November 16, 2000

With first notice day of the December contract next Wednesday, the delivery period weighed on the market and remained a dominant feature this week as observers closely monitored the large number of bales in certificated stocks. Impending inclement weather in Texas gave a small boost to the market as analysts anticipate further crop losses and degeneration of cotton quality in the state.

West Texas farmers were stripping as many fields as possible before anticipated rain and snow moved into the area this weekend. Early classings from weathered cotton around Lubbock revealed that color grades have dropped from predominantly strict middling and better to strict low middling light spotted and better. Average staple length also has shortened slightly, and micronaire readings have fallen.

Elsewhere in the state, light showers are expected to develop along the Gulf Coast and bring much-needed precipitation to the Rio Grande Valley and Coastal Bend districts which will help increase soil moisture levels for next season. The storms are forecast to move into southern parts of the Memphis Territory and then into Southeastern states. Although a vast majority of the crop in the Southeast already is off the stalk, the rainfall will interrupt picking activities and increase the likelihood of discoloration of fibers in open bolls.

According to USDA figures, overall U.S. cotton harvesting reached 77 percent complete as of November 12, up from 74 percent last year and matching the five-year average. The weather-plagued Texas harvest edged up to 60 percent done which is even with the previous year but one percent below the five-year average. Based on November 1 production estimates compiled by USDA before additional adversity hit the crop, roughly 1.73 million bales would have remained on the stalk in Texas as of Sunday, November 12.

Meanwhile, USDA reported weekly export sales of upland cotton fell to 54,800 running bales for the week ended November 9. Sales were considerably lower than the previous week's 126,100-bale figure and 26 percent below the four-week average.

Canada was the only sizable buyer of U.S. cotton with purchases totaling 34,800 bales, but sales of 4,000 bales to China captured the attention of market observers. China has purchased U.S. cotton for three consecutive weeks, but amounts have been small which could be an indication that the country has been filling needs for high-quality varieties. Despite its appearance in several U.S. export sales reports, China is not considered a major player in the export market at this point, but traders will be watching USDA reports closely for further sales.

Spot cotton sales on TELCOT fell to 8,638 bales for the week ended November 16 compared to the previous week's impressive 42,585-bale figure. Average daily prices received by producers utilizing the electronic marketing system ranged from 53.25 to 56.64 cents per pound compared to a range of 53.52 to 56.34 cents the previous week.