended various workshops in anticipation of next season’s crop. Many producers focused their attention on financial strategies to minimize expenses as low commodity prices and high input costs pose major impediments to profitability. Some producers have already booked some of their cottonseed for the coming season.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate. Supplies and producer offerings were moderate.

Demand was light. Average local spot prices were steady for the week ending December 31, 2015, but lower for the week ending January 7, 2016. Trading of CCC-loan equities was slow for the week ending December 31, but inactive for the week ending January 7. Foreign mill inquiries were very light.

For the week ending December 31, 2015, South Texas and the Rio Grande Valley received rain showers that deposited additional precipitation to the area and helped recharge subsoil moisture. East and central Texas received over 4 inches of heavy rainfall that caused flooding. No damage was reported since harvesting was mostly completed. Kansas and Oklahoma received rainfall and up to 2 inches of snow and ice that slowed harvesting and ginning progress. Gins in Oklahoma experienced complete shutdowns due to power outages. For the week ending January 7, 2016, rainy, cold conditions continued to hamper harvesting and ginning progress in east and central Texas. Some modules were stuck in flooded fields. Fields showed signs of erosion. Light rain and overnight freezing temperatures slowed progress in Kansas and Oklahoma. Local reports indicated that Kansas fields were 80 percent harvested and ginning neared 50 percent completed.

Producers planned for next season, in view of low cotton prices, and attended the Beltwide Cotton Conference that was held in New Orleans.

West Texas

Spot cotton trading was moderate. Supplies and producer offerings were moderate.

Demand was moderate. Average local spot prices were firm for the week ending December 31, 2015, but lower for the week ending January 7, 2016. Trading of CCC-loan equities was inactive. Foreign mill inquiries were very light.

During the week ending December 31, 2015, blizzard conditions deposited more than 11 inches of snow and ice in Lubbock and 5 inches around Abilene. No major crop damage was reported since the majority of the crop is harvested, but some agricultural structures received damage under the weight of the snow. Industry members were encouraged with additional moisture for the planting season and plans were made for an increase in planted acres. Transportation of modules from the fields to the gins was halted. For the week ending January 7, 2016, periodic sunny conditions, accompanied with daytime temperatures in the 30s to 50s, melted some of the snow and ice accumulations. Nighttime temperatures dropped in the teens and 20s, which refroze roadways overnight causing travel difficulties.

A cold front on January 5 moved from New Mexico into the High and Low Plains that intermittently deposited up to 2 inches of snow and rain. Some gins moved snow away from modules on the yards in order to continue pressing operations. Some gins expected to be finished, but lingering snow and ice delayed operating schedules.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was slow. Supplies were moderate. Demand was light.

Average local prices were higher for the week ending December 31, 2015 were higher, but higher lower for the week ending January 7, 2016. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the 50s and 60s in Arizona. Approximately one-third of an inch of moisture was received on January 3. Approximately one-tenth of an inch of rainfall was recorded early in the period for week ending January 7. Ginning continued. Cotton-growing areas in higher elevations of New Mexico had daytime temperatures in the low to mid-30s. Southern New Mexico and El Paso, Texas temperatures were in the high 40s to low 50s.

Snow, ice, and rain were received the week of December 25 for much of New Mexico and El Paso, Texas. Rainfall measured around one-half of an inch.

Snowfall accumulations were around 2 to 4 inches, which did not affect ginning.

Ginning was completed in New Mexico on New Year’s Eve. Ginning continued in El Paso, Texas.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were moderate. Demand was light.

Average local prices for the week ending December 31, 2015 were firm, but lower for the week ending January 7, 2016. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures were in the 50s. The El Nino weather pattern brought beneficial rain and snow for the week ending January 7. The SJV received one-half of an inch to two inches of rainfall in the period. Low-lying areas were flooded, due to heavy amounts of rainfall, but most of the moisture was soaked into the ground or directed into ponding basins. The California Department of Water Resources conducted the first manual snow survey for the season on December 30. The water content of the Sierra Nevada Mountains snowpack stands at 10.2 inches or 105 percent of the December 30 average. This moisture will help ease drought conditions in California. Saw and roller ginning were completed for the season.

American Pima (AP)

Spot cotton trading was inactive. Supplies were moderate. A moderate volume of 2015-crop cotton remained in producer hands. Demand was light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light.

Temperatures ranged from the low 30s to high 50s in Arizona, California, New Mexico, and El Paso, Texas. Central Arizona and the San Joaquin Valley received one-third of an inch to two inches of rainfall for the week ending January 7. The El Nino weather pattern boosted California reservoirs and the Sierra Nevada Mountains snowpack. The California Department of Water Resources conducted the first manual snow survey for the season on December 30. The water content of the Sierra Nevada Mountains snowpack stands at 10.2 inches or 105 percent of the December 30 average. This is a good start for easing drought conditions in California. More mountain snowfall is needed to fill reservoirs to capacity after four years of drought. Southern New Mexico and El Paso, Texas temperatures were in the high 40s to low 50s. Snow, ice, and rain were received the week of December 25 for much of New Mexico and El Paso, Texas. Rainfall measured around one-half of an inch. Snowfall accumulations were around 2 to 4 inches, which did not affect ginning. Ginning continued in Arizona, California, and El Paso, Texas.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for first and second quarter 2016 fill-in needs. No sales were reported.

Demand for open-end and ring-spun yarn was moderate to good. Most mills continued to report an increase in cotton-polyester blends due to competitively priced man-made fibers.

