Weekly Cotton Market Review

MEMPHIS - Dec 8/06 - SNS -- The USDA released its latest review of cotton market conditions in the United States, reviewing conditions through the week ending 11 8.

Average spot cotton quotations were 75 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 26.5-28.4, uniformity 81) in the seven designated markets averaged
48.44 cents per pound for the week ending Thursday, December 7.  This was the highest average since the
week ending August 10. The weekly average was up from 47.69 cents last week but down from 48.74 cents
from the corresponding week a year ago.  Daily average quotations ranged from a high of 48.59 cents on
Friday, December 1 to a low of 48.26 cents per pound on Thursday, December 7.  Spot transactions reported in
the Daily Spot Cotton Quotations for the week ending December 7 totaled 54,535 bales, compared with 51,528
a week earlier and 91,462 a year ago.  Total spot transactions for the season were 425,164 bales compared to
604,794 the corresponding week a year ago. The New York March futures settlement price ended the week at
53.06 cents, compared to 53.50 cents a week earlier.

The USDA announced on December 7 that the Adjusted World Price (AWP) was 44.64 cents per pound for the
period December 8 through December 14, the Loan Deficiency Payment (LDP) rate for Upland cotton will be
7.36 cents per pound and the Extra Long Staple (ELS) Competitiveness Payment will be 1.39 cents per pound.

Southeastern markets.  Spot cotton trading was active.  Supplies were moderate.  Demand was good.
Average local prices were higher.  A moderate volume of color 41, leaf 3 and 4, staple 34 and longer, mike
43-49, strength 27-29, and uniformity 79-81 sold for around 300 points off New York March futures, FOB
car/truck (Rule 5, compression charges paid).  Mixed lots containing mostly color 31, leaf  3, staple 37 and
longer, mike 37-49, strength 30-32, and uniformity 80-83 sold for  125 to 150 points off New York March
futures, FOB car/truck, Georgia terms (Rule 5, compression charges paid, 30 days free storage).  A
moderate volume of color 41 and better, leaf 3 and 4, staple 34 and longer, mike 37-49, strength 28-31,
and uniformity 79-82 sold for 200 to 250 points off New York March futures, same terms as above.    A
moderate volume of color 31 and 41, leaf 4 and better, staple 34 and shorter, mike 43-52, and uniformity
79-82 sold for 350 points off New York March futures, same terms as above.  Similar lots containing mike
50 and higher sold for 600 to 625 points off New York March futures, same terms as above.
    Clear, cold weather allowed harvesting to progress at a rapid pace.  According to the NASS Crop
Progress report for the week ending November 26, harvesting was 95 percent completed in Alabama, 91 in
Virginia, 88 in Georgia, 80 in North Carolina, and 75 percent in South Carolina. In Georgia and the
Carolinas, ginning continued uninterrupted as gins worked through backlogs of modules on gin yards.
Gins in north Alabama have finished for the season.  Several gins in south Alabama continued to operate
on a 24-hour basis and a few others considered adding a shift due to better than anticipated yields.





South central markets.   Spot cotton trading was slow.  Available supplies were moderate.  Demand was
moderate.  Average local prices were higher.  A moderate volume of 2005-crop cotton, color 31 and better,
leaf 3 and better, staple 34, mike 35-49, strength 26-33, and uniformity 79-83 sold at around 51.25 cents
per pound, FOB car/truck (Rule 5, compression charges paid).  Mixed lots of CCC-forfeited loan cotton,
color mostly 41 and better and 42 and better, leaf 5 and better, staple 34 and longer, mike 36-57, strength
24-32, and uniformity 78-84 sold at around 44.00 to 48.50 cents, FOB warehouse.  Inquiries from
domestic and foreign mills were moderate.  No sales were reported.
    Dry weather conditions allowed producers to proceed with outside activities.  Producers in the North
Delta were wrapping up harvesting.  Stalk destruction occurred throughout the region.  A few producers
were scrapping cotton in Louisiana.  Several gins in the South Delta completed operations for the season,
while some larger gins continued to operate at full capacity.  A number of gins in Missouri and Tennessee
were expected to continue pressing operations throughout the month.

