USDA-Weekly Cotton Market Review: July 22, 2016

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Spot cotton quotations averaged 257 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 71.42 cents per pound for the week ended Thursday, July 21, 2016. The weekly average was up from 68.85 cents last week and 62.53 cents reported the corresponding period a year ago. Daily average quotations ranged from a season high of 72.22 cents Friday, July 15 to a low of 70.36 cents Wednesday, July 20. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 21 totaled 9,741 bales. This compares to 40,551 bales reported last week and 12,875 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,519,445 bales compared to 2,103,629 bales the corresponding week a year ago. The ICE October settlement prices ended the week at 72.66 cents, compared to 73.82 cents last week.

USDA SPECIAL IMPORT QUOTA ANNOUNCEMENT FOR UPLAND COTTON CORRECTION: UPLAND COTTON SPECIAL IMPORT QUOTA (21 & 22) July 19, 2016

The news releases issued on June 30 and July 7, 2016, for the Upland Cotton Special Import Quota (#21 and #22) failed to recognize that the U.S. Far East price did not exceed the prevailing world market price during the consecutive 4-week period ending on the date of the announcement.

We regret the error. When this condition (for any consecutive 4-week period, the U.S. Far East price exceeds the prevailing world market price) is met again in the future, a Special Import Quota announcement will be issued.

Prices are in effect from July 22-28, 2016 
    
Adjusted World Price (AWP)       65.28     ELS Competitiveness Payment           0.00 
Loan Deficiency Payment (LDP)     0.00     Fine Count Adjustment 2015 Crop       0.88 
Coarse Count Adjustment (CCA)     0.00     Fine Count Adjustment 2016 Crop       0.98 
Source:  Farm Service Agency, FSA, USDA

Regional Summaries

Southeastern Market

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

Mostly hot and sunny conditions dominated the weather pattern across the lower Southeast region during the period with daytime high temperatures observed in the mid-90s. Scattered thunderstorms brought around one-quarter of an inch to one-half of an inch of weekly accumulated moisture to areas along the Atlantic and Gulf Coasts. Afternoon pop-up showers brought lesser accumulations to localized areas further inland in Alabama and Georgia. Sunny to partly cloudy conditions prevailed across the Carolinas and Virginia during the period with daytime highs in the low to mid-90s. Heavy shower activity brought around 2 inches of moisture to portions of central South Carolina late in the period. Lesser weekly accumulations of around one-quarter to one-half of an inch of moisture were received in most areas of North Carolina and Virginia throughout the period. The crop advanced at a rapid pace across the region under hot and humid conditions. Producers ran full irrigation schedules in areas that missed significant precipitation. Squaring neared completion and boll-setting was ahead of the five-year average in Alabama and Georgia at 51 and 52 percent, respectively, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report released July 18.

Producers applied growth regulators to fields in areas that have received timely moisture. The cotton bollworm moth flight was underway in Alabama and scouts were reporting significant increases in moths collected in pheromone-baited traps. Producers also monitored and treated fields for infestations of plant bugs and stink bugs across the lower Southeast.

In the Carolinas boll-setting lagged behind the five-year average at 24 percent in both states, but Virginia advanced ahead of the average to 21 percent, according to NASS. Producers treated fields for sporadic infestations of plant bugs and stink bugs.

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. A light volume of forward contracting was reported.

Hot, dry, but humid climatic conditions remained in place throughout most of the period. Pop-up thundershowers brought only trace amounts of moisture to isolated locales. Heat advisories were in effect as temperatures soared into the high 100s. Overnight lows were in the low 70s. A general rain was needed to ease pressure on irrigation systems and to help moderate temperatures.

According to the U.S. Drought Monitor, abnormally dry areas expanded in central Arkansas and western Tennessee. The crop made normal progress under fair conditions, except in Missouri where the crop advanced slowly. Fields were treated for plant bugs and spider mites. Plant growth regulators were used to contain excess vegetative growth. According to the National Agricultural Statistics Service (NASS) Crop Progress report released July 18, boll setting had reached 86 percent in Arkansas, 7 in Missouri, and 33 percent in Tennessee. NASS also reported that the crop was in good-to-excellent condition in Arkansas and Tennessee and fair-to-good condition in Missouri. Local experts reported that square retention remained high in spite of the heat.

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. A light volume of forward contracting was reported.

Hot, humid conditions persisted during the period. Isolated pop-up showers brought little relief from the heat. Heat advisories were in effect as temperatures soared into the high 100s. Nighttime lows were in the mid-70s. Large portions of the region remained abnormally dry due to a lack of measurable precipitation. According to the U.S.

Drought Monitor, areas of moderate and severe drought expanded in Louisiana and Mississippi.

Irrigation systems were operating at full capacity to ensure normal crop development and reduce square shedding. The crop made good progress. Fields were carefully monitored for aphids, plant bugs, and stink bugs. Treatments were applied to control plant bugs and spider mites. Producers applied plant growth regulators. According to the National Agricultural Statistics Service (NASS) Crop Progress report released July 18, boll setting had reached 65 percent in Louisiana and 51 percent in Mississippi. NASS reported that the crop remained in fair-to-good condition.

Southwestern Markets

East Texas-Oklahoma

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

Foreign mill inquiries were moderate.

In the Rio Grande Valley (RGV), harvesting and ginning had expanded. Most gins were operating. According to the Texas Boll Weevil Eradication Weekly Report released July 18, the year-to-date captures, including non-commercial cotton captures, totaled 11,718 weevils in the RGV. In the South Texas and Winter Garden areas, 13 weevils had been captured.

