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USDA - AMS: Weekly Cotton Market Review, narrative (2020-04-17)

USDA U.S. Department of Agriculture - April 17, 2020



Mp_cn206
Weekly Cotton Market Review 
April 17, 2020 
 

Average spot quotations were 30 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 47.55 cents per pound for the week 
ending Thursday, April 16, 2020. The weekly average was down 
from 47.85 last week and from 72.61 cents reported the corresponding 
period a year ago. Daily average quotations ranged from a low 
of 47.37 cents Tuesday, April 14 to a high of 47.65 cents Thursday, 
April 16. Spot transactions reported in the Daily Spot Cotton 
Quotations for the week ended April 16 totaled 22,698 bales. This 
compares to 8,603 reported last week and 27,298 spot transactions 
reported the corresponding week a year ago. Total spot transactions 
for the season were 1,407,747 bales compared to 1,100,173 bales the 
corresponding week a year ago. The ICE May settlement price ended 
the week at 52.79 cents, compared to 54.37 cents last week. 



Southeastern Markets Regional Summary

Spot cotton trading was slow. Supplies and producer offerings were 
moderate. Demand was light.    Average local spot prices were steady.  
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.  
 Sunny to cloudy conditions were observed across the lower Southeastern 
region during the period.  Daytime high temperatures varied from the 
mid-60s to low 80s.  Widespread storm systems moved across Alabama, 
Florida, and Georgia early in the week.  Rainfall totals measured from 
trace amounts to around one and one-quarter inches of moisture, with 
locally heavier accumulations observed in some areas.  Producers were 
preparing fields for spring planting; burn down applications and 
fertilizer were being applied.  Some fields remained inaccessible 
due to wet conditions.  Due to low cotton market prices, producers 
were carefully managing inputs to reduce costs. 
 Mostly sunny to partly cloudy conditions prevailed across the upper 
Southeastern region throughout the period.  Daytime high temperatures 
varied from the upper 50s to low 80s.  Scattered thunderstorms brought 
light to moderate moisture to areas throughout South Carolina and 
eastern North Carolina early in the week.  Weekly accumulated rainfall 
totals measured from around trace amounts to around one inch of moisture.  
Field preparations were underway and producers applied fertilizer, lime 
and burn downs.  Producers were carefully managing inputs to reduce costs 
due to low cotton market prices. 
 
Textile Mill 
 
Inquiries from domestic mill buyers were very light.  No sales were 
reported.  The undertone from mill buyers remained very cautious as 
they continued to delay or reschedule deliveries of raw cotton due to 
declining demand associated the COVID-19 virus.  Some mills furloughed 
employees and closed plants last week and this week as they assessed 
drastically  reduced demand.  A few mills planned to re-open plants on 
week-by-week basis if yarn orders supported production.  One mill 
announced a permanent plant closure in Landis, North Carolina effective 
April 24. 

Demand through export channels was light.  Agents throughout the Far 
East inquired for any discounted styles of cotton.   No sales were reported. 



 


Trading 
..A moderate volume of color mostly 41, leaf 2-4, staple mostly 36 and 37, 
mike 43-49, strength 28-32, and uniformity 80-84 sold for around 25 points 
off ICE July futures, FOB car/truck, Georgia terms (Rule 5, compression 
charges paid, 30 days free storage). 

..A light volume of 2018-crop CCC-catalog cotton, color 62 and better, 
leaf mostly 6 and better, staple 34 and longer, mike 43-49, strength 
mostly 25-27, uniformity 79-81, and containing 75 percent extraneous 
matter sold for 10.00 to 20.00 cents per pound, FOB warehouse 
(compression charges not paid). 




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 weak.  
Trading of CCC-loan equities was light. No forward contracting was 
reported.  A light volume of CCC-catalog cotton was sold.  The World 
Agricultural Supply and Demand report projected that carryover worldwide 
could be slightly more that 91 million bales, an increase of nearly 
8 million bales compared to last month. 
Severe weather moved through the region early in the week.  Strong
 winds caused power outages, downed trees, and damaged structures in 
southern Arkansas.  Colder temperatures moved in behind the front.  
Daytime temperatures were in the 50s and 60s.  Overnight lows were 
in the 30s and 40s.  Rainfall totals measured up to 4 inches in some 
areas. Fieldwork and other outdoor activities were hampered due to 
renewed wet conditions.  River flood warnings issued by the National 
Weather Service remained in effect for numerous locations throughout 
the region.   Low-lying portions of fields in bottomland remained 
saturated or flooded throughout the region.   
 
South Delta 
 
Spot cotton trading was inactive.  Supplies of available cotton were 
moderate.  Demand was light.  Average local spot prices were weak.  
Trading of CCC-loan equities was inactive. No forward contracting was 
reported.  A light volume of CCC-catalog cotton was sold.   
Severe weather produced a tornado that caused extensive damage in Monroe, 
Louisiana.  Downed trees, damaged homes and businesses, and extensive 
power outages were reported.  Daytime temperatures were in the 60s and 
70s, with lows in the 40s and 50s.  Up to 4 inches of precipitation 
were reported in some areas, while most places received around 2 inches.  
River flood warnings issued by the National Weather Service remained 
in effect for numerous locations throughout the region.   Low-lying 
portions of fields along streams and rivers remained flooded or 
saturated in many areas.  Outdoor activities were delayed due to 
soft soils.  Planting continued in fields that were firm enough to 
support equipment.   According to the National Agricultural Statistics 
Service Crop Progress report released on April 13, cotton planting was 
underway at 6 percent completed in Louisiana and 1 percent Mississippi. 

