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USDA - AMS: Weekly Cotton Market Review, narrative (2020-04-03)

USDA U.S. Department of Agriculture - April 3, 2020



Mp_cn812 
April 3, 2020  
Weekly Cotton Market Review 
 
 

Average spot quotations were 268 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 45.13 cents per pound for the week ending 
Thursday, April 2, 2020. The weekly average was down from 47.81 last week and 
71.81 cents reported the corresponding period a year ago. Daily average quotations 
ranged from a high of 46.15 cents Friday, March 27 to a season low of 43.23 cents 
Wednesday, April 1. Spot transactions reported in the Daily Spot Cotton Quotations 
for the week ended April 2 totaled 1,779 bales. This compares to 298 reported last 
week and 39,609 spot transactions reported the corresponding week a year ago. 
Total spot transactions for the season were 1,376,147 bales compared to 1,025,451 
bales the corresponding week a year ago. The ICE May settlement price ended the week 
at 49.99 cents, compared to 52.78 cents last week. 


Southeastern Markets Regional Summary


Spot cotton trading was inactive.  Supplies and producer offerings were moderate.  
Demand was light.  Average local spot prices were lower.  Trading of CCC-loan 
equities was inactive.  No forward contracting was reported.  Producers considered 
spring planting options as the COVID-19 Pandemic continues to negatively impact economic activity.  
     
A mix of cloudy to sunny conditions were observed across the lower Southeast 
during the period.  A cold front briefly moved across the region mid-week dropping 
daytime highs into the low 60s before returning to the 70s late week.  Scattered 
showers brought moderate precipitation to much of north Alabama over the weekend.  
Rainfall totals measured from 1 to 3 inches.  Areas throughout south Alabama, 
Georgia, and the Florida Panhandle received around one-quarter to one-half of an 
inch of moisture throughout the week.  Fieldwork advanced as dry conditions allowed 
in areas where soils were firm enough to support equipment.  Producers applied lime 
and fertilizer to fields.  Wet conditions prevented the application of herbicides in some areas. 
     
Fair to cloudy conditions prevailed across the upper Southeastern region throughout the 
period.  Warm daytime high temperatures in the upper 80s to low 90s cooled into the 
upper 50s to low 60s as a cold front moved across the region late week.  Scattered shower 
activity brought light precipitation to portions of the Carolinas and cotton growing areas 
of Virginia early in the week.  Precipitation totals measured from trace amounts to 
around one-half of an inch of moisture.  Fieldwork advanced between rain events in areas 
where soils were firm enough to support equipment. Producers applied fertilizers in 
preparation for spring planting.   
 
Textile Mill 

Inquiries from domestic mill buyers were light.  No sales were reported.  Most mill 
buyers have covered their immediate-to-nearby raw cotton needs.  The undertone from 
mill buyers remained very cautious as they continued to delay or reschedule deliveries 
of raw cotton due to declining demand associated with the COVID-19 virus.  Some mills 
planned extended down time at plants due to weak yarn demand.  A coalition of American 
apparel brands and textile manufacturers recently announced an effort to coordinate and 
produce 10 million face masks per week for medical workers treating coronavirus patients. 
     
Demand through export channels was light-to-moderate.  Agents throughout the Far East 
inquired for any discounted styles of cotton.  

Trading 
..
A moderate volume of 2019-crop cotton, color 11-31, leaf 2 and 3, staple 36-39, 
mike 37-49, strength mostly 28-31, and uniformity 80-83 was offered for sale.  
Bids for around 400 points on ICE May futures, FOB car/truck, Georgia terms (Rule 5, 
compression charges paid, 30 days free storage) were rejected by sellers. 
..
A moderate volume mixed lot of 2019-crop cotton, color mostly 31 and 41, leaf 2-4, staple 
37-39, mike 37-49, strength 28-31, and uniformity 80-83 was offered for sale.  
Bids for around 200 points on ICE May futures, same terms as above, were rejected by sellers. 
..
A moderate volume of 2019-crop cotton, color 41 and 51, leaf 3-5, staple 35-37, mike 43-47, strength      
29-32 and uniformity 81-83 was offered for sale.  Bids for around 325 points off ICE May 
futures, same terms as above, were rejected by sellers. 
..
A light volume of 2019-crop cotton, color mostly 51, leaf 3 and 4, staple 37, mike 37-47, 
strength 27-30, and uniformity 80-82 was offered for sale.  Bids for around 550 points off 
ICE May futures, same terms as above, were rejected by sellers. 


