Weekly Cotton Market Review

MEMPHIS - Feb 8/08 - SNS -- The USDA released its latest review of cotton market conditions in the United States, reviewing conditions through the week ending 1 8.

February 8, 2008

Average spot cotton quotations were 26 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
62.69 cents per pound for the week ended Thursday, February 7.  The weekly average was up from 62.43 cents
reported last week and 49.31 cents reported the corresponding period a year ago.  Daily average quotations
ranged from a high of 62.91 cents on Monday, February 4 to a low of 62.40 cents on Friday, February 1.  Spot
transactions reported in the Daily Spot Cotton Quotations for the week ended February 7 totaled 65,146 bales
compared with 37,987 bales last week and 27,916 a year ago.  Total spot transactions for the season were
1,105,228 bales compared to 795,554 bales the corresponding week a year ago.  The ICE March futures
settlement prices ended the week at 68.41 cents compared to 67.79 cents reported last week.


Southeastern markets.  Spot cotton trading was slow.  Demand was moderate.  Supplies were moderate.
Average local prices were firm.  Trading of CCC-loan equities was inactive.    Forward contracting of 2008-
crop cotton was inactive.

>	A moderate volume of color 31 and 41, leaf 3 and 4, staple 33 and longer, mike 45-52,
strength 28-30, and uniformity 79-81 sold at around 66.00 cents per pound, FOB car/truck
(Rule 5, compression charges paid).
>	A heavy volume of color mostly 31 and 41, leaf 3 and 4, staple 33 and shorter, mike 43-52,
strength 26-28, and uniformity 78-80 sold for around 62.50 cents, same terms as above.
>	A light volume of mixed lots containing color mostly 51 and better, leaf 3 and 4, staple 33 and
longer, mike 43-52, strength 27-29, and uniformity 79-81 traded for around 61.25 cents, same
terms as above.

More than 50 tornadoes, spawned by violent thunderstorms, ravaged the Mid-south region killing 54 people,
including 4 in Alabama, on Tuesday, February 5.  Widespread damage was reported throughout north
Alabama where many homes and businesses were damaged or completely leveled.  High winds and
damaging hail swept through north Georgia.  Much of Alabama, Georgia, and the Florida panhandle
remained under  tornado watch late  in the period as the storm  system  moved  across  the Atlantic seaboard.
Most of the region received around one-half of an inch to one and one-half inches of precipitation.
Producers weighed planting options for the 2008-crop year.  The lower input costs and dramatically higher
futures prices for soybeans offered an attractive alternative to cotton.

South Central markets.  Spot cotton trading was inactive.  Available supplies were light.  Demand was
light.  Average local spot prices were firm.  Trading of CCC-loan equities was inactive.   No forward
contracting was reported.  Inquiries from representatives of domestic and foreign mills were light.  No sales
were reported.

>	A light volume of color mostly 33 and 43, leaf 4 and better, staple 33 and shorter, strength 23-
28, and uniformity 77-80 sold at around 59.75 cents per pound, FOB car/truck (Rule 5,
compression charges paid).

Thunderstorms brought light-to-moderate precipitation to most of the Delta and soils remained soft
throughout the region.  The precipitation helped improve groundwater supplies, but timely rains will be
required this spring to fully recharge water table supplies.  Unseasonably warm temperatures were recorded
with highs in the upper 70s.   Severe storms resulted from a fast-moving cold front that collided with a
warm, moist air mass centered over the Mid-south.  Tornadoes, which resulted from these storms, claimed
23 lives in the Mid-south, of which 11 were in Arkansas, 12 in Tennessee, and left dozens injured.
Considerable structural and property damage was reported and assessments were still ongoing.

Southwestern markets.  Spot trading was slow in East Texas/Oklahoma and active in the West Texas
market.  Trading of CCC-loan equities was slow in east Texas/Oklahoma and west Texas markets.  Supplies
were moderate.  Demand was good for color 31 and better, leaf 3 and better, staple 34 and longer, and mike
35-49.  Average local spot prices were firm for east Texas/Oklahoma and steady for west Texas.  Forward
contracting in south Texas remained light.  No domestic mill inquiries were reported.  Agents for foreign
mills inquired for color 21, leaf 3 and better, staple 36 and longer, and mike 33-49 for prompt or nearby
shipment.  No sales were reported.
East Texas/Oklahoma