Trading 
  
North Delta 
..A light volume of 2018-crop CCC-catalog cotton, mixed lots with mostly 
color 41 and better, leaf 4 and better, staple 36 and longer, mike averaging 
48.0, strength averaging 29.6, and uniformity averaging 81.8 sold for 10.00 
cents per pound, FOB warehouse (compression charges not paid). 


 
South Delta 
..A moderate volume of 2018-crop CCC-catalog cotton, in mixed lots with 
mostly color 31 and better, leaf 3 and better, staple 38 and longer, 
mike averaging 4.7, strength averaging 29.7, and uniformity averaging 
81.2 sold for 47.00 cents per pound, FOB warehouse (compression charges 
not paid). 

..A light volume of CCC-catalog cotton, in mixed lots with mostly color 
41 and better, leaf 4 and better, staple 36 and longer, mike averaging 
48.0, strength averaging 29.6, and uniformity averaging 81.8 sold for 
10.00 cents, same terms as above. 



Southwestern Markets Regional Summary      .

East Texas 
 
Spot cotton trading was inactive.  Supplies and producer offerings
 were light. Demand was light. Average local spot prices were weak. 
Producer interest in forward contracting was light. Trading of CCC-loan 
equities was inactive. Foreign inquiries were light.  An open invitation 
to bid on a light volume of 2018-crop CCC-catalog cotton was awarded on 
April 13. Concerns over the COVID-19 Pandemic continued to pressure the 
market, and confirmed cases increased throughout the region. The final 
planting date for insurance expired on April 15 for Bee, Brooks, Duval, 
Goliad, Jim Wells, Kleberg, La Salle, Live Oak, Nueces, San Refugio, 
San Patricio, and Webb Counties.  
 Planting was winding down in the Upper Coast and the Coastal Bend.  
In the Rio Grande Valley, some seedlings were blown out of the ground 
during periods of gusty winds, and replanting was expected. Pinhead 
squares were observed in other fields by industry  experts. Timely 
rainfall  brought  up  to   one-half of an inch of moisture in south 
Texas that greatly helped support the emerging stands. More rainfall 
is needed to take the crop to harvest, but any rainfall is beneficial.  
In the Blackland Prairies, thunderstorms brought rainfall, hail, and 
damaging straight line winds that further delayed planting.  In Kansas, 
fieldwork and other outside activities made good progress under cold 
weather conditions. Planting seed deliveries to producers were slowed 
due to COVID-19 stay at home orders.  In Oklahoma, soils were wet and 
cool from recent snow and rainfall.   Field preparation was idle.  
Cover crops had been terminated ahead of the wintry weather. 
 
West Texas 
 
Spot cotton trading was moderate.  Supplies were moderate.  Producer 
offerings were light.  Demand was light.  Average local spot prices 
were weak. Producer interest in forward contracting was light. Trading 
of CCC-loan equities was inactive. Foreign inquiries were light.  The 
COVID-19 Pandemic continued to pressure the market and cause delays in 
shipments.   
 Producers planned for cotton planting by ordering seed and building rows.  
Ground was plowed and herbicide was applied.  Fieldwork progressed despite 
erratic weather conditions.  Beneficial rainfall was received early in the 
period and up to 5 inches of snow was received in the Panhandle on April 14. 
Warm, sunny conditions made up the other days, with daytime temperature highs 
in the low 40s to low 80s and overnight lows in the 30s to 50s.   



 
Trading 
 
East Texas 
..In Oklahoma, a light volume of mostly color 31, leaf 3 and 4, staple 38, 
mike 36-41, strength 28-33, and uniformity 77-82 sold for around 52.00 cents 
per pound, FOB car/truck (compression charges not paid).   

..A light volume of 2018-crop CCC-catalog cotton, mixed lots with mostly 
color 22, leaf 2, staple 36 and longer, mike averaging 45.6, strength 
averaging 29.5, and uniformity averaging 80.5 sold for around 38.50 cents 
per pound, FOB warehouse (compression charges not paid).  


 
West Texas 
..A light volume containing mostly color 21 and better, leaf 1 and 2, 
staple 34 and longer, mike 38-47, strength 26-31, and uniformity 77-81 
sold for around 46.50 cents per pound, FOB car/truck (compression charges 
not paid).   

..A light volume of mostly color 31 and 32, leaf 2 and 3, staple 32 and 
longer, mike averaging 43.9, strength averaging 27.5, and uniformity 
averaging 79.1 sold for around 41.75 cents, same terms as above.     

..Bids of 36.00 to 54.00 cents per pound, same terms as above were made 
on a heavy volume of 2019-crop cotton, color 23 and better, leaf 5 and 
better, staple 34 and longer, mike 40-46, strength 29-31, and uniformity 
79-81.  No sales were reported. 