South Central Markets Regional Summary


North Delta 

Spot cotton trading was inactive.  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.  Cotton prices moved 
even lower than experts expected, due to the worsening worldwide COVID-19 Pandemic.  
As prices dropped, producers were faced with the choice of making margin calls or 
liquidating their positions through price fixation. In many cases, it appeared 
that producers chose the latter option, which caused the market to fall even further.  
The ICE December 2020 futures contract settled the limit down at 50.41 cents on April 1. 
     
Cloudy skies, with intermittent but heavy showers, and warm temperatures early in 
the week gave way to partly clear skies, but cooler days.  Daytime temperatures were 
in the 40s to 80s. Some northern areas experienced temperatures in the upper 30s, 
while most of the region reported lows in the 40s and 60s.  Rainfall accumulations 
of up to 2 inches were reported in many areas.  River flood warnings issued by the 
National Weather Service remained in effect for numerous locations throughout the region.   
Roads and fields in low-lying areas remained flooded or saturated.  Soft soils limited 
field activity in many places.  The National Agricultural Statistics Service’s Prospective 
Plantings report indicated that Upland cotton is estimated at 13.5 million acres, down 
less than 1 percent from 2019.  In the North Delta, Arkansas is expected to plant 
590,000 acres, a decrease of 2 percent, Missouri 400,000, up 5 percent, and Tennessee 
360,000 acres, down 12 percent compared with last season. 
 
South Delta 

Spot cotton trading was inactive.  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. Financial markets moved lower and 
economic activity in some sectors halted as a result of the worldwide effects of the COVID-19 
Pandemic. As prices dropped, producers were faced with the choice of making margin calls or 
liquidating their positions through price fixation.  In many cases, it appeared that producers 
chose the latter option, which caused the market to fall even further.  On Wednesday, April 1, 
the ICE December 2020 futures contract settled the limit down at 50.41 cents. 

Severe weather and warm temperatures early in the week gave way to partly cloudy skies 
and cool conditions.  Daytime temperatures were in the 60s to 80s. Low temperatures were 
in the 50s and 60s.  A series of storms brought up to 3 inches of precipitation; higher 
amounts were reported in a few places.  Tornadoes swept through in Mississippi, but no 
injuries were reported.  Field activities were hampered due to saturated soils and standing 
water in low-lying fields.  Aerial and ground-rig applications of burndown herbicides were 
made in many areas.  Corn was being planted, and fields were prepped for planting where soils 
were firm enough to support equipment.  The National Agricultural Statistics Service’s 
Prospective Plantings report indicated that Upland cotton is estimated at 13.5 million 
acres, down less than 1 percent from 2019.  In the South Delta, Louisiana is expected to 
plant 230,000 acres, a decrease of 18 percent, and Mississippi 660,000, a 7 percent decrease from last season. 

Trading 
  
North Delta 
..
No trading activity was reported. 

South Delta 
..
No trading activity was reported. 


Southwestern Markets Regional Summary      .


East Texas 

Spot cotton trading was inactive.  Supplies were moderate. Producer offerings were light. 
Demand was light. Average local spot prices were lower. Producer interest in forward 
contracting was light. Trading of CCC-loan equities was inactive. Foreign inquiries 
were light.  Interest was best from China, Korea, and Vietnam. Concerns over the 
coronavirus continued to pressure the market, and confirmed cases increased throughout the region.  
     
In the Rio Grande Valley, cotton planting continued with daytime temperatures in the 
80s and 90s and overnight lows mostly in the 70s. Some stands were at 4 to 6 true 
leaves.  Extension specialists monitored for pests and reported light infestations of 
aphids and red spider mites. Dry conditions stalled planting for some producers in 
south Texas, and others decided to dry plant. The nearby forecast contains a good 
chance for rainfall.  Planting progressed in the Upper Coast.  Parts of the Blackland 
Prairies received over 1 inch of rainfall that left fields saturated. Some producers 
were unable to finish planting corn and will consider planting cotton.  A heavy 
amount of planting seed had been ordered.  
     
Kansas received intermittent showers that brought light amounts of beneficial 
precipitation. Producers considered other cropping alternatives, but planted cotton 
acres were expected to be similar to last season.  In Oklahoma, fieldwork was active 
with burndown of weeds and volunteer cotton ongoing.  Fields were tilled and rows 
were built. Planting was expected to begin in the Panhandle in early April and 
continue through mid-May for the rest of the state.  Oklahoma State University 
Extension offered a webinar via Zoom for producers and industry members.   
 
