Cn_206 Weekly Cotton Market Review May 17, 2013 Spot cotton quotations averaged 98 points lower than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton 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 81.37 cents per pound for the week ended Thursday, May 16, 2013. The weekly average was down from 82.35 cents last week, but up from 70.80 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 81.03 cents on Monday, May 13 to a high of 81.87 cents on Tuesday, May 14. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended May 16 totaled 7,074 bales. This compares to 5,601 bales last week and 2,290 bales reported a year ago. Total spot transactions for the season were 1,629,258 bales, compared to 846,513 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 86.03 cents, compared to 87.92 cents last week. Prices are in effect from May 17-23, 2013 Adjustment World Price (AWP) 72.92 ELS Competitiveness Payment 0.00 Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2011 Crop 0.34 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2012 Crop 0.54 Source: Farm Service Agency, FSA, USDA FSA Administrator Urges Producers to Enroll in DCP/ACRE WASHINGTON, May 16, 2013 — USDA Farm Service Agency (FSA) Administrator Juan M. Garcia encouraged farmers and ranchers to enroll for the 2013 Direct and Counter-Cyclical Payment Program (DCP) or the Average Crop Revenue Election Program (ACRE) before the deadline. Producers who wait until the last minute to sign up could face increased waiting time in FSA county offices. “We understand that producers have gotten busy, but they can’t forget to visit their county office and sign up for DCP or ACRE,” said Garcia. “Just as farmers and ranchers plan their spring plantings, producers should plan to schedule an appointment to visit their USDA Service Center at the earliest possible time. It’s best to complete the paperwork now rather than to stand in line the day before the deadline,” advised Garcia. The sign-up for both programs began Feb. 19, 2013. The deadline to sign up for ACRE is June 3, 2013. The DCP sign up period ends Aug. 2, 2013. The 2013 DCP and ACRE program provisions are unchanged from 2012, except that all eligible participants in 2013 may choose to enroll in either DCP or ACRE for the 2013 crop year. This means that eligible producers who were enrolled in ACRE in 2012 may elect to enroll in DCP in 2013 or may re-enroll in ACRE in 2013 (and vice versa). 2 Southeastern Markets Spot cotton trading was slow. Supplies were light. Demand was good. Producer offerings were light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. Ideal weather allowed planting activities to advance at a rapid pace in North Carolina and Virginia. Planting made good progress elsewhere in the region as producers attempted to complete fieldwork ahead of crop insurance deadlines. Many fields remained too soggy to support equipment and fieldwork was hindered. Daytime temperatures in the high 70s to mid-80s prevailed, but warmer temperatures in the near term should enhance germination and seedling vigor. In Alabama, local experts reported some fields exhibited poor emergence and delayed seedling plant growth due to the unseasonably cool weather in recent weeks. Producers also treated some fields for light-to-moderate thrip infestations. Cotton planting lagged behind the five-year average in all areas at 35 percent complete in North Carolina, 34 in Alabama, 27 in Virginia, 23 in Georgia, and 22 percent in South Carolina, according to the National Agricultural Statistics Service Crop Progress report. South Central Markets North Delta Spot cotton trading was inactive. Supplies of available cotton were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. A period of mostly warm, dry weather allowed saturated soils to firm enough to support equipment in most areas. Low temperatures dropped into the upper 40s before ending the week in the mid-50s. Daytime high temperatures were in the mid-80s. Producers made good progress sowing cotton throughout the region, particularly in Missouri. A few low-lying areas remained underwater from both heavy rainfall and floodwater from rising rivers. South Delta Spot cotton trading was inactive. Supplies were light. Producer offerings were light. Demand was light. Average local spot prices were lower. Trading of CCC-loan equities was inactive. No forward contracting was reported. About one half of an inch of rain fell early in the week. Warm, dry weather throughout the remainder of the week helped saturated fields dry sufficiently to support planting equipment in most areas. A few low lying fields remained flooded from recent heavy rainfall and floodwater from rising rivers. Daytime highs ranged from the mid-60s to the mid-80s. Low temperatures dropped into the low 40s before ending the week in the upper 50s. Producers made good progress planting. A few of the earliest planted fields had to be replanted as a result of poor germination and cool soil temperatures. Southwestern Markets East Texas-Oklahoma Spot cotton trading was inactive. Supplies were light. Demand was light. Average local spot prices were lower. Producer offerings were light. Trading of CCC-loan equities was slow. Foreign mill inquiries were light. Recent abundant rainfall both helped and hindered the fields in Texas. Some areas received up to five inches of precipitation in relatively short periods of time, which flooded some fields. Late in the week, the Blackland Prairies received severe thunderstorms containing hail. Crop damage assessments are underway. The moisture mostly helped progress the established crop. Adjusters evaluated failed acreage. Replanting was underway in some areas. Weed populations are expected to increase. According to the National Agricultural Statistics Service (NASS), cotton was 20 percent planted for the state, lagging behind the five-year average of 31 percent. Advancements in planting equipment allowed producers to plant large amounts of acreage quickly, so the delays were minimal. In Kansas, most producers finalized corn planting; which delayed the expansion of cotton planting. Central and eastern Kansas received timely rainfall, but the southwest remained exceptionally dry. Planting was underway in the central and eastern Oklahoma, but the southwestern counties remained dry. According to NASS, six percent was planted compared to 15 percent for the five-year average. 