..A light volume of 2018-crop CCC-catalog cotton, mixed lots with mostly 
color 31, leaf 5, staple 36, mike averaging 47.3, strength averaging 30.4, 
and uniformity averaging 81.0 sold for around 10.00 cents, FOB warehouse 
(compression charges not paid). 




Western Markets Regional Summary      .


Desert Southwest (DSW) 
 
Spot cotton trading was inactive.   Supplies were moderate.  Producers 
moved bales into the CCC-loan program.   Some producers offered a light 
volume of equities, mostly for price discovery.  No sales were reported. 
Demand was light. The COVID-19 pandemic continued to put pressure on the 
Upland futures market and demand.  Average local spot prices were weak.   
No forward contracting or domestic mill activity was reported. Foreign 
mill inquiries were light.     
 Plenty of sunshine and warm conditions initiated planting in central 
Arizona and in Safford.  The Yuma crop made good progress.  Temperatures 
in the mid-70s to low 80s advanced fieldwork and planting in New Mexico 
and El Paso, Texas.  Some El Paso and Hudspeth County, Texas producers 
began planting last week.  Planting gained momentum as weather and soil 
conditions were conducive to good germination.  Pre-plant irrigation 
continued in New Mexico and the upper Valley of El Paso.  Sources 
reported some producers were still determining whether to increase Upland 
acreage from American Pima acreage, as prices and demand have fallen flat. 
 
San Joaquin Valley (SJV) 
 
Spot cotton trading was inactive.  Supplies and demand were light.  The COVID-19 
pandemic continued to impact U.S. and global economies.  Average local spot prices 
were weak.  No forward contracting or domestic mill activity was reported.  Foreign 
mill inquiries were light.  
 Temperatures rebounded into the mid-70s and low 80s for the week.  Above-average 
daily temperatures were recorded in the Valley late in the period.  Producers were 
anxious to get cottonseed in the ground as planting deadlines for late maturing 
varieties approached.  It remains uncertain how much Upland will actually be planted. 
 
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.  The COVID-19 pandemic continues to affect demand for cotton.  Foreign 
mill inquiries were light for 2019 and 2020-crop.  Shippers remained focused on 
shipping cotton and preserving previously made sales contracts.   The Foreign 
Agricultural Service Export Sales report for week ending April 9 showed no new 
sales and reported no cancellations.   
 Temperatures were in the 50s to 80s in the far west.  No rainfall was reported 
for the region.  Planting windows were pushed into April for the San Joaquin 
Valley (SJV) of California, due to spring cold fronts.  SJV producers would 
prefer to have had AP in the ground in March, as AP varieties need a long 
growing season.  Initial planting began in Safford, Arizona, El Paso, Texas, 
and the SJV.  Total AP plantings remain uncertain as demand from textile mills 
and retailers has come to a standstill.   


 




 


Trading 
 
Desert Southwest 
..No trading activity was reported.   


 
San Joaquin Valley 
..No trading activity was reported.   


 
  American Pima 
..No trading activity was reported.   






2020 CCC Loan Rate Differentials 


USDA’s Commodity Credit Corporation announced the 2020 crop loan rate differentials 
for upland and extra-long staple cotton on April 16. The differentials, also referred 
to as loan rate premiums and discounts, have been calculated based on market 
valuations of various cotton quality factors for the prior three years. This 
calculation procedure is identical to that used in past years. 
 The 2020 crop differential schedules are applied to 2020 crop loan rates of 52 
cents per pound for the base grade of upland cotton and 95 cents per pound for 
extra-long staple cotton. The 2018 Farm Bill stipulates that the loan rate for 
the base quality of upland cotton range between 45 and 52 cents per pound based 
on the sim-ple average of the Adjusted World Price for the two marketing years 
immediately preceding the next planting of the crop. However, the loan rate established 
cannot be less than 98 percent of the loan rate for the immedi-ately preceding year. 
The loan rate provided to an individual cotton bale is based on its quality as 
determined by USDA’s Agricultural Marketing Service classing measurements. 
 The Commodity Credit Corporation adjusts cotton loan rates by these differentia
ls so that cotton loan val-ues reflect the differences in market prices for color, 
staple length, leaf, extraneous matter, micronaire, length uniformity and strength.  
 


Cotton & Wool 

In April, the 2019/20 world cotton mill use estimate was reduced nearly 7.6 million bales 
(6.4 percent) - a   record monthly change - as cotton sector disruptions from COVID-19 
affect the supply chain from spinning to retail (fig. 1). Global mill use is now forecast 
at 110.6 million bales, 8 percent below 2018/19 and the lowest in 6 years. The reduction 
has also impacted raw cotton fiber demand at spinning mills, with the world trade      
estimate lowered 3.0 million bales (6.8 percent) this month as a result. Global cotton
trade is now forecast slightly below 2018/19 at 40.6 million bales, the lowest in 3 years. 
While mill use and trade adjustments were made for most countries in April, the United States
 - the leading exporter - experienced one of the largest monthly reductions in projected U.S. 
cotton exports on record.  






 




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