West Texas 

Spot cotton trading was inactive.  Supplies were moderate.  Producer offerings 
were light.  Demand was light.  Average local spot prices were lower. Producer 
interest in forward contracting was light. Trading of CCC-loan equities was inactive. 
Foreign inquiries were light.  Interest was best from China, Korea, and Vietnam. 
Concerns over the coronavirus continued to pressure the market.    
     
Fieldwork made progress with daytime temperature highs in the mid-60s to upper 70s.  
A dry cold front moved into the region on April 2,  dropping overnight lows from the 
50s and 60s into the 20s and 30s. Soil temperatures had begun to warm into the 50s 
and 60s in most areas.  Producers adjusted to the market climate and were strategically 
determining the most cost effective fertilizer and herbicide applications.  The 113th 
Annual Meeting & Cotton Trade Show hosted by the Texas Cotton Ginners’ Association 
was cancelled due to compliance with the regulations to help slow the spread of 
the Coronavirus. Producers and industry members continued to meet and conduct 
business using various internet platforms.   

Trading 
 
East Texas 
..
No trading activity was reported.  

West Texas 
..
No trading activity was reported.  


Western Markets Regional Summary  


Desert Southwest (DSW) 

Spot cotton trading was inactive.   Supplies were moderate.  Producers moved bales 
into the CCC-loan program.   Demand was light.  The COVID-19 virus continues to fuel 
U.S. and global economic turmoil.   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 70s to mid-80s in central Arizona.  No rainfall was 
recorded in the period.  Cotton seedlings were up and made good progress in Yuma.  
Some re-planting was done, as some of the crop did not sprout, due to cooler 
temperatures and heavy rainfall received about two weeks ago.  Temperatures reached 
the low 80s for New Mexico and El Paso, TX late in the period.  Fields were readied 
for planting and cottonseed was delivered.  Sources reported a little planting may 
begin the week of April 6 in the lower Valley of El Paso.  Producers considered 
other row crops to plant such as corn.  Private estimates indicated Upland planted 
acreage in the DSW would be lower than planting intentions published in the 
Prospective Plantings report released by the National Agricultural Statistics 
Service on March 31, due to current market prices.    
 
San Joaquin Valley (SJV) 

Spot cotton trading was inactive.  Supplies and demand were light.    
The COVID-19 virus continues to impact U.S. and global economies.  
Average local spot prices were lower.  No forward contracting or domestic 
mill activity was reported.  Foreign mill inquiries were light.       
     
Temperatures were mostly in the 60s.   Around one-tenth of an inch of moisture was 
received early in the period in the SJV.   More was in the forecast over the weekend.  
The California Department of Water Resources measured the all-important April 1 snowpack.  
Statewide snowpack was measured at 53 percent of average.  This represents the 11th 
lowest measurement since recordkeeping began.  Irrigation water availability is a 
concern for growers.  No planting was reported for the SJV.  Local sources were in 
general agreement with the National Agricultural Statistics Service’s Prospective 
Plantings report released on March 31.  Sources were uncertain the amount of acreage 
dedicated to “save seed” programs.  Soil temperatures were optimal and initial planting began in Blythe, CA.   
 
American Pima (AP) 

Spot cotton trading was inactive.    Supplies of 2019-crop cotton were moderate.  
Producers moved bales into the CCC-loan program.  Demand was light.  Average local spot 
prices were steady.    No forward contracting or domestic mill activity was reported.   
Fears and concerns of the COVID-19 virus put the Upland cotton market under pressure, 
which in turn, pressured the AP.  Foreign mill inquiries were light. Foreign mills 
requested delays or postponement of shipments.  Merchants were concerned about possible 
cancellations.  Shippers continued to ship and offer cotton. 
     
Temperatures were in the 60s to 80s in the Far West.  No rainfall was reported in the 
Desert Southwest.  In the San Joaquin Valley (SJV) of CA, approximately one-tenth of an 
inch was received early in the period.  Surprise was expressed for Prospective Plantings 
report released by National Agricultural Statistics Service on March 31. A light volume of 
acreage was planted in Yuma, AZ.  Local sources reported the crop was up.  Fields were 
readied for planting in the SJV.  No planting was reported.   

Trading 
 
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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