Weekly Cotton Market Review

MEMPHIS - Jun 6/08 - SNS -- The USDA released its latest review of cotton market conditions in the United States, reviewing conditions through the week ending 5 6.

June 6, 2008

Spot cotton quotations averaged 135 points lower 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 57.71 cents per
pound for the week ended Thursday, June 5.  The weekly average was down from 59.06 cents reported last week
but up from 46.68 cents reported the corresponding period a year Tuesday, June 3.  Spot transactions reported in
the Daily Spot Cotton Quotations for the week ended June 5 totaled 25,698 bales compared with 12,929 last
week and 35,362 a year ago.  Total spot transactions for the season were 1,629,793 bales compared to 1,560,593
bales the corresponding week a year ago.  The ICE July futures settlement prices ended the week at 64.65 cents
compared to 65.99 cents reported last week.

Southeastern markets.  Spot cotton trading was moderate.  Producer offerings were moderate.  Demand
was moderate.  Average local prices were lower.  Supplies were moderate.  Trading of CCC-loan equities
was inactive.  No forward contracting was reported during the period.

>	A light volume of color 31 and 41, leaf 3 and 4, staple mostly 34 and longer, mike 43-49,
strength 28-30, and uniformity 79-81 sold for around 62.25 cents per pound, FOB car/truck
(Rule 5, compression charges paid).
>	Even-running lots of color 21, leaf 3 and better, staple 35, mike 35-49, strength 27-29, and
uniformity 79-81 traded at around 350 points off ICE July futures, same terms as above.
>	A light volume of color mostly 41, leaf 4, staple 34 and 35, mike 43-52, strength 28-30, and
uniformity 80-82 sold for around 500 points off ICE July futures, same terms as above.
>	Mixed lots containing color mostly 51, leaf 3 and 4, staple 32 and longer, mike 43-52, strength
27-29, and uniformity 79-81 sold for 775 to 800 points off ICE July futures, same terms as
above.

Scattered thundershowers brought heavy precipitation to portions of north Alabama and north Georgia early
in the period.  Areas of north Alabama received around three and one-quarter inches of rainfall.
Accumulations were generally less than one-quarter of an inch elsewhere in the Southeast.  Mostly clear,
warm conditions prevailed and planting activities progressed at a rapid pace.  Producers replanted some
fields in North Carolina where seedlings failed to achieve good stands due to cool weather in recent weeks.
Fertilizer, herbicide, and insecticide applications were underway throughout the region.  According to the
NASS Crop Progress report for the week ending June 1, 100 percent of the crop was planted in Virginia, 99
in North Carolina, 93 in Alabama, 92 in South Carolina, and 82 percent in Georgia.

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

Hot temperatures and clear skies allowed producers to complete planting operations in most areas.  High
temperatures were in the mid-to-upper 90s, while low temperatures were in the low 70s.  According to the
NASS Crop Progress report for the week ending June 1, 100 percent of the crop was planted in Missouri, 99
in Arkansas, 95 in Louisiana, 90 in Mississippi, and 90 percent in Tennessee.  A few producers in Louisiana
and Mississippi were still harvesting wheat crops on acreage intended for cotton.  Some producers in
Tennessee had to replant a few fields due to seed rot from excessive rainfall and cold temperatures.  Soil
moisture throughout the region was rated at mostly adequate to surplus.  Thrips no longer presented much of
a threat to the rapidly-growing cotton seedlings.  Producers were closely monitoring fields for aphids and
spider mites.

Southwestern markets.  Spot cotton trading was moderate in the East Texas/Oklahoma market and slow
in the West Texas market.  Trading of CCC-loan equities was inactive in the east Texas/Oklahoma market
and moderate in the west Texas market.  Supplies were moderate.  Demand was light for color 41 and better,
leaf 5 and better, staple 32 and longer, and mike 30-52.  Average local spot prices for east Texas/Oklahoma
and west Texas were lower.  No domestic or export mill inquiries were reported.

East Texas/Oklahoma

>	A moderate volume of color 41 and 51, leaf 5, staple 36 and longer, mike mostly 35-49,
strength 27-35, and uniformity 77-85 traded in south Texas at around 58.00 cents per pound,
FOB warehouse (compression charges not paid).
>	A mixed lot of color mostly 43, 53, 63, and 54, leaf 6 and better, staple 32 and longer, mike
mostly 41-52, strength 24-33, and uniformity 75-84 traded in south Texas at around 56.00 cents,
same terms as above.
>	A light volume of color 41, leaf 3, staple 35, mike 37, strength 29, and uniformity 80 traded in
Oklahoma at around 57.00 cents, FOB car/truck (compression charges not paid).

Squaring increased rapidly in the south Texas area and some plants were starting to bloom.  Producers
applied water as needed.  High heat, extra dry soils, and lack of any measurable moisture were a concern for
producers.  According to the NASS Crop Progress report for the week ending June 1, producers had planted
72 percent of the Texas crop, 70 in Oklahoma, and 60 percent in Kansas.  Kansas received one inch to one
and one-half inches of beneficial moisture, while only trace amounts were received in Oklahoma.

