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USDA - AMS: Weekly Cotton Market Review, narrative (2019-05-03)

USDA U.S. Department of Agriculture - May 3, 2019

Mp_cn812  
May 3, 2019 
Weekly Cotton Market Review  


Average quotations were 126 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, and uniformity 81.0-81.9) in the seven designated markets averaged 71.23 cents per pound for the week ending Thursday, 
May 2, 2019. The weekly average was down from 72.49 last week and from 80.22 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 72.24 cents Friday, 
April 26 to a low of 69.91 cents Thursday, May 2. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 2 totaled 32,665 bales. This compares to 8,277 reported last 
week and 25,892 spot transactions reported the corresponding week a year ago. Total spot transactions for the season were 1,141,115 bales compared to 1,876,705 bales the corresponding week a year 
ago. The ICE July settlement prices ended the week at 75.45 cents, compared to 78.32 cents last week.


Southeastern Markets Regional Summary 

Spot cotton trading was moderate.  Supplies and demand were moderate.  Producer offerings were moderate.  Average local spot prices were lower. Trading of CCC-loan equities was inactive.
	
Mostly fair to partly cloudy conditions prevailed across the lower Southeastern region during the period.  Seasonably warm daytime high temperatures were in the upper 70s to mid-to-upper 80s.  
Overnight lows were in the low 50s to high 60s.  Entering the weekend, scattered thunderstorms brought from trace amounts to around one-quarter of an inch of moisture to portions of southwestern 
Alabama, the Florida Panhandle, and areas of central Georgia.  Fieldwork was slowed in areas that received the heaviest precipitation, but producers welcomed the beneficial moisture which helped 
activate herbicide in fields.  Planting expanded under ideal weather and warmer temperatures.  Soil moisture conditions deteriorated in areas that missed rainfall in recent weeks, and moderate 
drought conditions expanded in portions of Georgia, according to the U.S. Drought Monitor.  In some fields, irrigation was necessary to help planters break through the crust.   A mix of cloudy to 
fair conditions was observed throughout the Carolinas and Virginia during the period.  Daytime high temperatures varied from the low 70s to mid-80s.  Overnight low temperatures were in the upper 40s 
to low 60s.  Scattered thunderstorms brought from trace amounts to around one-quarter of an inch of precipitation to portions of central and eastern North Carolina and Virginia.  Much of South 
Carolina missed significant precipitation and moderate drought conditions expanded or developed in some areas, according to the U.S. Drought Monitor.  Fieldwork advanced and producers were busy applying 
fertilizer and pre-plant herbicides.  Cotton planting was getting underway in the Carolinas.  Producers would welcome additional timely rainfall to ease dry conditions.
 
 
Textile Mill 

Demand  was  good  for a  moderate  volume  of  2019-crop cotton, color 41, leaf 4, and staple 34 and longer for fourth quarter 2019 through first quarter 2020 delivery.  Mill buyers also inquired for a 
moderate volume of 2019-crop cotton, color 52, leaf 5, and staple 32 and longer for fourth quarter delivery.  No sales were reported.  No additional inquiries were reported; most mills had covered their 
immediate-to-nearby raw cotton needs.  Most mills operated five to seven days.  Demand through export channels was moderate.  Agents for mills throughout the Far East inquired for any discounted 
styles of cotton and lower grade recaps.


Trading 
A heavy  volume of even-running  lots containing color 21 and 31,  leaf 2 and 3, staple 36 and  longer,  mike  35-49, strength 27-30, and uniformity 78-81 sold for around 80.25 cents per pound, FOB 
car/truck (Rule 5, compression charges paid). 
A heavy volume of mixed lots, color 32 and better, leaf 5 and better, staple 35 and longer, mike 33-52, strength 27-33, and uniformity 77-84 traded at around 79.00 cents, FOB car/truck, same terms as above.
 


South  Central Markets Regional Summary
 
North Delta
 
Spot cotton trading was moderate.  Supplies of available cotton and demand were light.  Average local spot prices were lower.  Trading of CCC-loan equities was inactive. No forward contracting was reported.  
Producers monitored commodity markets and international trade developments as planting season approaches.  Seasonably warm, spring-like weather early in the reporting period gave way to more rain showers.   
Daytime temperatures were in the 70s and 80s.  Overnight lows were in the 60s.  The sunshine helpful evaporate standing water and firm soil softs, but more rain showers returned late week.  Approximately 1 
inch of rain was reported generally, with heavier amounts reported in localized places.  River flood and pollen advisories, previously issued by the National Weather Service, remained in effect. Producers 
were hoping for a swift conclusion to the on-going trade talks between China and the U.S. as they continued to weigh their planting options while preparing for spring planting.  Fieldwork expanded in areas 
where soils were firm and dry enough to support equipment.  Aerial applications of burndown herbicides on a few fields were reported.