Southwestern markets.  Spot cotton trading was slow in the East Texas/Oklahoma and active in the West
Texas market.  Supplies were heavy.  Demand was good.  Average local prices were higher.  No forward
contracting was reported.  Domestic mill inquiries were light.  Foreign mill inquiries were light and
focused on any type of discounted styles of cotton. Foreign growths remained competitive and lowered
the demand for Texas cotton.

A moderate volume of 2006-crop cotton, mostly color 31 and better, leaf 3 and better, staple 30-34, and
mike averaging 45 traded in west Texas for 43.00 to 45.00 cents per pound, FOB car/truck (compression
charges not paid).  A light volume of color 31 and better, leaf 3 and better, staple 33-37, and mike
averaging 43 sold for around 47.00 cents, same terms as above.  A moderate volume of color 31 and better,
leaf 3 and better, staple mostly 37 and longer, and mike 35-49 sold for an average price of 50.50 cents,
same terms as above.  A light volume of west Texas equities traded for one to one and one-half cents.  A
moderate volume of CCC-forfeited loan cotton sold for around 43.00 to 45.00 cents, FOB warehouse
(compression charges not paid).
    Clear, dry conditions prevailed during the period.  All gins were operating and some smaller gins were
expected to close in approximately seven to ten days.  Reports indicated that harvesting was approximately
75 to 80 percent completed in west Texas.  Ginning continued.

A light volume of 2006-crop Oklahoma cotton, mostly color 31 and better, leaf 3 and better, staple 36 and
longer, and mike averaging 47 sold for around 48.00 to 50.00 cents per pound, FOB car/truck (compres-
sion charges not paid).   A light volume of mostly color 31 and better, leaf  4 and better, staple 32 and
longer, and mike averaging 49 traded in Oklahoma at around 43.00 cents, same terms as above. Shipping
to domestic and foreign mills was light.  A light volume of new-crop cotton was sold to mills in Turkey.
Receipts have peaked, but warehouses continued to receive cotton.
    Warm, dry weather prevailed and daytime temperatures were in the 50s.  Industry representatives
reported about 80 percent of the cotton in Oklahoma and Kansas was harvested. Ginning was
approximately 50 percent completed and most gins were operating around the clock.

Western markets.  Spot cotton trading was inactive in the San Joaquin Valley (SJV).  Available supplies
were moderate.  Producer offerings were light.  Demand was light.   Average local prices were firm.  No
forward contracting or domestic mill activity was reported.  Guaranteed minimum prices of 70.00 cents per
pound did not meet producers? expectations.  Foreign mills continued with hand-to-mouth purchases,
mostly for nearby delivery.  Field activities were almost completed.  Most modules were housed on gin
yards with a few scattered throughout the valley.  Ginning continued.

Spot trading of Upland cotton was inactive in the Desert Southwest (DSW).  Supplies were moderate.
Demand was light.  Average local prices were firm.  Producer offerings were heavy.  Merchant bids of
four to six cents per pound for equities were rejected by producers.  No forward contracting or domestic
mill activity was reported.

American Pima spot cotton trading was slow.  Supplies were moderate.  Producer offerings were
moderate.  Demand was steady.  Average local prices were lower.  A moderate volume of SJV Pima,
mostly color 3 and better, leaf 3 and better, staple 48 and longer, mike 29-42, and strength averaging 42
traded at around 96.00 cents per pound, UD free, FOB warehouse.  A moderate volume of SJV Pima,
mostly color 2, leaf 2, staple 48, mike 37-49, and strength averaging 40 sold for 105.00 cents, same terms
as above.  A moderate volume of SJV Pima was forward contracted.  No DSW Pima was offered.  Foreign
mills continued with hand-to-mouth purchases for first and second quarter delivery.
    Harvesting was virtually completed.  Ginning continued.

Textile mill report.  Domestic mill buyers inquired for a heavy volume of color 42 and better, leaf 4 and
better, and staple 33 and longer for March through October delivery and  a light volume of color 42, leaf 4,
and staple 33 and shorter for January delivery.  Demand was best for any discounted styles of cotton for
immediate to nearby fill-in needs.  No sales were reported.  Reports indicated that a few mills rescheduled
deliveries of raw cotton due to lackluster finished product sales.  Most mills operated on a five to seven
day schedule.  Mill buyers in Indonesia purchased a moderate volume of color 31, leaf 3, and staple 36 for
nearby shipment.

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STAT News Service