CM 206 July 2, 2009 Spot cotton quotations averaged 190 points higher 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 26.5-28.4, uniformity 81) in the seven designated markets averaged 51.11 cents per pound for the week ended Thursday, July 2, 2009. The weekly average was down from 49.21 cents reported last week and 64.44 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 49.64 cents on Friday, June 26 to a high of 53.14 cents on Wednesday, July 2. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended July 2 totaled 23,141 bales, compared with 16,923 bales last week and 2,052 bales a year ago. Total spot transactions for the season were 1,306,741 bales, compared to 1,726,023 bales the corresponding week a year ago. The ICE October futures settlement prices ended the week at 59.00 cents, compared to 55.49 cents reported last week. Prices are in effect from July 3-9, 2009 Adjustment World Price (AWP) 44.57 ELS Competitiveness Payment 6.23 Loan Deficiency Payment (LDP) 7.43 Fine Count Adjustment 2008 Crop 0.54 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2009 Crop 0.34 Source: Farm Service Agency, FSA, USDA Southeastern Markets Spot cotton trading was slow. Producer offerings were light. Demand was light. Average local spot prices were higher. Supplies were moderate. Trading of CCC-loan equities was inactive. Hot, dry conditions prevailed throughout most the Southeast. Thunderstorms brought locally heavy downpours to portions of the Florida Panhandle totaling two and one-half to three inches earlier in the week. Elsewhere, topsoil moisture quickly evaporated under the heat wave as daytime temperatures were reported at around 100 degrees. A few isolated showers developed, but soil moisture conditions declined due to a lack of a steady, soaking rain. Dryland cotton began to show signs of drought stress in Alabama, Georgia, and the Carolinas. Stands were spotty in portions of Alabama and Georgia. Local experts rated soil moisture levels mostly short to adequate. Producers applied herbicides to control weeds. Insect pressure was light and easily controlled. South Central Markets North Delta Spot cotton trading was slow. Producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Hot, dry conditions dominated the weather pattern throughout most of the region. Scattered thundershowers resulted in about one-quarter of an inch of rain, in a few isolated areas. Highs were in the upper 90s, with heat indexes around 105 degrees. Overnight temperatures late in the period were in the low-to-mid 60s providing some relief to heat-stressed plants. Soil moisture was rated at mostly adequate. Irrigation was underway on fields wherever possible. The progress of the crop varied widely due to the wide variation in planting dates. Producers treated fields for plant bugs and fleahoppers. Producers continued to apply layby herbicides. Squaring lagged well behind the 5-year average in all areas. South Delta Spot cotton trading was inactive. Producer offerings were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was was inactive. No forward contracting was reported. Hot, dry conditions prevailed throughout the reporting period. Temperatures were in the low 100s, with heat indexes in the upper 100s. The South Delta crop was rated as mostly good, but was in need of a good, soaking rain to promote normal plant development. Soil moisture was mostly short to very short. Producers were irrigating wherever possible. Selective spraying was applied in some fields to control insect hot spots. Squaring lagged well behind the 5-year average in all areas. Southwestern Markets East Texas/Oklahoma Spot cotton trading was inactive. Producer offerings were light. Demand was light. Supplies were light and mostly held in merchant hands. Average local spot prices were higher. Trading of CCC-loan equities was inactive. The drought continued in south and southeast Texas. Above-average temperatures exceeding 100 degrees and lack of significant rainfall, deteriorated soil moisture conditions. Irrigated cotton progressed well and boll setting was underway. Planting continued in the Edwards Plateau. Local experts rated cotton condition mostly poor to fair, statewide. Planting was essentially complete in Oklahoma. West Texas Spot cotton trading was slow. CCC-loan equity trading was inactive. Demand was light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were slow. Interest was best from China, Taiwan, and Turkey. Temperatures were in the high 90s to low 100s early in the reporting period, then dropped into