  
South Delta 

Spot cotton trading was active.  Supplies of available cotton were moderate.  Demand was light.  Average local spot prices were lower.  Trading of CCC-loan equities was inactive. No forward contracting was reported.      
A typical spring-like weather pattern was observed during the reporting period.  Clear skies gave way to more rain showers, which hampered fieldwork in affected areas.   Daytime temperatures were in the 70s and 80s.  Overnight lows were in the 60s.  The sunshine early in the period helped firm soil softs and eliminate standing water. Approximately 1 inch of rain was reported generally, with heavier amounts reported in localized places at the end of the reporting period.  River flood and pollen advisories, previously issued by the National Weather Service, remained in effect. Producers were hoping that the  on-going trade talks between China and the U.S. are successfully concluded quickly as they continued to preparing equipment, supplies, and fields for spring planting.  Fieldwork expanded in areas where soils were firm and dry enough to support equipment.  Aerial applications of burndown herbicides were reported on a few fields.  Planting had begun on a very limited basis as producers continued to struggle  with wet soil conditions, especially in  low-lying fields.


Trading 
  
North Delta 
A moderate volume of mixed lots, color 32 and better, leaf 5 and better, staple 35 and longer, mike 33-52, strength 27-33, and uniformity 77-84 traded at around 79.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
    

South Delta 
A moderate volume of mixed lots, color 32 and better, leaf 5 and better, staple 35 and longer, mike 33-52, strength 27-33, and uniformity 77-84 traded at around 79.00 cents per pound, FOB car/truck (Rule 5, compression charges paid).
  

Southwestern Markets Regional Summary      

East Texas 

Spot cotton trading was moderate.  Supplies and producer offerings were moderate.  Demand was moderate.  Average local spot prices were lower.  Trading of CCC-loan equities was light.  Foreign mill inquiries were light and interest 
was best for 2018-crop premium qualities.    Inquiries for 2019-crop cotton were light.  Interest was best from Korea, Indonesia, and Thailand.  	In the Rio Grande Valley, the crop made good progress.  Plants progressed to the 
squaring stage.  Plant pests were controlled by beneficial insects.  Planting continued in the Upper Coast, Coastal Bend, and south Texas.  Sources reported some cotton was up and in various stages.  For some south Texas producers, 
re-planting for a third time.  Damaging winds and emergence issues were reported.  In the Blackland Prairies, fields remain too wet and planting was delayed.  Two gins in the Abilene territory, near San Angelo, were combining operations
for the 2019-season, and they are in the process of building a completely new gin.  It was uncertain if the new gin would be ready by the fall.  Rainfall was received that halted all field activities.   Initial planting began in Kansas 
early in the period.  Ginning continued in Kansas and Oklahoma.  A new gin is being built in Kansas for 2019-crop operation.  All gins in Kansas and Oklahoma were in the process or have been modified to increase ginning capacity.      
   
 
West Texas 

Spot cotton trading was moderate.  Supplies and producer offerings were heavy.  Demand was moderate.  Average local spot prices were lower.  Trading of CCC-loan equities was light.  Foreign mill inquiries were light.  Interest was best 
from India and Turkey.     Demand was best for 2018-crop premium qualities, but US supplies are limited.  Some mills in Pakistan and Taiwan were active in purchasing lower quality styles such as color 33 and color 44.  Inquiries for 2019
-crop cotton were light.  Interest was best from Korea, Indonesia, and Thailand.  Local merchants were hopeful that the US trade impasse with China will be resolved this month, so that the industry can begin work on recovering US cotton
 market share.   Daytime high temperatures were in the mid-70s to low 90s and overnight lows were in the low 50s to low 60s.  Thunderstorms during the reporting period brought around one-quarter of an inch of rainfall and some hail.  
Local sources indicated topsoil moisture was good.  The US Drought monitor showed the west Texas area was free of drought conditions.  Initial planting began in the Panhandle.  South Plains producers prepared fields for planting.  Two 
new gins are being built north of Amarillo and will be operationally for the 2019-crop season.   

