USDA-Weekly Cotton Market Review: April 22, 2016

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Spot cotton quotations were 149 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 60.38 cents per pound for the week ended Thursday, April 21, 2016. The weekly average was up from 58.89 cents last week, but down from the 61.71 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 58.13 cents Friday, April 15 to a high of 61.46 cents Wednesday, April 20. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended April 21 totaled 28,415 bales. This compares to 14,906 bales reported last week and 8,395 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,414,289 bales compared to 1,986,755 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 64.01 cents, compared to 60.85 cents last week.

USDA ANNOUNCES SPECIAL IMPORT QUOTA #11 FOR UPLAND COTTON April 21, 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 April 28, 2016, allowing importation of 14,265,156 kilograms (65,519 bales) of upland cotton. Quota number 11 will be established as of April 21, 2016, and will apply to upland cotton purchased not later than July 26, 2016, and entered into the U.S. not later than October 24, 2016. The quota is equivalent to one week’s consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period December 2015 through February 2016, 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 April 22-28, 2016
Adjusted World Price (AWP)       50.53       ELS Competitiveness Payment           0.00 
Loan Deficiency Payment (LDP)    1.47        Fine Count Adjustment 2015 Crop       0.00 
Coarse Count Adjustment (CCA)    0.00        Fine Count Adjustment 2016 Crop       0.04 
Source:  Farm Service Agency, FSA, USDA

Regional Summaries

Southeastern Market

Spot cotton trading was slow.  Supplies were moderate. Producer offerings were moderate.  Demand was moderate.  Average local spot prices were higher. Trading of CCC-loan equities was slow.

 Scattered showers brought widespread moisture to portions of south Alabama, the Florida panhandle, and much of south Georgia early in the period.  Rainfall totals measured from trace amounts to around one-quarter of an inch.  Excessive rainfall in recent weeks has slowed fieldwork in most areas.  Mostly sunny to partly cloudy conditions prevailed over the lower Southeast the remainder of the period.

Daytime high temperatures ranged from the mid-70s to lower 80s.

Clear and breezy weather helped soft soils to firm.  Some fields experienced erosion and leaching of nutrients, standing water remained in   low-lying areas.  Producers applied fertilizers and nitrogen in fields firm enough to support equipment.  Planting activity should get underway in the next two weeks.  A band of showers deposited around one-half of an inch of moisture along coastal South Carolina early in the period, but mostly dry conditions prevailed elsewhere in the Carolinas and Virginia.

Variable daytime temperatures were observed in the upper 60s to upper 80s.  Abnormally dry conditions expanded across the cotton growing areas of North Carolina and Virginia. These areas experienced 4 to 8 inch rainfall deficits in the last 90 days, according to the U.S. Drought Monitor published April 21.

Producers would welcome a period of soaking rainfall in these areas to replenish soil moisture levels.  Planting was just getting started in South Carolina, and should get underway in North Carolina and Virginia as producers complete field preparations and shift from planting competing crops.

South Central Markets

North Delta

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

Intermittent rain showers dominated the weather pattern during the period.  Total accumulations of precipitation reached 3 inches in most areas, with heavier amounts in isolated locales. Temperatures were seasonably warm with highs in the low 80s and overnight lows in the upper 40s.  Outdoor activities were hampered by wet conditions in areas which received the heaviest amounts of rain.  Sporadic fieldwork was accomplished in drier areas.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light.  Demand was light.  Average local spot prices were higher.

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

Wet weather continued to plague the region during the period.

Up to 3 inches of rain fell generally across the region.  High temperatures were in the low 80s and overnight lows in the low 50s.

Field operations were hindered by soft soils; many areas were at a standstill.  Producers were expected to begin planting cotton as soon as fields dried sufficiently to support equipment.

Southwestern Markets

East Texas-Oklahoma

Spot cotton trading was moderate.  Supplies were moderate.  Producer offerings were light.  Demand was light.  Average local spot prices were firm.  No domestic mill activity was reported.  Trading of CCC-loan equities was inactive.  Foreign mill inquiries were light, but China showed interest.

 Heavy rainfall was received throughout the Upper Coastal Bend, central Texas, and into south Texas early in the period.  Scattered showers brought approximately 1.5 to 2 inches of moisture.  Heavier concentrations were deposited north of Victoria and into the Upper Coast.

Flooding is a problem in low-lying areas.  There is also threat of flooding in many rivers and creeks in the Upper Coast and central Texas.  More rain was received late in the period.  No damage to cotton was reported.  Most fields in the Upper Coastal Bend are planted in raised beds.  South Texas received less rainfall, but topsoil moisture levels will benefit.  Temperatures cooled down, which slowed crop progress.

Crop progress varied with some fields at first-true leaf stage and others were more advanced.  Insect pressures were light and easily controlled.

Approximately 3 to 4 inches of rainfall was received in Kansas and Oklahoma.

Field activity was limited.

West Texas 

Spot cotton trading was moderate.  Supply and demand were light.  Average local spot prices were firm.  Merchants reported supplies of high quality cotton were limited.  Most producers were signing into merchant and cooperative marketing pools for new-crop cotton.  Trading of CCC-loan equities was slow. No domestic mill activity was reported.  Foreign mill inquiries were light, as ICE July futures trended higher in the period.