mid-80s, as scattered thunderstorms rolled through the region. Rainfall accumulations totaled one-tenth of an inch in the High Plains to just over three-quarters of an inch in the Lubbock area. Irrigated fields progressed normally. Reports indicated some irrigated acreage in counties north of Lubbock were in poor condition, due to hail and excessive moisture. Cotton specialists advised producers on the management of late-planted cotton. Overall, the crop was in various stages of development. Industry representatives indicated the crop was a ?mixed-bag? and unsure of the amount of acreage that was abandon. Most representatives suggested more acreage was planted than estimated by NASS acreage report released on June 30. Western Markets San Joaquin Valley Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were higher. No forward contracting was reported. Daytime highs were in the mid- to-high 100s most of the reporting period. Cotton plants showed signs of heat stress. Cooler nighttime temperatures helped plants to recover. Some producers began second irrigations. Lygus migrated from harvested alfalfa to cotton fields. Producers began insecticide treatments. Desert Southwest Spot trading of Upland cotton was inactive. Supplies and demand were light. Average local prices were higher. No domestic mill activity or forward contracting was reported. Hot, sunny conditions were the norm. Temperatures were in the high 100s throughout most of Arizona. A trace of rainfall was recorded early in the period. Fields progressed normally in Yuma, Arizona. The bloom stage was almost complete. Producers applied herbicide and plant-growth regulators in central Arizona. Higher elevations of Safford, Arizona recorded temperatures in the mid 80s to low 90s. New Mexico and El Paso, Texas areas received approximately two-tenths of an inch to two inches during the reporting period. Reports indicated that the lower valley into Texas was in full bloom, while the upper valley (into New Mexico) was just in the beginning stages. Insect pressures were normal and easily treated. American Pima Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local prices were weak. No forward contracting or domestic mill activity was reported. Cotton was blooming and progressed normally in the SJV. Some plants showed signs of heat stress as temperatures reached the high 100s. Producers began second irrigations. Cotton fields were in full bloom in El Paso and Hudspeth counties. No insect problems were reported. Cloudy skies and rainfall kept temperatures in the low 80s. Two inches of rainfall was recorded. Clear, sunny conditions were needed to advance the crop. Industry representatives suggested that more American Pima cotton was planted in New Mexico than acreage estimates released on June 30, by NASS. Textile mill report Buyers for domestic mills inquired for a light volume of color 41 and 42, leaf 4, and staple 33 and longer for August through October fill-in needs. No sales were reported. Most mills have covered their immediate-to-nearby raw cotton needs. Reports indicated denim sales had improved. Demand for ring-spun yarn was good; open-end yarn was moderate. Some mills planned to take at least a week of downtime for the Fourth of July holiday. Inquiries through export channels were moderate. Representatives for mills in Turkey purchased a moderate volume of USDA Green Card Class, color 41, leaf 5, and staple 36 for prompt shipment. Representatives for mills in Manila inquired for a moderate volume of USDA Green Card Class, color 31, leaf 3, and staple 34 for August shipment. Taiwanese mill buyers inquired for a moderate volume of color 31, leaf 4, and staple 33 for July/August shipment. Vietnamese mill agents inquired for a moderate volume of color 31, leaf 4, and staple 35 for immediate-to-nearby shipment. Southeastern markets A moderate volume of color mostly 41, leaf 3 and 4, staple mostly 35 and 36, mike 43-49, strength 28-30, and uniformity 79-81 sold for around 51.75 cents per pound, FOB car/truck (Rule 5, compression charges paid). A moderate volume of forfeited CCC-loan cotton traded for 41.00 to 46.00 cents. South Central markets North Delta A heavy volume of color 41 and better, leaf 4 and better, staple 35 and longer, mike mostly 4.7 and higher, strength 28 and higher, and uniformity 80 and higher traded at 50.00 to 51.50 cents per pound, FOB car/truck (Rule 5, compression charges paid). South Delta No trading activity was reported. Southwestern markets East Texas/Oklahoma A light volume of 2007-crop cotton, color