>	A light volume of color mostly 31, leaf 3-5, staple 34 and longer, mike 36-44, strength 25-32,
and uniformity 78-83 traded in Oklahoma at around 61.75 cents per pound, FOB car/truck
(compression charges not paid).
>	A light volume of color 31 and 41, leaf mostly 3 and 4, staple 32 and longer, mike 35-45,
strength 24-31, and uniformity 76-80 traded in Oklahoma at around 57.00 cents, same terms
as above.
>	A light volume of color mostly 41 and better, leaf 3-5, staple 36 and longer, mike 36-50,
strength 28-33, and uniformity 80-84, with around 75 percent extraneous matter (bark) traded
in Kansas at around 58.50 cents, same terms as above.
>	A moderate volume of CCC-loan equities traded in south Texas for five cents.

Ginning in Oklahoma and Kansas neared completion with only a few gins still in operation.  Producers
were busy preparing fields and machinery for spring planting.  Producers in the Rio Grande Valley prepared
fields for spring planting and applied fertilizers where needed.  Planting was scheduled to start by the end of
February and the first of March.  More rain was needed in most areas before full scale planting begins.


West Texas

>	A light volume of color 21 and better, leaf 3 and better, staple 35-37, mike 45-51, strength 27-
32, and uniformity 79-82 traded at around 63.75 cents per pound, FOB car/truck (compression
charges not paid).
>	A light volume of color 21 and better, leaf 2 and better, staple 33-35, mike 38-44, strength 25-
31, and uniformity 77-81 traded at around 60.00 cents, same terms as above.
>	A light volume of color mostly 31 and 41, leaf mostly 3-7, staple 31-35, mike 30-54 (averaging
48.9), strength 22-34, and uniformity 75-82 traded at around 58.25 cents, same terms as above.
>	A light volume of 2006-crop cotton, color 31 and better, leaf 3 and better, staple 36 and longer,
mike 35-49, strength 23-32, and uniformity 79-83 traded at around 63.25 cents, same terms as
above.
>	A moderate volume of CCC-loan equities traded for four and three-quarter cents.

Local estimates indicated 65 percent of the gins in the west Texas area were finished for the season.  Gins
continued to work around the clock, with some gins working from backlogs of modules in nearby storage
areas.  Large amounts of modules awaited movement from fields to gins.  Producers shredded stalks and
listed seedbeds in preparation for spring planting.  The number of bales stored outside increased as some
warehouses were overflowing with another record crop.  Industry representatives indicated a shortage of
containers for overseas shipments, which resulted in some warehouses becoming congested with blocks of
cotton marked and ready for loading.

Western markets.  Spot cotton trading was slow in the San Joaquin Valley (SJV).   Supplies were
moderate.  Demand was light.  Average local spot prices were firm.  Foreign mill inquiries were slow.
Average contract prices for 2008 saw-ginned Acala were around 80.00 cents per pound and 85.00 cents for
roller-ginned.  No sales were reported.

>	A light volume of Acala cotton, mostly color 31 and better, leaf 3 and better, staple 37 and
longer, mike 37-49, and strength averaging 33.9 traded for around 72.00 cents per pound, UD
free, FOB warehouse.

The Valley received up to one-half of an inch of beneficial moisture early in the reporting period.  The
National Resources Conservation Service reported snow water equivalent averaged well above normal for
January in California.   In spite of the improved water outlook, industry representatives expect a reduction
in cotton acreage.  Some producers planned to plant grains and other alternative row crops with
expectations of better returns.

Spot trading of Upland cotton was inactive in the Desert Southwest (DSW).  Supplies were moderate.
Demand was light.  Average local spot prices were firm.  Average contract prices for 2008-crop Upland
were around 73.00 to 75.00 cents per pound.  No sales were reported.  Recent rains and snowfall improved
drought conditions for the state of Arizona.  The National Resources Conservation Service reported that the
snowpack measured 138 percent of the 30-year average, compared with 71 percent a year ago.  Central
Arizona received approximately one-quarter of an inch of rainfall during the period.  The Safford Valley
area received about one-half of an inch of beneficial moisture.




American Pima spot cotton trading was inactive.  Supplies and demand were moderate.   Average local
prices remained steady for color 2, leaf 2, and staple 46.  Interest was best from mills in Egypt, India, and
Turkey.  Agents made inquiries for mostly color 4 and lower with low mike.   Ginning continued in the
SJV.

