Cn_206 February 10, 2012 Weekly Cotton Market Review Spot cotton quotations averaged 28 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 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets averaged 86.97 cents per pound for the week ended Thursday, February 9, 2012. The weekly average was up from 86.69 cents last week, but down from 169.50 cents reported the corresponding period a year ago. Daily average quotations ranged from a high of 89.08 cents on Monday, February 6 to a low of 83.09 cents on Thursday, February 9. Spot transactions reported in the Daily Spot Cotton Quotations for the week ended February 9 totaled 35,961 bales. This compares to 26,212 bales last week and 22,750 bales reported a year ago. Total spot transactions for the season were 632,847 bales, compared to 525,186 bales the corresponding week a year ago. The ICE March settlement prices ended the week at 90.38 cents, compared to 94.21 cents last week. Prices are in effect from February 10-16, 2012 Adjustment World Price (AWP 82.25 ELS Competitiveness Payment 0.00 Loan Deficiency Payment (LDP) 0.00 Fine Count Adjustment 2010 Crop 1.65 Coarse Count Adjustment (CCA) 0.00 Fine Count Adjustment 2011 Crop 1.70 Source: Farm Service Agency, FSA, USDA USDA ANNOUNCES SPECIAL IMPORT QUOTA #26 FOR UPLAND COTTON February 9, 2012 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 February 16, 2012, allowing importation of 14,594,057 kilograms (67,030 bales) of upland cotton. Quota number 26 will be established as of February 16, 2012, and will apply to upland cotton purchased not later than May 15, 2012, and entered into the U.S. not later than August 13, 2012. The quota is equivalent to one week's consumption of cotton by domestic mills at the seasonally- adjusted average rate for the period May 2011 through July 2011, 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. Regional Summaries Regional Summaries Southeastern Markets Spot cotton trading was moderate. Supplies were moderate. Demand was moderate. Producer offerings were moderate. Average local spot prices were higher. Trading of CCC-loan equities was slow. Mostly clear conditions prevailed during the period with daytime temperatures in the high 60s to low 70s. Light scattered precipitation was received in areas of North Carolina and Virginia, but rainfall totals were generally less than one-quarter of an inch. A few gins continued daily operations, but most had gone to gin days as they waited for modules from the last remaining fields yet to be picked. Producers considered planting options and management strategies for the upcoming season to control glyphosate-resistant Palmer amaranth (pigweed), which infests most Georgia cotton fields. The USDA has declared counties scattered throughout the region as primary natural disaster areas due to drought, excessive heat, tornado damage, and flooding. Qualified farm operators are eligible for assistance provided eligibility requirements are met at http://disaster.fsa.usda.gov/. South Central Markets North Delta Spot cotton trading was slow. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were firm. Trading of CCC-loan equities was inactive. Seasonably cool temperatures dominated the weather pattern during the week. High temperatures ranged from mid-40s to the mid-60s and the overnight lows were mostly in the mid-30s. Light rain showers produced about one-half of an inch of precipitation. Soil moisture conditions were adequate-to-surplus throughout the region. No outside activities were reported. South Delta Spot cotton trading was slow. Supplies were moderate. Producer offerings were light. Demand was light. Average local spot prices were firm. Trading of CCC-loan equities was inactive. No forward contracting was reported. A warm, moist air flow early in the week brought heavy rain showers that produced two to three inches of welcomed precipitation. Highs in the 70s gave way to temperatures in the mid-50s later in the week. Overnight lows ranged from mid-30s to the mid-50s. Soil moisture improved in some of the drier parts of Louisiana. No outside activities were reported. Southwestern Markets East Texas-Oklahoma Spot cotton trading was slow. Supplies were light. Demand was light. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was slow. No domestic mill activity was reported. Foreign mill interest was very light. In Texas, beneficial rainfall was received in most areas. Reports indicated that timely precipitation measured one-half of an inch to six inches of rainfall. The moisture helped replenish fields prior to the onset of planting, which will begin in three to six weeks depending on location. In Kansas, rainfall fell throughout the week and brought one to three inches in the cotton-growing areas. Blizzard conditions were north of cotton-growing acreage. Ginning operations were completed at the end of the week. Industry reports indicated that a significant increase in new acreage is expected. In Oklahoma, increased acreage is expected around Caddo County. The drought continued to influence planting decisions in the southwestern part of the state, where water profiles were very low. West Texas Spot cotton trading was active. Supplies were moderate. Demand was light. Average local spot prices were higher. Producer offerings were light. No forward contracting was reported. Trading of CCC-loan equities was moderate. No domestic mill activity was reported. Foreign mill interest was very light. Daytime temperature highs were in the 40s to 50s, and nighttime lows were in the teens to 20s. Cold, northern winds gusted periodically during the week. A light dusting of snow blanketed the panhandles of Texas and Oklahoma early in the week, which deposited trace amounts of precipitation. Rainfall was received late in the week, and is expected to continue through the weekend. Precipitation was welcomed and provided relief to the drought-stricken area, but Regional Summaries Regional Summaries more rainfall is needed to alleviate the on-going drought. When the winds calmed, producers prepared fields, and applied pre-emergent herbicide. Producers attended local production meetings and agricultural conferences. Western Markets Desert Southwest (DSW) Spot cotton trading was slow. Supplies were moderate. Demand was light. Average local spot prices were steady. No domestic mill activity was reported. Foreign mill inquiries were light. Mild, spring-like temperatures were the norm in the DSW. Dry conditions continued with no rainfall recorded in the period. Producers in Yuma, Arizona pre-irrigated fields for spring plantings. Ginning continued in Arizona, southern California, New Mexico, and El Paso, Texas. Rain and snow were desperately needed to alleviate droughty conditions in the DSW. San Joaquin Valley (SJV) Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local spot prices were steady. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. Temperatures were in the mid-60s for most of the Valley. A weak cold front brought little rain to the Valley, but the Sierra Nevada Mountains received several inches of fresh snow early in the reporting period. A couple of gins were finishing operations this week. American Pima (AP) Spot cotton trading was inactive. Supplies were moderate. Demand was light. Average local prices were steady. No forward contracting was reported. Foreign mill inquiries were light and mostly for third quarter shipments. Mills continued to test prices and inquired for any off-grades. Interest was best from China, Korea, Pakistan, and Taiwan. Producers in Yuma, Arizona prepared equipment and fields for planting. Ginning continued in the far west. Textile mill Buyers for domestic mills inquired for a moderate volume of color 41, leaf 4, and staple 34 and longer for April through September delivery. No sales were reported. Most mill buyers reported a cautious undertone as finished product demand remained sluggish. Inquiries through export channels were moderate. Demand was best throughout the Far East for any discounted or low-grade styles of cotton. Regional Price Information Regional Price Information Southeastern Markets .. A heavy volume of color 21-41, leaf 4 and better, staple 35-37, mike 35-49, strength 28-30, and uniformity 79-81 sold for around 94.75 cents per pound, FOB car/truck (Rule 5, compression charges paid). .. A moderate volume of color 41 and better, leaf 4 and better, staple 35 and longer, mike 4751, strength 27-32, and uniformity 80-84 sold for around 90.00 cents, same terms as above. .. A moderate volume of color 41 and better, leaf 4 and better, staple 34 and longer, mike 3752, strength 26-32, and uniformity 79-83 sold for around 89.50 cents, same terms as above. .. A light volume of color 31 and 41, leaf 3 and 4, staple 36-38, mike 43-52, strength 31-33, and uniformity 81-83 sold for around 88.00 cents, same terms as above. .. A moderate volume of color 42 and better, leaf 5 and better, staple 31-34, mike 46-54, strength 27-31, and uniformity 79-82 sold for around 80.00 cents, same terms as above. .. A light volume of CCC-loan equities traded for around 28.00 to 30.00 cents. South Central Markets North Delta .. A light volume of color 31 and better, leaf 3 and better, staple 34 and longer, mike 43-49, strength 29-34, and uniformity 79-83 sold at around 94.25 cents per pound, FOB car/truck (Rule 5, compression charges paid). .. A light volume of color 42 and better, leaf 4 and better, staple 33 and longer, mike 36-54, strength 27-33, and uniformity 79-82 sold at around 88.25 cents, same terms as above. .. Producers forward contracted a light volume of 2012-crop cotton at around 325 