Cn_206 Weekly Cotton Market Review June 14, 2013 Spot cotton quotations were five and one-half cents 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 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 84.20 cents per pound for the week ended Thursday, June 13, 2013. The weekly average was up from 78.70 cents last week, and 69.11 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 80.86 cents on Friday, June 7 to a high of 87.55 cents on Thursday, June 13. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended June 13 totaled 3,072 bales. This compares to 8,897 bales last week and 5,461 bales reported a year ago. Total spot transactions for the season were 1,650,535 bales, compared to 864,371 bales the corresponding week a year ago. The ICE July settlement prices ended the week at 91.72 cents, compared to 84.87 cents last week. Prices are in effect from June 14-20, 2013 Adjustment World Price (AWP) 72.94 ELS Competitiveness Payment 0.00 Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2012 Crop 0.50 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2013 Crop 0.65 Source: Farm Service Agency, FSA, USDA USDA ANNOUNCES SPECIAL IMPORT QUOTA #18 FOR UPLAND COTTON June 13, 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 June 20, 2013 allowing importation of 13,544,062 kilograms (62,207 bales) of upland cotton. Quota number 18 will be established as of June 20, 2013, and will apply to upland cotton purchased not later than September 17, 2013, and entered into the U.S. not later than December 16, 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. 2 Southeastern Markets Spot cotton trading was slow. Supplies were light. Demand was good. Producer offerings were light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Tropical storm Andrea made landfall in Florida late last week and quickly swept across the southeast Georgia coastline and the Carolinas over the weekend. The relatively weak storm system brought soaking rainfall and occasional downpours, but flooding and wind damage was minimal. Planting activity was completed in Virginia, but progress was delayed elsewhere due to wet conditions. Excessive rainfall in Georgia delayed double-crop cotton planting behind the wheat harvest in areas. Reports indicated some gins had cancelled forward contracts, due to production concerns. The consistent moisture also delayed the application of herbicides and producers were assessing strategies to combat Palmer amaranth (Pigweed). Reports indicated crews had entered fields in some areas to hand pull weeds. Insect pressure from thrips lessened in earlier-planted fields throughout the region as young plants matured beyond the thrips-suceptible stage. In north Alabama, producers sprayed fields for spider mite infestations. A period of clear, warm weather was needed to allow soft soils to firm and allow planting activity to finish. South Central Markets North Delta Spot cotton trading was inactive. Supplies of available cotton were light. Demand was moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Clear skies and very warm temperatures allowed the crop to make excellent progress in established stands; however, late-planted fields were barely at the first true-leaf stage. A few producers with contracted acres in Tennessee finished planting during the week, after the deadline for insurance coverage. Some replanting was also reported. According to the National Agricultural Statistics Service (NASS), planting advanced to 88 percent in Tennessee. Pinhead squares were reported in early-planted fields in Missouri, and squaring reached 1 percent in Arkansas, according to NASS. Cotton extension specialists reported heavy infestations of plant bugs in host plants bordering fields and advised producers to carefully monitor fields as the pests migrated into maturing cotton stands. Population levels of aphids and spider mites increased and a few hotspots were treated as necessary. South Delta Spot cotton trading was inactive. Supplies were light. Producer offerings were light. Demand was moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Ideal weather conditions helped the crop to make excellent progress during the week; although, the stage of growth varied widely throughout the region due to the prolonged planting season. High temperatures were in the low 90s and overnight lows were mostly in the upper 60s. According to the National Agricultural Statistics Service, planting in Mississippi advanced to 94 percent. Squaring advanced to 4 percent in Louisiana, but no squaring was reported in Mississippi. Insect pressure from thrips was light in late-planted fields. Population levels of aphids, plant bugs, and spider mites increased and a few hotspots were treated. Southwestern Markets East Texas-Oklahoma Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Producer offerings were light. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. In Texas, fields made good progress and began to set fruit. Early management applications of growth regulators were applied on irrigated acreage. Some irrigated fields received the first watering in south central Texas. Producers monitored for fleahoppers and spider mites. The Coastal Bend area received showers and some hail, but damage was minimal. Irrigated fields continued to progress in the Lower Rio Grande Valley. Planting neared completion in Kansas, but was delayed in some areas because fields were too wet to support equipment. In Oklahoma, a general light rainfall was received. Planting continued; although, droughty conditions persisted. Cotton-growing areas need more rainfall. The final planting date for crop insurance coverage in the southwestern counties is June 20. West Texas Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Producer offerings were light. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. Hail and wind from last week’s thunderstorms left some seedling stands damaged in counties surrounding Lubbock. Hail knocked off leaves in some fields. High winds toppled some irrigation pivots and blew some seedlings out of the soil. Following the adjuster’s assessments of the fields, producers will decide what to replant. Progressing fields varied from emerged to the seven true-leaf stage. Irrigated fields advanced; but most drip irrigated and dryland fields need more moisture to advance. However, in the Low Rolling Plains timely rainfall helped advanced the dryland stands. Planting neared completion and some replanting was underway. Producers were lightly tilling fields and breaking the crusty soil so that the seedling could emerge without injury. Crop dusters applied herbicides and fertilizers. Western Markets Desert Southwest (DSW) Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were steady. Widespread blooming was reported in Yuma, Arizona. Reports indicated that the crop in Parker, Arizona appeared to be two weeks ahead of normal. New Mexico crop progress was typical with 85 percent rated in fairto- excellent condition. Some wind damage was reported. Rains moved in from the west into El Paso, Texas, but brought no real relief from the on-going drought. Irrigations were on-going. No insect pressures were reported. The crop progressed normally with some fields squaring and others approaching first bloom. San Joaquin Valley (SJV) Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Foreign mill inquiries were light. Interest was best from Ecuador. Mill demand was weak, with no interest for nearby. Competitive growths, especially Australian high grades held mill interest. Hot, dry conditions advanced the crop. Fields were progressing normally. Producers continued to monitor pest populations, but levels remained below the threshold for treatment. 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. Interest was best for prompt shipments for some mills, that need to meet licensing agreements. Inquiries were made for new-crop cotton, but mostly for the purpose of price discovery. AP shipments to foreign mills were consistent and sales were on track to set a new record. The crop continued to make excellent progress throughout the region. Widespread blooming was reported in Yuma, Arizona. Some of the more advanced San Joaquin Valley fields exhibited first blooms, but blooming was not widespread. Textile Mill Report Domestic mill buyers inquired for a heavy volume of 2013-crop cotton for delivery fourth quarter 2013 through fourth quarter 2014. No sales were reported. Most mills had covered their immediate-to-nearby raw cotton needs. Yard demand remained good and most mills continued to operate on a five to seven day schedule. Demand through export channels was moderate, but had tapered due to higher ICE futures prices. Guatemalan mill buyers inquired for a moderate volume of color 31, leaf 3, and staple 35 for nearby shipment. Agents for mills throughout the Far East inquired daily for any discounted styles or low-grade styles of cotton. Regional Price Information Southeastern Markets .. A light volume of color mostly 31, leaf 2 and 3, staple 35-37, mike 43-49, strength 27-30, and uniformity 80-82 sold for around 88.50 cents per pound, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage). .. A moderate volume of color 31 and 41, leaf 2 and 3, staple mostly 36 and 37, mike 43-49, strength 28-31, and uniformity 80-83 sold for around 50 points off ICE July futures, same terms as above. .. Mixed lots containing color 42 and better, leaf 3-5, staple 35-38, mike 43-49, strength 28-31, and uniformity 80-83 sold for around 300 points off ICE July futures, same terms as above. .. A moderate volume of color 31 and 41, leaf 3 and 4, staple 35-37, mike 43-52, strength 27-30, and uniformity 80-83 sold for around 87.00 cents, 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 .. In Texas, a light volume of color mostly 21 and better, leaf 2 and 3, staple 34 and longer, mike 51- 56, strength 27-32, and uniformity 80-84 sold for around 79.00 cents per pound, FOB warehouse (compression charges not paid). .. In Oklahoma, mixed lots containing a light volume of color mostly 31, leaf 4 and better, staple 37 and longer, mike 28-32, strength 29-32, uniformity 79-82, and 75 percent bark sold for around 75.00 cents, FOB car/truck (compression charges not paid). West Texas .. A light volume of color 21 and better, leaf 2 and 3, staple 35 and 36, mike 32-37, strength 29-31, and uniformity 77-81 sold for around 81.00 cents per pound, FOB car/truck (compression charges not paid). Western Markets Desert Southwest .. No trading activity was reported. San Joaquin Valley .. No trading activity was reported. American Pima .. No trading activity was reported. The following information was excerpted from the World Agricultural Supply and Demand Estimates released on June 12, 2013 The 2013/14 U.S. cotton supply and demand balance sheet shows lower beginning and ending stocks, lower production, and higher prices relative to last month. The 2012/13 export estimate is raised 350,000 bales to 13.6 million, reducing the current season’s ending stocks forecast. This adjustment reflects continued strong sales and shipments and expected higher imports by China. At the same time, projected U.S. production for 2013/14 is reduced to 13.5 million bales for 2013/14, as abandonment is raised to reflect continued drought conditions in the Southwest. With the total 2013/14 supply 900,000 bales below last month, U.S. exports are reduced 500,000 bales to 11.0 million and ending stocks are reduced to 2.6 million, the equivalent of 18 percent of total use. The projected range for the marketing-year average price of 73 to 93 cents per pound is raised 5 cents on each end, with a midpoint of 83 cents per pound, 15 percent above the estimated average for 2012/13. This month’s changes to the world cotton estimates for both 2012/13 and 2013/14 result primarily from a sharp increase of 1.75 million bales in China’s 2012/13 imports to a level of 20.0 million. Higher imports by China in the current season are drawing stocks out of exporting countries and constraining the 2013/14 supply outside of China available for global consumption and trade. World production in 2013/14 is reduced slightly from last month, based on lower production for the United States, Turkmenistan, and others; world consumption also is reduced slightly. China’s imports are reduced 1.0 million bales from last month to 11.0 million, accounting for most of the change in the world trade, as higher China imports in 2012/13 raise beginning stocks and domestic supplies. Projected world 2013/14 ending stocks are reduced marginally, but China’s stocks are raised 750,000 bales, leaving projected stocks outside of China about 3 percent lower. These projections assume that China continues current policies regulating the national reserve acquisition and release prices.