Textile mill report.  Domestic mill buyers purchased a moderate volume of color 31, leaf 4, and staple 33 for
April through December delivery.  Buyers for domestic mills also inquired for a moderate volume of color
41, leaf 4 and better, and staple 34 and longer for nearby delivery.  Reports indicated that some mill buyers
also made initial inquiries for 2008-crop cotton, color 41, leaf 4, and staple 34 for January 2009 through
December 2009 delivery.  No sales were reported.

Inquiries through export channels were moderate.  Vietnamese mill buyers purchased a moderate volume of
color 31, leaf 3, and staple 36 for April through June shipment.  Indonesian mill buyers purchased a moderate
volume of USDA Green Card Class, color 41, leaf 4, and staple 35 for nearby shipment.  Mill representatives
in Indonesia and Taiwan inquired for a moderate volume of USDA Green Card Class, color 31, leaf 3, and
staple 35 and longer for immediate-through-nearby shipment.  Turkish mill buyers inquired for a moderate
volume of USDA Green Card Class, color 41, leaf 4, and staple 36 for immediate-to-nearby shipment.  No
additional sales were reported.




The following  information was reported by the International Cotton Advisory Committee, (ICAC)
released February 1, 2008

World Cotton Stocks were Projected to Decline Further in 2008/09
    World ending stocks were projected to decline during 2007/08 by 1.3 million ton to 11.4 million tons
as a result of the gap between world production and consumption. World cotton area was projected to
remain stable in 2008/09 at 33.9 million hectares, less than 1% higher than in 2007/08.  Cotton area was
projected to decline mostly in the USA (-11%), slight increases are expected in China (Mainland), India,
African Franc Zone and Brazil, while stable area is projected for Pakistan, Turkey and Uzbekistan
    World cotton yields were expected to continue rising in 2008/09 and were projected at 794 (+3%)
kilograms per hectare. As a result, world cotton production in 2008/09 was expected to increase by 1
million tons to 26.9 million tons.  However, world mill use was projected to increase further to 27.4 million
tons (+1%), still exceeding production. As a result, a further reduction in world ending stocks could take
place to an estimated 10.9 million tons (-5%).
    The Secretariat, using the ICAC Price Model 2007, forecast a season-average Cotlook A Index of 67
cents per pound in 2007/08, 8 cents higher than in 2006/07. An expected significant decline in the stocks-
to-mill use ratio in the World-less-China (Mainland) was pushing prices higher in 2007/08.










Forward contracting of 2008-crop cotton.  United States upland cotton growers had forward contracted
about 418,282 acres of the 2008 crop by January 31.  This compares with 146,180 acres booked by the end
of January last season.  In the south central states, growers had contracted around 202,900 acres and the
southwestern states had booked around 87,000 acres.  In the southeastern states, around 26,900 acres were
booked and growers in the western states had about 1,500 acres under contract.  These estimates were based
on information provided to the USDA, Agricultural Marketing Service’s Cotton Program.


Exports of all cotton from the United States totaled 980,800 bales during January, according to the Foreign
Agricultural Service, USDA.  A month earlier, 779,900 bales were shipped and 682,600 bales were exported
in January last year.  Shipments for the first six months (August-January) of this marketing year totaled
6,076,000 bales, compared 3,714,400 bales exported through January last year.




The following information was excerpted from the World Agricultural Supply and Demand Estimates,
released February 8, 2008

    This month’s 2007/08 U.S. cotton estimates included lower exports and higher ending stocks.
Production and domestic mill use were unchanged.  Exports were reduced 300,000 bales, due mainly to the
slow pace of export shipments and a reduced import forecast for China.  Accordingly, ending stocks were
raised to 8.2 million bales.
    The world cotton 2007/08 estimates included higher production, lower consumption and an increase in
ending stocks of nearly 5 percent relative to last month.  World production was raised about 1.0 million
bales, as increases for China, Pakistan, and Brazil were partially offset by decreases for India and others.
World consumption was reduced 1.3 percent from last month, as slowing world economic growth was
reflected in lower mill use for China, India, Thailand, and Turkey.  China’s consumption was reduced 1.0
million bales, as anecdotal reports of credit problems and rising yarn inventories were corroborated by
slower growth seen in China’s December textile exports; however, China’s consumption was still forecast
to rise 8 percent from 2006/07. Lower forecast world consumption resulted in lower world imports,
including a 500,000-bale reduction in the import forecast for China.  With lower demand, exports were
reduced in several countries, including Australia, Brazil, India, and the United States.  China accounted for
over half of the 2.6-million-bale increase in world stocks.

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STAT News Service