In the Coastal Bend, bolls had opened and defoliation began. Some fields were harvested and modules were transported to the gin. Pressing will begin when a backlog of modules collect on the gin yards to maintain continuous operation. In eastern Texas, local expert reports indicated that plants were loaded and stands advanced. Industry was encouraged with the quality of the stands. In Kansas, the crop was rated mostly fair-to-good. Squaring was at 44 percent, ahead of 31 from the previous season, according to the National Agricultural Statistics Service. Insecticides and plant growth regulators were applied. In Oklahoma, cotton fields received beneficial rainfall in Jackson and surrounding counties. Producers were encouraged. Bacterial blight was reported. The crop was rated mostly fair-to-good and squaring was at 43 percent, 2 percent behind the previous season, according to NASS.

West Texas

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 slow. Forward contracting was light. Foreign mill inquiries were moderate.

Hot, dry conditions prevailed. Irrigation continued where available. Industry experts reported excellent boll load and fruit retention. Minor issues with bacterial blight were reported. Dryland began to show signs of stress and was in need of an immediate slow soaking rain. Weeds were moderately controlled through herbicide applications and manual removal.

Western Markets

Desert Southwest (DSW)

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

Average local prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were good.

In Arizona, irrigation continued and stands advanced. Fields in Yuma reached cut-out. Central Arizona had moved into peak bloom, according to local experts.

In eastern Arizona, the crop was blooming, fruiting, and setting bolls. Industry members were encouraged. A powerful monsoon brought rainfall to parts of western and central Arizona on July 18. In New Mexico and El Paso, Texas, spotty rainfall brought moisture to some fields, but not all. Irrigation continued and stands progressed. Insect pressures remained light.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies were light. Demand was good. Average local prices were higher. No forward contracting or domestic mill activity was reported.

Foreign mill inquiries were good.

Cotton advanced under abundant sunshine and hot conditions. Cotton was blooming and at peak water use. Stands were irrigated. Insect pressures remained low.Squaring neared completion and boll-setting was ahead of the five-year average at 89 percent, according to the National Agricultural Statistics Service’s (NASS) Crop Progress report released July 18. Boll setting was reported at 75 percent, ahead of the five-year average at 60 percent. The crop was rated 50 percent excellent, 25 percent good, and 25 percent fair.

American Pima (AP)

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

Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were moderate.

Irrigation continued in Arizona, California, New Mexico, and Texas. Final irrigation was applied to fields in Yuma, Arizona. Fields in the San Joaquin Valley advanced.

The crop in Arizona and Texas had reached peak bloom. Stands in New Mexico had begun to bloom.

Textile Mill

Domestic mill buyers inquired for a moderate volume of 2016-crop cotton, color mostly 52 and better, leaf 5 and better, and staple 32 and longer for January through March 2017 delivery. No sales or additional inquiries were reported. Reports indicated most mills have covered their raw cotton needs through the fourth quarter of 2016.

The undertone from mill buyers was cautious due to tepid finished product demand and sluggish sales activity in the retail sector. Most mills operated four to seven days.

Demand through export channels was moderate. Demand was best throughout the Far East for any discounted or low-grade styles of cotton.

Regional Price Information

Southeastern Markets

A moderate volume of color mostly 31 and 41, leaf 3 and 4, staple 37-39, mike 37-49, strength 29-32, and uniformity 81-83 sold for around 150 points on ICE December futures, FOB car/truck (Rule 5, compression charges paid).

A light volume of color 31 and 32, leaf 3 and 4, staple mostly 36 and 37, mike 43-49, strength 29-32, and uniformity 81-83 sold for around 100 points on ICE December futures, same terms as above.

A moderate volume of color mostly 31 and 41, leaf 2-4, staple 35-38, mike 43-49, strength 29-32, and uniformity 81-83 sold for around 50 points on ICE December futures, same terms as above.

Mixed lots containing color mostly 42, leaf 3 and 4, staple mostly 36 and 37, mike 35-49, strength 28-31, and uniformity 81-83 sold for around 250 points off ICE December futures, same terms as above.

South Central Markets

North Delta

Producers booked a light volume of 2016-crop bales for CCC-loan equities of 15.00 cents per pound.

South Delta

Producers booked a light volume of 2016-crop acres for CCC-loan equities of 14.00 cents per pound.

Southwestern Markets

East Texas

In Oklahoma, a light volume of 2015-crop cotton color 31 and 32, leaf 3 and 4, staple 34, mike 46-47, strength 30-31, and uniformity 80-81 sold for around 68.00 cents per pound, FOB car/truck (compression charges not paid).

A light volume of CCC-loan equities traded for 7.00 to 11.50 cents.

West Texas

A light volume of color 43, leaf 3, staple 34 and longer, mike averaging 45.5, strength averaging 29.8, and uniformity averaging 78.7 sold for around 57.00 cents per pound, FOB car/truck (compression charges not paid).

Mixed lots containing a light volume of mostly color 43 and 53, leaf 4 and 5, staple 34 and longer, mike 46-51, strength 26-29, and uniformity 77-80 sold for 52.25 to 54.50 cents, same terms as above.

A light volume of CCC-loan equities traded for 2.00 to 11.00 cents.

Western Markets

Desert Southwest

No trading activity was reported.

San Joaquin Valley

No trading activity was reported.

American Pima

No trading activity was reported.

 

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