Weekly Cotton Market Review

MEMPHIS - May 10/02 - SNS -- The USDA released its latest review of cotton market conditions in the United States, reviewing conditions through the week ending 4 10.

May 10, 2002
Average spot cotton quotations were lower for the seventh consecutive 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 28.95 cents per 
pound during the week ending Thursday, May 9.  The weekly average was down from 29.43 cents per pound for 
the previous week and 41.16 cents during the corresponding week a year ago.  Quotations ranged from a low of 
28.80 cents on Friday, May 3 to a high of 29.39 cents on Thursday, May 9.  The NY July 2002 futures settlement 
price ended the week at 33.95 cents compared to 33.76 cents on Thursday a week ago.  
This was the fourth week of the six-week transition period from using current price quotations (2001-2002 Cotlook 
A Index) to using forward price quotations (2002-2003 Cotlook A Index) in calculating the Adjusted World Price 
(AWP).  The Loan Deficiency Payment (LDP) for Upland cotton was 25.04 cents per pound for the period May 9 
through May 16.  The Upland User Marketing Certificate Rate (Step 2) for the period May 10 through May 16 fell 
from 0.39 cents per pound to 0.01 cents.  The Extra Long Staple (ELS) Step 2 competitiveness payment rate in 
effect for the period May 10 through May 16 was up sharply from 0.39 cents to 2.14 cents per pound due to a sharp 
increase in the weekly lowest adjusted price quotation for foreign growths (LFQ). 
Southeastern markets.  Spot cotton trading was inactive.  Supplies were light.  Offerings were light and originated 
mostly from merchants.  Demand was light.  Prices were higher.  Mixed lots of mostly color 41 and better, leaf 4 
and better, staple 33 and longer, mike 35-49, strength 24 and higher traded at 400 to 525 points off New York July 
futures, FOB car/truck (Rule 5, compression charges paid).  Domestic mill buyers purchased a light volume of 
2001-crop cotton for June through September 2002 delivery and a moderate volume of 2002-crop cotton for 
October 2002 through September 2003 delivery.  Export shipments were steady.  Merchants offered forward 
contracts in Georgia with a basis of 300 to 400 points off New York December futures, FOB car/truck with 30 days 
free storage (Rule 5, Georgia terms, compression charges paid).  Contracts contained various terms including 
additional discounts for various combinations of staple 33 and shorter, mike 50 and higher, and strength 25 and 
lower.  Planting was delayed from a lack of soil moisture in central and south Alabama, Florida, and south Georgia.  
Planting in the rest of the southeast made excellent progress.  Good stands have been established in most of north 
Alabama, central Georgia, and North Carolina.  
South central markets.  Spot cotton trading was inactive.  Supplies were light to moderate and were mostly in the 
CCC loan.  Demand was light, but strengthened for the base quality of cotton.  Grower offerings decreased as price 
levels remained low.  A very small volume of color 41, leaf 3 and 4, staple 34, mike 50-52 sold at around 700 
points off NY July futures, FOB car/truck (Rule 5, compression charges paid).   Domestic mill sales were moderate 
and were for fourth quarter 2002 through first quarter 2003 delivery.   Sales to mills in Mexico were moderate and 
had shipment dates scheduled for second through third quarter 2002.  Planting made good progress under mostly 
favorable planting conditions.  Dry conditions slowed planting in parts of Louisiana and southern Mississippi.    
Rain moved across the delta toward the end of the week and brought slightly cooler temperatures.  Earlier planted 
cotton was up to a good stand in Louisiana and Mississippi with approximately 36 and 29 percent emerged, 
respectively.  The percentage of cotton planted ranged from 30 percent in Tennessee to 66 percent in Louisiana 
through the week ending May 5, according to the National Agricultural Statistics Service, NASS, USDA.   The 
percentages planted in the mid-south were below last year's average but up from the 5-year average.
Southwestern markets.  Spot cotton trading was light.  Demand remained light to moderate.  Supplies were 
moderate but decreased in some qualities that had been in high demand.  Prices were generally steady to slightly 
higher.  Prices for better white and light spotted quality recaps with mostly staple 34 and longer (FOB car terms, 
compression charges not paid) usually brought 19 to 22 cents under CCC loan prices.  Prices for lots with staple 33 
and shorter and/or containing lower qualities usually brought around 17 to 19 cents under CCC loan prices.  Prices 
for mixed lots of mostly colors 41 and better and 32 and better, leaf 4 and better, staple 32 and longer, strength 27 
and higher, mike 35-49 with only limited amounts of extraneous matter were around 400 to 800 points off NY July 
futures, FOB car/truck, compression charges not paid.  The Upper Coastal and Winter Garden areas have 
completed planting, although a small acreage was being planted.  The earlier planted crop made good progress, but 
a rain would be very beneficial as surface moisture has diminished.  Dryland cotton in the lower portions of the 
Coastal Bend through the Rio Grande Valley was reportedly nearing the point of plowdown due to the lack of rain. 