to 425 points off ICE December 2012 futures. South Delta .. A moderate volume of color 41 and better, leaf 5 and better, staple 33 and longer, mike 3254, strength 27-35, and uniformity 78-83 sold at around 88.00 cents per pound, FOB car truck, (Rule 5, compression charges paid). Southwestern Markets East Texas .. In Kansas, a light volume of color 21 and 31, leaf 2 and 3, staple 34 and longer, mike 38-41, strength 28-31, and uniformity 78-81 sold for around 88.50 cents per pound, FOB car/truck (compression charges not paid). .. A light volume of color 41 and better, leaf 4 and better, staple 34 and longer, mike 38-43, strength 28-32, and uniformity 79-81 sold for around 82.00 cents, same terms as above. .. A moderate volume of mixed lots mostly color 43 and better, leaf 5 and better, staple 35 and longer, mike 30-45, strength 26-31, uniformity 77-81, and 75 percent extraneous matter sold for around 73.00 cents, same terms as above. .. In Oklahoma, a light volume of mixed lots of color mostly 51 and better, leaf 4 and 5, staple averaging 35.1, mike averaging 36.4, strength averaging 29.7, uniformity averaging 80, and 75 percent extraneous matter sold for around 74.75 cents, same terms as above. Regional Price Information Regional Price Information Southwestern Markets East Texas .. In Oklahoma, a light volume of color 43, leaf 4 and 5, staple 23 and longer, mike 23-25, strength 21-25, uniformity 75-78, and 25 percent extraneous matter sold for around 55.50 cents, same terms as above. .. A moderate volume of CCC-loan equities traded for 25.00 to 34.00 cents. West Texas .. A moderate volume of color mostly 31 and better, leaf 1 and 2, staple 35 and longer, mike 41-46, strength 27-30, and uniformity 79-81 sold for 90.00 to 94.50 cents per pound, FOB car/truck (compression charges not paid). .. A light volume of color 31 and better, leaf 4 and better, staple 34 and longer, mike averaging 45.0, strength averaging 30.2, uniformity averaging 80.0, and 75 percent extraneous matter sold for 85.00 to 86.00 cents, same terms as above. .. A light volume of color 31 and better, mostly leaf 3 and better, staple 33 and longer, mike 43-48, strength 26-29, and uniformity 77-81 sold for 82.00 to 83.50 cents, same terms as above. .. A light volume of color mostly 31 and better, leaf 3 and better, staple 32 and longer, mike 37-43, strength 26-27, and uniformity 78-79 sold for 73.00 to 76.50 cents, same terms as above. .. A moderate volume of CCC-loan equities traded for 30.00 to 35.00 cents. Western Markets Desert Southwest .. A light volume of color 21 and 31, leaf 2, staple 33-34, mike averaging 46.2, and strength averaging 27.9 sold for 85.50 cents, FOB car/truck (compression charges not paid). .. A moderate volume of new-crop contracts were booked at 150 points off ICE December 2012 futures, for color 31 and better, leaf 3 and better, and staple 35 and longer. San Joaquin Valley .. No trading activity was reported. American Pima .. A heavy volume of color 2 and better, leaf 2 and better, staple 46 and longer was sold for 165.00 cents, per pound landed to domestic mills. .. A moderate volume of color 2 and better, leaf 2 and better, and staple 46 and longer was sold to foreign mills for prompt and third quarter shipments. The following information was excerpted from the World Agricultural Supply and Demand Estimates, released on February 9, 2012 The 2011/12 U.S. cotton estimates reflected marginally lower domestic mill use compared with last month. With no change in the production estimate, the total cotton supply is unchanged. Domestic mill use was lowered 100,000 bales, reflecting lower than anticipated activity in recent months. The export estimate was unchanged. Ending stocks were raised 100,000 bales to 3.8 million, for a stocks-to-use ratio of 26 percent. The forecast range for the average price received by producers of 87 to 93 cents per pound was narrowed 1 cent on each end. The 2011/12 world cotton estimates included sharply higher supplies, due to higher beginning stocks and production. Beginning stocks were raised 1.6 million bales, mainly reflecting increased estimates for India’s production in 2009/10 and 2010/11 by the India Cotton Advisory Board. World 2011/12 production was raised 505,000 bales due largely to higher estimated production for Pakistan, which is based on ginning arrivals. Forecast world consumption was reduced slightly, including decreases for Thailand, the United States, and others. World trade was raised, due to a 1.0-million-bale increase in the import forecast for China. World ending stocks were forecasted at 60.8 million bales, an increase of nearly 14 million bales from the beginning level. The stocks-to-consumption ratio of just over 55 percent was sharply higher than the past two seasons and about equal to the 2008/09 level.