mostly 32, 42, 33, and 43, staple 34 to 36, mike 3.8 and lower, strength averaging 30.0, and uniformity averaging 80.5, with over 50 percent extraneous matter (bark) sold in south Texas for around 41.00 cents per pound, FOB warehouse, compression charges not paid. A light volume of 2008-crop cotton, mostly color 41 and better, leaf 3 and better, staple 34 to 36, mike 42 and higher, strength averaging 28.0 to 29.00, and uniformity averaging 82.0 sold in south Texas for 46.50 to 47.00 cents, same terms as above. A light volume of 2008-crop cotton, color 31 and better, leaf 4 and better, staple 34 and longer, mike 35-49, strength averaging 28.0-29.0, and uniformity averaging 79.0-80.0, with over 50 percent extraneous matter (bark) sold in Oklahoma for 44.00 to 46.00 cents, FOB car/truck, compression charges not paid. A light volume of CCC-loan equities traded in Oklahoma for around three cents per pound. West Texas A light volume of mostly color 23 and better, leaf 2 and better, staple 33 and longer, mike 24-35, strength averaging 26.6, with 75 percent bark traded at around 44.00 cents per pound, FOB car (compression charges not paid.) A moderate volume of CCC-loan forfeiture 2007-crop cotton sold for 42.00 to 49.00 cents, FOB warehouse. Western markets San Joaquin Valley A light volume of 2007-crop, saw-ginned cotton was sold to domestic mills. Desert Southwest No trading activity was reported. American Pima A moderate volume of color 2, leaf 2, and staple 46 and better was sold to mills in the Far East. The following narrative and tables were excerpted from a report by the USDA, NASS, and World Agricultural Outlook Board (WAOB), released July 1, 2009 Squaring advanced to 32 percent complete on the 2009 cotton crop, 11 points behind the previous year and 14 points behind the 5 year average. In Texas, the largest cotton producing state, squares were slow to develop. Squaring in Texas, at 22 percent complete, was over a week behind normal. Overall, 8 percent of the crop was setting bolls by June 28, two points behind last year and 3 points behind the average. With above-average temperatures prevailing, boll set began during the week across the Delta and in North Carolina. Nationally, 42 percent of the cotton crop was rated in good-to-excellent condition, down 2 points from last week and 3 points from a year ago. All cotton plantings for 2009 were estimated at 9.05 million acres, 4 percent below last year. Upland planted area was estimated at 8.91 million acres, down 4 percent from 2008, according to the National Agricultural Statistics Service, NASS, USDA. All and upland cotton acres were the lowest since 1983. In Mississippi and Louisiana, producers planted the lowest upland acreages on record at 270,000 and 240,000 acres respectively. The largest percentage decline was in California where upland producers planted 65,000 acres, 46 percent less than last year. Increased upland planted acres were expected in Arizona, Georgia, Oklahoma, South Carolina, Tennessee, and Virginia. American Pima cotton growers planted 149,400 acres, down 14 percent from 2008. The 2009 all-cotton planted area was estimated at 9.05 million acres, down 4 percent from last year. Upland-cotton planted area totals 8.91 million acres, down 4 percent from 2008. All and Upland cotton acres are the lowest since 1983. Upland growers in the Southeastern states (Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia) planted 1.88 million acres, down 2 percent from last year. By mid-June, planting was virtually complete throughout the region. The crop was rated in mostly fair-to-good condition throughout the region at the end of June. In the Delta states (Arkansas, Louisiana, Mississippi, Missouri, and Tennessee), producers planted 1.68 million acres, down 11 percent from last year. Mississippi growers planted 270,000 acres, down 26 percent from last year and the lowest since records began. In Louisiana, producers planted 240,000 acres, the lowest planted acreage on record and down 20 percent from last year. Tennessee producers planted 340,000 acres, up 19 percent from last year. Wet conditions throughout the region slowed planting progress. Planting was complete by the mid-June. The crop was rated in mostly fair-to-good condition throughout the region by the end of June. Texas, Oklahoma, Kansas, and New Mexico upland acreage planted totaled 5.15 million acres, down 2 percent from last year. Texas accounts for 4.90 million of this acreage. Oklahoma producers planted 180,000 acres, up 6 percent from last year. Planting was