April 21, 2005

Cotton futures settled mixed on Thursday at the New York Board of Trade as spread trading dominated with front-month May at a premium over July. USDA’s weekly export sales report provided support for the market as both sales and shipments were strong.

USDA reported net export sales of U.S. cotton totaled 269,000 bales in the week ended April 14, six percent more than the previous week and 43 percent higher than the four-week average. For the first time since the first two weeks of January, Turkey was the major buyer of U.S. cotton. Smaller quantities were sold to China, Indonesia, and Mexico. Net sales of 5,000 bales for delivery in 2006 were mainly for Indonesia and South Korea.

Export shipments reached a new marketing year high at 432,200 bales, a 27 percent increase from the previous week and 24 percent more than the four-week average. Primary destinations were China, Turkey, Pakistan, and Indonesia.

In the spot cotton market, online sales by producers in Texas, Oklahoma and Kansas increased in the week ended April 21 as sales totaled 12,273 bales compared to the previous week when 8,945 bales were traded. Average prices received by producers in the most recent week ranged from 37.58 to 43.88 cents per pound compared to 38.35 to 42.50 cents per pound the previous week.

In other news, the Bush Administration said Wednesday it will formally notify the World Trade Organization (WTO) that it plans to fully comply with its ruling involving U.S. cotton subsidies that resulted from a complaint filed by Brazil calling the subsidies “unfair” to the world market. The U.S. has until July 1 to comply with the ruling which would impact Step 2 export payments and cotton export credit programs.

Many in the industry believe the changes initiated by the WTO will not fully affect the U.S. cotton industry until the 2006-07 crop, however, traders certainly will keep a watchful eye on the situation.

Meanwhile, USDA reported 11 percent of the 2005-06 U.S. cotton crop had been planted as of April 17. Although the figure was down from the same period last year when 15 percent of the crop was planted, the department noted that planting progress still is in line with the average plantings of 12 percent. Cotton planting in the U.S. has started to gain momentum under mostly favorable conditions.

USDA indicated Texas growers were right on schedule with 18 percent of their projected crop now in the ground. Planting is virtually complete in the Texas Coastal Bend, and work is well advanced in the Upper Coastal Bend area. Remnant ginning continues in some areas of Texas, but all gins should be finished by the end of the month.

Fieldwork continues at a steady pace on the Texas High and Rolling Plains. Above-average temperatures persist in the areas increasing the soil moisture evaporation rate. Many fields already have been prepared for planting, and a slow, soaking rain would be welcome to improve topsoil moisture levels.