The irrigated crops in this area continued to make good progress.  Central Texas producers began widespread 
planting except in small areas too wet to plant.  Kansas producers were preparing to plant and expected planted 
acreage to double that of the 2001 crop.  Producers in west Texas continued planting under generally favorable 
weather conditions, although winds depleted top-soil moisture.
Western markets.  Spot cotton trading increased but continued slow in the San Joaquin Valley (SJV).  Supplies 
were very light and mostly in merchant hands.  Demand was light.  A light volume of color 21, leaf 2, staple 36 and 
37, mike 35-49 traded at around 1100 to 1150 points on NY July futures, FOB car/truck (Rule 5, compression 
charges paid).  No purchases for domestic mills were reported.  Agents for mills in India purchased a light volume 
of Acala cotton for nearby shipment.  Cotton planting was virtually completed.  A small acreage was replanted.  
The crop made good progress.  Most cotton fields were up to good stands.                                                                   
Spot cotton trading was inactive in the Desert Southwest (DSW).  Supplies were light to moderate.  Demand was 
very light.   Sales to mills in India and Turkey were light and were for nearby shipment.  Planting of the Arizona 
crop was reported at 85 to 90 percent completed.  The crop made good progress under near ideal weather 
conditions.  Planting of the New Mexico crop was estimated at around 75 to 80 percent completed.                                                                
Spot cotton trading of American Pima cotton was inactive.  Supplies were heavy and mostly in the CCC loan.  
Demand remained weak.  Planting was near completion in the SJV and parts of the DSW.                       
Textile mill report.  Domestic mill buyers purchased a light volume of 2001-crop cotton for summer delivery.  
Demand was best for low white or light spotted cotton with short staple and high mike.  Some mills were 
attempting to replace higher priced California cotton with cheaper mid-south and southeastern cotton of similar 
qualities.  Interest in 2002-crop cotton was good, and mills booked a moderate volume of cotton.   Some mills 
indicated that they plan to run 2001-crop cotton into October and November 2002.  Demand for ring-spun yarn was 
light and demand for open-end yarn was moderate to good.  Consumption of raw cotton continued to show signs of 
improvement.  Most mills operated on a five to six day workweek.
All cotton production for 2001 in the United States is estimated at 20.3 million bales, 18 percent above the 2000 
production level.  The 2001 output is the largest crop on record.  Upland cotton production, at 19.6 million bales, 
was 17 percent above the previous year.  This is the largest upland production in history, surpassing the 1994 record 
of 19.3 million bales.  American Pima production totaled 700,400 bales, up 80 percent from 2000.  This surpasses 
the previous record high production of 691,700 bales in 1989.
	The area planted to all cotton totaled 15.8 million acres, up 2 percent from 2000.  Harvested area increased 6 
percent to 13.8 million acres.  Yields for the U.S. averaged 705 pounds per harvested acre, up 73 pounds per acre 
from a year ago.
	Producers in the southeastern states rated their crop mostly fair-to-good throughout the 2001-growing season.  
However, cooler-than-normal temperatures and cloud cover, resulting in bolls opening at a pace slightly behind the 
5-year average, especially in Alabama, Georgia, and South Carolina, hindered development.  Despite the slow 
development, harvest was underway throughout the region by mid-September.  Cotton picking was aided 
throughout October by favorably dry weather, but remained slightly behind average in Alabama, Georgia, and 
South Carolina.  Extremely dry conditions during November increased the efforts on harvesting cotton, as many 
farmers delayed small grain seeding due to the lack of moisture.  By the time rains were received during late 
November, the pace of cotton harvest had exceeded the 5-year average in all of the Southeastern states except 
Alabama.
	Planting of upland cotton progressed rapidly in the delta states during 2001.  Dry weather permitted planting to 
begin in mid-April, with planting completed well ahead of the 5-year average.  Warm temperatures and adequate 
moisture throughout May allowed the crop to develop a good stand and minimized the need for replanting.  