complete in southern Texas by early May. In the Texas Plains, dry weather aided planting progress as planting was slightly ahead of normal. Upland planted area in Arizona and California was estimated at 205,000 acres, down 20 percent from 2008. In California, producers planted 65,000 acres, down 46 percent from last year and the lowest acreage since upland estimates began in 1941. Arizona producers planted 140,000 acres. Planting was complete in both states by mid-June. American Pima planted acreage is estimated at 149,400 acres, down 14 percent from last year. California accounts for 130,000 acres, down 16 percent from 2008. Arizona producers planted 1,000 acres. Planting in Arizona and California was complete by early May. Texas producers planted 17,000 acres and New Mexico producers planted 1,400 acres. Producers planted 88 percent of their upland cotton acreage with seed varieties developed using biotechnology, up 2 percentage points from last year. Stacked gene varieties, those containing both insect and herbicide resistance, accounted for the most acreage, with 48 percent of the planted acreage, up 3 points from the previous year. Herbicide resistant varieties were planted on 23 percent of the acreage, unchanged from 2008. Varieties containing bacillus thuringiensis (Bt) were planted on 17 percent of the acreage, down 1 point from last year. Upland cotton growers in the United States had booked about 2 percent of their expected acreage by the end of June this season. This was below the 10 percent booked through the same period last year. Contracting has been most active in the southeastern states where about 6 percent of the crop was under contract by the end of June and compares with 12 percent a year earlier. Growers in the western states had contacted about 3 percent and were the same as last June. South central states' growers had forward contracted about 2 percent, compared with 16 percent in 2008. Southwestern states? growers had contracted about 1 percent of the crop, compared to 8 percent last year. These estimates were based on the National Agricultural Statistics Board's March prospective plantings report and informal surveys made by the USDA, Agricultural Marketing Service, Cotton Program. Prices received by farmers for upland cotton averaged 44.40 cents per pound in mid-June, according to the National Agricultural Statistics Service, USDA. This compares with 46.40 cents for the entire month of May 2009 and 64.00 cents in June 2008. These prices include cotton delivered against forward contracts. The June index, at 73, was down 5.2 percent from May and 31 percent below last year. The June price, at 44.4 cents per pound, was down 2.0 cents from the previous month and 19.6 cents below last June. The following information was reported by the International Cotton Advisory Committee, (ICAC) released July 1, 2009 Cotton Stocks Increasing Outside of China (Mainland) in 2009/10 Outside of China (Mainland), cotton production was expected to increase by 3% to 16.0 million tons in 2009/10. Production was expected to increase in the three largest producing countries after China (Mainland): India, the United States, and Pakistan. However, significant production declines were expected in Turkey, Brazil, and the CFA zone. Cotton mill use outside of China (Mainland) was forecast 1% higher at 14.2 million tons in 2009/10. Both cotton imports and exports from the World-less-China (Mainland) were expected to recover slightly in 2009/10, to 5.1 million tons and 6.5 million tons, respectively. Due to a faster increase in supply than in use, cotton stocks outside of China (Mainland) were forecast to continue to grow by 4% to a record of 9.5 million tons by the end of July 2010, accounting for two-thirds of cotton mill use in that region. In China (Mainland), cotton production was expected to decline by 7% to 7.5 million tons in 2009/10. Cotton mill use was expected to increase by 3% to 9.3 million tons, slightly recovering from a sharp drop in 2008/09. Chinese imports were expected to increase only slightly to 1.5 million tons in 2009/10. Chinese stocks were expected to decline by 10%, to 3.4 million tons. Based on a price forecast of 60 U.S. cents/lb for 2008/09 and an expected increase in the stocks-to-mill use ratio in the World-less-China (Mainland) in 2009/10, the ICAC Price Model 2007 forecast a season-average Cotlook A Index of 56 U.S. cents/lb in 2009/10 (the 95% confidence interval was between 44 and 61 cents/lb). This would represent a 7% decline from the projected 2008/09 average.