West Texas

>	A moderate volume of color 31 and better, leaf 3 and better, staple 35, mike 35-49, strength 24-
33, and uniformity 74-82 traded at around 63.50 cents per pound, FOB car/truck (compression
charges not paid).
>	A light volume of color mostly 41 and better, leaf 5 and better, staple 31 and longer, mike
mostly 34-39, strength 25-34, and uniformity 76-82, with around 50 percent extraneous matter
(bark level 1 and 2 and cracked seed) traded at around 62.00 cents, same terms as above.
>	A moderate volume of CCC-loan equities traded for one and one-quarter to two and one-half
cents and a light volume traded for four and one-quarter cents.

Planting on the High Plains increased rapidly under hot, dry weather conditions.  Daytime temperatures
were in the low-to-mid 100s for most of the period.  Most fields were in need of additional moisture.
Blowing sand was a problem causing some replanting to take place.   Stands across the state were
considered fair to good.  Replanting due to hail damage received last week was expected to be minimal.
Local industry representatives indicated around 90 percent of the crop in the Lubbock area had been
planted.  Some producers with dryland acres waited for more rain before planting.  A few dry planted acres
were expecting moisture in the near future.  Producers were concerned that the high winds, with gusts of 40
to 50 mph, would rapidly decrease soil moisture levels and increase the need for water later in the growing
season.

Western markets.  Spot cotton trading was inactive in the San Joaquin Valley (SJV).   Supplies and
demand were light.  Average local prices were lower.  No forward contracting or domestic mill activity was
reported.  Crop progress was two weeks behind normal.  Producers began applying water earlier in the
period.  Some of the more mature plants were starting to square.  Warm, sunny weather was needed to
improve growing conditions and advance the crop.  Temperatures were in the low-to-mid 80s.  Insect pressure was light and easily controlled.
Spot trading of Upland cotton was inactive in the Desert Southwest (DSW).  Supplies were moderate.
Demand was light.  Average local prices were lower.  No forward contracting or domestic mill activity was
reported.  No significant insect activity was reported.  Temperatures were in the mid 90s to low 100s.

America Pima spot cotton trading was inactive.  Supplies and demand were light.  Early planted Pima had
around five to six squares per plant.  Insect pressure was light and easily controlled.  Earlier in the period,
plant growth was slowed due to cooler-than-normal daytime temperatures in the SJV.  Industry contacts
thought the crop was in mostly fair condition.  Insect infestations were considered light and easy to control.

Textile mill report.  Buyers for domestic mills inquired for a moderate volume of color 41, 51, and 42, leaf
4, and staple 35 and longer for July through December delivery.  Mill buyers also inquired for a heavy
volume of 2008-crop cotton, color 41, leaf 4, and staple 34 for December 2008 through December 2009
delivery.  No sales were reported.
      Inquiries through export channels were moderate.  Representatives for mills in Turkey purchased a
moderate volume of USDA Green Card Class, color 41 and better, leaf 4, and staple 34 and longer.
Taiwanese mill agents purchased a moderate volume of color 42 and 51, leaf 5 and better, and staple 32 and
longer.  These sales were for July through September shipment.  Agents for mills in Bangladesh inquired for
a moderate volume of color 31, leaf 3, and staple 36 for July/August shipment.  Mill representatives in
Thailand inquired for a moderate volume of USDA Green Card Class, color 52 and better, leaf 4 and 5, and
staple 34 and longer for July shipment.

Producers had planted 83 percent of the expected cotton acreage by week’s end, 3 points ahead of last year
but slightly behind the 5-year average. In all States, producers were planting within 8 points of their normal
pace. Planting was complete in California, Missouri, and Virginia, while producers in the Delta and North
Carolina were nearing completion. However, producers still needed to plant more than a quarter of the
expected acreage in Kansas, Oklahoma, and Texas. Planting was most active during the week in the Delta,
Great Plains, and parts of the Southeast.

International Cotton Prices Forecast Higher in 2008/09
(released June 2, 2008)

The ICAC forecasts a season-average Cotlook A Index of 79 cents per pound in 2008/09, six cents higher
than the expected 2007/08 average.  This projected price increase was due mainly to an expected decline in
the stocks-to-mill use ratio in the World-less-China (Mainland).
	World cotton production was projected to decline slightly in 2008/09 to 25.9 million tons.  Declines in
production were forecast in the United States, Brazil, and Turkey due to competition from grains and
soybeans.  These reductions could offset increases projected in Asia, West Africa, and Australia.
	Global cotton mill use was expected to remain stable at 26.7 million tons in 2008/09 due to slower
world economic growth and higher prices of cotton relative to polyester.
	World consumption was expected to exceed production in 2008/09.  As a result, world ending stocks
were forecast down by 6% to 11.3 million tons.
	World imports were expected to increase by 5% to 8.8 million tons in 2008/09 due to projected higher
imports by China (Mainland).  Imports by the rest of the world were projected down for the second
consecutive season.

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STAT News Service