Development continued to progress well until the end of June when below normal temperatures hindered crop 
progress.  However, by the end of July, near normal temperatures returned and promoted development.  Harvest 
was in full swing during the second half of September; however, Louisiana and Mississippi lagged behind the 5-
year average due to a slow developing crop and persistent, excessive rains received during late August and early 
September.  Despite the delay in development during the end of June and rain delays during early harvest periods, 
the Delta states had virtually completed harvest by the end of November.  Record yields were established in 
Tennessee.  Data from the Objective Yield Survey show boll weights in Arkansas and Louisiana rank as the fourth 
heaviest since 1992, while Mississippi boll weights are the second heaviest in the past 10 years.
	Producers in the southwestern states were able to plant their cotton at or ahead of normal pace. However, the 
cotton crop on the High Plains received rain, strong winds, and large hail during early June.  Some replanting was 
possible, but insurance deadlines resulted in some abandonment as destroyed cotton acreage was replanted to 
alternative crops.  Overall, development and harvest of the crop maintained pace with the 5-year average.  
Objective Yield Survey data indicate Texas' boll weights are the sixth lightest in the past ten years.
	Arizona and California cotton growers began planting during mid-March, but were slowed by cool, wet weather 
during early April.  Additionally, storms during the first half of April resulted in the need to replant some fields.  
Crop development progressed slightly ahead of the 5-year average as a result of warm weather and irrigation.  
Producers rated the crop as mostly good-to-excellent throughout the entire season.  Harvest activities progressed on 
pace with the 5-year average in Arizona and well ahead of average in California, despite some delays due to wet 
fields.  Data from the objective yield plots indicate California's weight per boll is the second lightest since 1992.
	The San Joaquin Valley began planting American Pima cotton in mid-March, but cool, wet weather caused a 
large amount of acreage to be replanted.  Warm weather during the summer aided development.  Harvest 
progressed well despite slight delays, and was virtually complete by mid-December.
	All cotton ginnings totaled 20,298,600 equivalent 480-pound net weight bales during the 2001 season.  This 
compares with 17,179,500 equivalent 480-pound net weight bales in 2000.
World cotton supply and demand estimates.  According to the May 10, World Agricultural Supply and Demand 
Estimates, the first U.S. projections for 2002-03 include sharply lower production, marginally higher 
disappearance, and lower ending stocks.  Production is projected at 17.8 million bales, based on the area in the 
Prospective Plantings report, combined with 10-year average abandonment and yields.  Domestic mill use is 
projected at 7.8 million bales, a 2.6-percent increase from the current season, reflecting anticipated growth in retail 
cotton consumption as economic conditions improve.  Exports are projected at 11.0 million bales, the same as the 
revised 2001-02 level; these are the largest exports since 1926-27.  Stronger foreign import demand and continued 
surplus domestic supplies will sustain a historically large U.S. share of world trade.  Ending stocks are likely to 
drop 1.0 million bales to 6.7 million, about 36 percent of total use.
	World production and consumption for 2002-03 are projected at 91.0 and 95.5 million bales, respectively, 
reducing world stocks almost 10 percent to 40.6 million bales.  Production is projected to fall 7 percent as the 
current season's historically low prices have significantly reduced planted area.  World use is expected to rebound 
more than 2 percent, above the long-run average growth rate, as economic recovery and competitive cotton prices 
stimulate demand.  Larger consumption will also boost world trade. 
	For 2001-02, U.S. ending stocks are reduced this month reflecting higher forecasts of both mill use and exports, 
which are based on activity to date.  The world 2001-02 estimates show larger supplies relative to last month; 
partially offset by higher consumption, with ending stocks raised nearly 400,000 bales.  Historical revisions in the 
estimates for Brazil account for a 1-percent increase in world beginning stocks and about half of the increase in 
world production; production is also raised in Australia and Pakistan.   World consumption also is raised nearly 1 
percent, reflecting increases for China, Turkey, Mexico, and the United States; in addition, consumption data are 
now included for Bahrain and Mauritius.
CCC loan entries of 2001-crop upland cotton totaled 13,645,917 running bales through April 30, 2002, according 
to the USDA, Farm Service Agency.  Form G (cooperative) loans accounted for 10,521,227 bales and Form A 
(producer) loans totaled 3,124,690 bales.  Repayments have been made on 11,017,909 bales.  Loans remained 
outstanding on 2,627,243 bales, of which, 1,585,561 bales were Form A and 1,041,682 bales Form G loans.  
Entries of American Pima cotton from the 2001 crop totaled 443,807 bales.  Repayments have been made on 
116,393 bales.  Loans remained outstanding on 327,414 bales, of which, 280,777 were Form G and 46,637 were 
Form A loans.