  
Trading 
 
East Texas 
In Texas, a light volume of mostly color 52 and 62, leaf 4 and 5, staple 34-37, mike averaging 47.0, strength averaging 26.1, and uniformity averaging 78.1 sold for around 53.25 cents per pound, FOB warehouse (compression charges not 
paid).
In Oklahoma, a light volume mixed lot of mostly color 42 and 52, leaf 5 and better, staple 36 and 37, mike averaging 45.8, strength averaging 30.6, and uniformity averaging 81.5 sold for around 58.65 cents, FOB car/truck (compression 
charges not paid).
Similar lots containing staple 33-35 sold for around 54.00 cents, same terms as above.  
In Kansas, a light volume of mostly color 21, 22, and 32, leaf mostly 3 and 4, staple 35-37, mike averaging 30.1, strength averaging 28.5, uniformity averaging 80.6, with 25 percent extraneous matter sold for around 60.00 cents, same 
terms as above.  
A light volume of color 23 and 33, leaf mostly 3 and 4, staple 36, mike averaging 32.6, strength averaging 27.4, and uniformity averaging 79.5  sold for around 59.00 cents, same terms as above. 
A light volume of CCC-loan equities traded for 12.50 cents. 

 
West Texas 
A heavy volume mixed lot of mostly color 31 and better, leaf 2 and 3, mike 24-54, staple 32-38, strength 25-35, and uniformity 76-83 sold for around 70.00 cents per pound, FOB car/truck (compression charges not paid).
A light volume of mostly color 31, 41 and 42, leaf 5 and better, staple 33 and longer, mike 31-36, strength averaging 30.0, uniformity averaging 81.0, with 25 percent extraneous matter sold for 60.00 to 60.50 cents, same terms as above.  
Mixed lots containing a light volume of mostly color 33 and 44, leaf 6 and better, staple 32 and longer, mike 32-53, strength 28-33, uniformity averaging 77-81, and 75 percent extraneous matter sold for around 56.50 cents, same terms as
above.  
A light volume of CCC-loan equities traded for 7.00 cents.


Western Markets Regional Summary 


Desert Southwest (DSW) 

Spot cotton trading was inactive.  Supplies and demand were moderate.    Average local spot prices were lower.  No forward contracting or domestic mill activity was reported.  Foreign mill inquiries were light. Temperatures were in the 
high 80s to mid-90s in Arizona.  The Yuma crop made good progress.  Planting continued in central Arizona and in Safford.  Planting neared 65-70 percent completion in Safford.  Planting continued in New Mexico and El Paso, Texas.  
Strong thunderstorms from the previous week had producers removing hard crusted soil caps to allow seedlings to emerge in New Mexico. Ginners and industry representatives prepared to attend the National Cotton Ginners Association, 
Western Ginners  School in Mesilla Park,  New Mexico  May 7-9.  
 
 
San Joaquin Valley (SJV) 

Spot cotton trading was inactive.  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.  Mostly clear, sunny 
conditions were the norm.  Temperatures varied from a one-day high of 94 degrees early in the period.  Seedlings made good progress.  Sources reported some fields reached 2-true leaf stage.  


American Pima (AP) 

Spot cotton trading was inactive.  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, India, and Peru.  Spring temperatures varied from the mid-70s to mid-90s in the far west.    Planting was active in Arizona, California, New Mexico, and El Paso, Texas.   Some cotton was up to a stand in Arizona 
and California.   The crop made good progress.  Strong thunderstorms from the previous week had producers removing hard crusted soil caps to allow seedlings to emerge in New Mexico.  


Trading 
 
Desert Southwest 
No trading activity was reported. 

San Joaquin Valley 
No trading activity was reported. 

American Pima 
No trading activity was reported. 


USDA ANNOUNCES SPECIAL IMPORT QUOTA #2 
FOR UPLAND COTTON 
May 2, 2019 


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 May 9, 2019, allowing importation of 12,157,032 kilograms (55,836 bales) of upland cotton. 
     
Quota number 2 will be established as of May 9, 2019, and will apply to upland cotton purchased not later than August 6, 2019, and entered into the U.S. not later than November 4, 2019. The quota is equivalent 
to one week's consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period December 2018 through February 2019, 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. 







 

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