Inquiries were mostly for price discovery.  Interest was best from China, Pakistan, and Turkey.

 Scattered shower activity brought one-half of an inch of rainfall mid-period.

The rainfall improved topsoil moisture.  Pre-plant preparations continued.

Western Markets

Desert Southwest (DSW)

Spot cotton trading was inactive.  Supplies and demand were light.  Average local spot prices were higher.  Producer inquiries for new-crop contracting increased as ICE December futures trended higher.  No forward contracting or domestic mill activity was reported.  Foreign mill inquiries were light as ICE futures trended higher.

 Sunny conditions and clear skies advanced the crop in Yuma, Arizona.  No moisture was recorded in the period.  Planting gained momentum in central Arizona.  Planting commenced in the Safford Valley.  Sunny, mild conditions prevailed in New Mexico and El Paso, Texas.  Initial planting began in the period.

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, as ICE futures trended higher.

Interest was best from China and Japan.

 Cotton planting neared completion.  Above-average temperatures advanced the crop.

Seedlings made good progress.  No insect pressures were reported.

American Pima (AP)

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

Average local prices were steady.  Desert Southwest producers inquired for new-crop contracting.  No forward contracting or domestic mill activity was reported.

Foreign mill inquiries were moderate.  Interest was best from China, India, and Pakistan.  Inquiries for new-crop cotton increased, but no sales were reported.

 No moisture was recorded in the period for the Far West.  Above-average temperatures allowed the crop to advance in Arizona and California.  Initial planting began in New Mexico and El Paso, Texas.

Textile Mill 

Domestic mill buyers inquired for a moderate volume of 2015 and 2016-crop cotton, color 41 and better, leaf 4 and better, and staple 34 and longer for third and fourth quarter delivery.  No sales were reported.   Most mills have covered their immediate-to-nearby raw cotton needs.  Demand for open-end and ring-spun yarn was moderate.  Most mills operated five to seven days.

 Demand through export channels was moderate.  Agents throughout the Far East inquired daily for any discounted or low-grade styles of cotton.  No sales were reported.

Regional Price Information

Southeastern Markets

A moderate volume of color 52-63, leaf 3 and 4, staple 34-37, mike 37-49, strength 26-28, and uniformity 78-81 sold for around 1075 points off ICE July futures, FOB car/truck (Rule 5, compression charges paid).

Mixed lots containing color 85 and better, leaf 4-6, staple 32 and longer, mike 43-52, strength 26-29, and uniformity 78-80 sold for 32.00 to 38.00 cents, same terms as above.

A heavy volume CCC-loan equity traded for around 16.00 cents.

South Central Markets

North Delta

No trading activity was reported.

South Delta

No trading activity was reported.

Southwestern Markets

East Texas

A heavy volume of color 31 and better, leaf 3 and better, staple 37 and 38, mike 35-49, strength 27-37, and uniformity 77-84 sold for around 65.00 cents per pound, FOB car/truck (compression charges not paid).

A heavy volume of mostly color 31, leaf 3 and better, staple 36, mike 35-49, strength 25-35, and uniformity 75-83, sold for around 65.00 cents, same terms as above.

In Kansas, a moderate volume of mixed quality lots containing color 41 and better, leaf 4 and better, staple   35-37, mike 37-49, strength 27-32, uniformity 79-83, with 45 percent bark sold for around 50.00 to 52.00 cents, same terms as above.

In Oklahoma, a light volume of mixed quality lots containing color 41 and better, leaf 5 and 6, staple 35 and longer, mike 29-42, strength 26-35, uniformity 78-83, with 75 percent bark sold for around 52.50 cents, same terms as above.

West Texas

A moderate volume of mostly color 31, leaf 2 and 3, staple 35-37, mike averaging 38.30, strength averaging 30.90, and uniformity averaging 79.70 sold for around 62.00 cents per pound, FOB car/truck (compression charges not paid).

A moderate volume of mostly color 31 and better, leaf 2-4, staple 35 and longer, mike averaging 42.30, strength averaging 31.30, and uniformity averaging 80.90 sold for around 60.00 cents, same terms as above.

A moderate volume of mostly color 31, leaf 4 and better, staple 33-36, mike averaging 39.60, strength averaging 31.70, and uniformity averaging 80.40 sold for around 56.00 cents, same terms as above.

A light volume of organic cotton, color 31 and 41, leaf 2 and 3, staple 35, mike averaging 41.60, strength averaging 30.20, and uniformity averaging 79.9 sold for around 57.50 cents, same term as above.

A moderate volume of CCC-loan equities sold for around 4.00 cents.

Western Markets

Desert Southwest

A light volume of color 41, leaf 4 and 5, staple 37, mike averaging 34.50, strength averaging 30.90, and uniformity averaging 80.50 sold for around 55.50 cents per pound, FOB car/truck (compression charges not paid).

San Joaquin Valley

No trading activity was reported.

American Pima

A light volume of mostly color 3 and 4, leaf 4 and better, staple 48 and longer, mike averaging 36.90, strength averaging 42.00, and uniformity averaging 85.40 sold for around 95.00 cents per pound, UD free, FOB warehouse.

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