Some mills were also testing blending lower grades of cotton into lay down mixes for yarn due to the prevalence of discounted styles of cotton in the current crop. Downtime varied over the Christmas and New Year’s holidays; most mills scheduled around 7 to 10 days of downtime for annual routine maintenance.

Demand through export channels was moderate. Agents throughout Indonesia, Turkey, and Vietnam inquired daily for any discounted styles of cotton.

Regional Price Information For the week ending December 31, 2015

Southeastern Markets.

A heavy volume of color 21 and 31, leaf 2 and 3, staple 36-38, mike 43-49, strength 28-31, and uniformity 80-83 sold for around 71.75 cents per pound, FOB car/truck (Rule 5, compression charges paid).

A light volume of color 51 and 52, leaf 3 and 4, staple 36-38, mike 43-49, strength 29-31, and uniformity 79-81 sold for around 60.00 cents, same terms as above.

Mixed lots containing color mostly 52 and 62, leaf 3-5, staple 34-38, mike 43-52, strength 26-28, and uniformity 79-81 sold for around 55.00 cents, same terms as above.

A moderate volume of color 52, 62 and 63, leaf 3-5, staple 32-36, mike 48-53, strength 24-26, and uniformity 77-79 sold for around 50.00 cents, same terms as above.

A moderate volume of color 82-84, leaf 3 and 4, staple 34, mike 48-52, strength 24-26, and uniformity 78-79 sold for around 32.00 cents, same terms as above.

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 31, leaf 5 and better, staple 34 and longer, mike 47-50, strength 30-33, and uniformity 81-83 sold for around 58.25 cents per pound, FOB car/truck (compression charges not paid).

A light volume of mostly color 21 and 22, leaf 2 and 3, staple 33 and longer, mike averaging 43.1, strength averaging 28.4, and uniformity averaging 79.5 sold for around 57.50 cents, same terms as above.

A light volume of color 31 and better, leaf 5 and better, staple 36 and 37, mike 39-43, strength 29-31, and uniformity 80-82 sold for around 54.75 cents, same terms as above.

A light volume of CCC-loan equities traded for 5.00 cents.

West Texas

Mixed lots containing a heavy volume of color 31 and better, leaf 3 and better, mostly staple 36 and 37, mike 41-47, strength 27-33, and uniformity 79-83 sold for around 60.25 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of color 21 and 31, mostly leaf 3 and 4, staple 34 and longer, mike 38-45, strength 25-31, and uniformity 78-81 sold for around 58.25 cents, same terms as above.

A light volume of color 31 and 41, leaf 5 and better, mike averaging 45.9, strength averaging 31.9, and uniformity averaging 80.8 sold for around 56.00 cents, same terms as above.

 Western Markets

 Desert Southwest

No trading activity was reported.

San Joaquin Valley

No trading activity was reported.

American Pima

No trading activity was reported.

 Regional Price Information For the week ending January 7, 2016

Southeastern Markets

A heavy volume of color 21 and 31, leaf 2 and 3, staple 36-38, mike 43-49, strength 27-30, and uniformity 81-83 sold for around 68.75 to 69.75 cents per pound, FOB car/truck (Rule 5, compression charges paid).

 South Central Markets

North Delta

A light volume of even-running lots, color 31, leaf 3, staple 37, mike 37-49, strength 30-35, and uniformity 80-83 traded for around 69.75 cents per pound, FOB car/truck (Rule 5, compression charges paid).

A light volume of color 31 and better, leaf 4 and better, staple 36 and longer, mike 50-52, strength 29-34, and uniformity 79-84 traded for around 67.00 cents, same terms as above.

A light volume of color mostly 31 and 32, leaf 5 and better, staple 34 and longer, mike 53-55, strength 29-34, and uniformity 80-84 traded for around 62.50 cents, same terms as above.

South Delta

No trading activity was reported.

 Southwestern Markets

East Texas

In Oklahoma, mixed lots containing a moderate volume of color 33 and better, leaf 4 and better, staple 34 and longer, mike 31-54, strength 27-33, and uniformity 78-82 sold around 51.25 cents per pound, FOB car/truck (compression charges not paid).

A light volume of color 21 and 31, leaf 3 and better, staple 36 and longer, mike 37-44, strength 29-33, and uniformity 78-81 sold for around 62.75 cents, same terms as above.

A light volume of color 31 and better, leaf 5 and better, staple 36 and 37, mike 39-43, strength 29-31, and uniformity 80-82 sold for around 54.75 cents, same terms as above.

West Texas

A moderate volume of color 31 and better, leaf 3 and better, staple 36 and longer, mike 39-45, strength 29-34, and uniformity 78-81 sold for around 63.00 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of color 31 and 41, leaf 3 and 4, staple 35 and longer, mike 37-44, strength 29-32, and uniformity 79-82 sold for around 59.50 cents, same terms as above.

Mixed lots containing a moderate volume of color 34 and better, leaf 4 and better, staple 34 and longer, mike 31-54, strength 27-33, and uniformity 78-82 sold for around 51.25 cents, same terms as above.

 Western Market

Desert Southwest

A light volume of color mostly 31 and 41, leaf 4 and better, staple mostly 37 and longer, mike 31-45, strength 30-32, and uniformity 79-82 traded for around 55.75 cents per pound, FOB car/truck (compression charges not paid).

San Joaquin Valley

No trading activity was reported.

American Pima

No trading activity was reported.

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