3 West Texas Spot cotton trading was slow. Supplies and demand were light. Average local spot prices were lower. Producer offerings were light. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. Producers were eager to return to the fields under sunny conditions with temperatures consistently in the low to mid-90s. The subsoil levels warmed closer to the preferred temperatures to encourage germination, and planting leisurely advanced. Some producers plowed and prepared rows ahead of planting. Some producers scheduled cotton planting after peanuts. According to the National Agricultural Statistics Service, cotton was 20 percent planted for the state, lagging behind the five-year average of 31 percent. Advancements in planting equipment allow producers to plant large amounts of acreage quickly, so the planting delays will be minimalized with cooperative weather conditions. Light, intermittent rain showers brought a trace to three-fourths of an inch of beneficial moisture to most fields in the Northern and Southern High Plains. Strong thunderstorms brought heavy rainfall to the Southern Low Plains and the Edwards Plateau. Local reports indicated that more acres were planted to grain sorghum at the expense of cotton. Western Markets Desert Southwest (DSW) 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. Hot, dry conditions dominated the weather pattern. The crop made excellent progress throughout the region. A few earlier planted fields neared the squaring stage in Yuma, Arizona. Planting continued in some parts of Arizona, New Mexico, and El Paso, Texas. Industry representatives in the El Paso, Texas area reported approximately 50 to 60 percent of the crop was planted. Those producers with wells may have a chance to make a crop, with some saving water for pecan trees. Everyone is hopeful for an active monsoon season by midsummer. San Joaquin Valley (SJV) Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were lower. Merchant offerings of new-crop cotton were light. No new sales were reported. Foreign mill inquiries were light and interest was best for roller-ginned Upland. The first 100 degree day was reached early in the reporting period. The crop made excellent progress and some fields received first irrigations. American Pima (AP) Spot cotton trading was inactive. Producer offerings and supplies were light. Demand was light. Average local prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. A few shippers offered new-crop cotton. No new sales were reported. The crop made good progress throughout the region. Planting continued in New Mexico and El Paso, Texas. Acreage is expected to be down, due to the on-going drought. Textile Mill Report Domestic mill buyers inquired for a heavy volume of 2013-crop cotton, color 51 and better, leaf 5 and better, and staple 32 and longer for January through March 2014 delivery. No sales were reported. Yarn demand remained good throughout the Far East and most mills continued to operate at capacity. Demand through export channels was moderate. Japanese mill buyers inquired for a moderate volume of USDA Green Card Class, 2013-crop cotton, color 41 and better, leaf 3 and 4, and staple 34 and 35 for October 2013 through March 2014 shipment. Representatives for mills in China inquired for a heavy volume of color 31 and 41, leaf 3 and 4, and staple 36 for July shipment. Turkish mill buyers inquired for a moderate volume of color 41, leaf 4, and staple 33 and 34 for nearby shipment. Regional Price Information Southeastern Markets .. Even-running lots containing color 41, leaf 3 and 4, staple 36, mike 35-49, strength 27-30, and uniformity 81-83 sold for around 75 points on ICE July futures, FOB car/truck (Rule 5, compression charges paid). 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 CCC-loan equities traded for 27.00 cents per pound. West Texas .. A light volume of mixed lots containing color 22 and 32, leaf 3 and better, staple 33, mike 40-51, strength 24-30, uniformity 75-81, and 25 percent bark sold for around 80.50 cents per pound, FOB car/truck (compression charges not paid). Western Markets Desert Southwest .. No trading activity was reported. San Joaquin Valley .. A light volume of color 21 and better, leaf 3 and better, and staple 36 and longer sold for 96.00 cents per pound, UD free, FOB warehouse. .. A moderate volume of saw-ginned Upland was contracted for 95.00 to 97.00 cents. American Pima .. No trading activity was reported. USDA ANNOUNCES SPECIAL IMPORT QUOTA #14 FOR UPLAND COTTON May 16, 2013 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 23, 2013 allowing importation of 13,544,062 kilograms (62,207 bales) of upland cotton. Quota number 14 will be established as of May 23, 2013, and will apply to upland cotton purchased not later than August 20, 2013, and entered into the U.S. not later than November 18, 2013. The quota is equivalent to one week's consumption of cotton by domestic mills at the seasonally-adjusted average rate for the period December 2012 through February 2013, 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. The following information was excerpted from the Cotton & Wool Outlook report, released on May 14, 2013 Global Cotton Production To Decline in 2013/14 but Still Exceed Consumption The first U.S. Department of Agriculture (USDA) cotton forecast for 2013/14 projects that world cotton production will decrease while consumption increases, although consumption is expected to remain below production for the fourth consecutive season. Global production is projected to decline about 3 percent from 2012/13 (to 117.8 million bales) as cotton area is reduced slightly in 2013/14. World cotton production will be at its lowest in three seasons, with China, India, the United States, and Pakistan accounting for more than 70 percent of global cotton production in 2013/14. World cotton consumption for 2013/14 is projected at 110.4 million bales, a 2-percent increase from the current season, as use continues to rebound from 2011/12’s 8-year low. Modest growth in world gross domestic product (GDP) is expected to support cotton consumption. China, India, and Pakistan are expected to lead global cotton mill use and account for a combined 65 percent of world consumption in 2013/14.