Southeast

Mid-South

Southwest

Far West

Specially Processed Products ($/ton)

Northeast

Midwest

Southwest

Rail - fob track points

Cottonseed Buyer Profiles

GROUP 1: Base demand group that will formulate cottonseed in at a 4-6 lb. inclusion rate regardless of price. GROUP 2: Formulates at a 2-3 lb. inclusion rate regardless of price, and would like to feed at the 4-6 lb. level. However, the last 2-4 lb. is price sensitive. GROUP 3: This is the major swing factor for cottonseed demand. They enter the market when the price is right or other factors prevail (i.e. short hay supplies), and will subsequently exit when other opportunities exist. GROUP 4: This group does not have access to, or the ability to incorporate whole cottonseed into their rations. However over time, dairymen in this group will migrate up into Groups 1, 2 or 3.

Cottonseed production was raised to 6.689 million tons. This is an increase of 243,000 tons compared to last month’s report. Improved cotton yields and production are likely driving the cottonseed increase. News of increased supplies may not have a very bearish impact on price considering strong prices for other feed ingredients. Some market contacts are skeptical of the large production increase considering anecdotal reports from gins reporting lower cottonseed yields per bale. The objective yield data showing cumulative boll counts is somewhat contradictory of such a large increase in cottonseed. Six of the seven states listed in the report show smaller boll counts and that could mean less cottonseed.

The ginning report as of the beginning of the month, shows a 7.45 million running bale total, which is roughly 40 percent of the total crop as forecasted by USDA. While ginning progress for more states moved above their three-year average, others states in the Southwest and Far West kept to the same level or fell behind. Ginning progress, albeit slow this year, is still ahead of last year’s ginning rate. 

COTTONSEED MARKET: Long-awaited ginning pressure is finally being reported this month. In previous installments, we have suggested that slow crop development will help support prices and could cause ginning pressure to start later than what the market is used to in previous seasons. Some of this ginning pressure was reported in California, the Mid-South, and the Carolinas. At the same time, the Delta states were reportedly winding down and expected to be finished by Thanksgiving. In Texas, crops had a shot of late unseasonably warm weather, which helped crops continue development. Now producers in West Texas are waiting on a frost before stripping the cotton still in the fields. This has slowed harvest and would likely limit ginning progress for the month, but by next month progress should be made. 

All Southeastern nearby markets were reported lower with the exception of South Carolina. More JFM offers are being quoted in the market, yet end users are slow to book these supplies as they are priced with a premium buyers are not willing to pay. The delivered markets in the Northeast are seeing lower offers which may be a good opportunity for dairy buyers to come in a pick up an extra load or so. Some merchants have noted Canada is in the market and increased its buying. 

Mid-South spot markets are softer at mid-month with the Missouri Boothill reported trading below the Memphis market. Strength in the Mid-South is coming from barge business in the rush to move supplies before waterways close. Expectations are for ginning to last well into December for Missouri and Arkansas. There are still some chances to make good buys. The Far West spot markets are softer due to ginning pressure and improved rail deliveries. Trading in the nearby is brisk. Some merchants in California reported more trading in the JFM timeframe thanks to lower prices.

COTTONSEED SUPPLY/DEMAND BALANCESHEET UPDATE: The old crop USDA balance sheet had some minor changes. On the supply side, imports were lowered six thousand tons. The disappearance side had more significant changes. The crush was increased 11,000 tons, exports gained 1,000 tons, while the feed, seed and other category was reduced 35,000 tons. The net result of these changes raised the ending stocks by 17,000 tons. 

New crop production is up drastically, with a 466,000-ton increase from the previous report back in September. With the larger carry in, total supply is up 483,000 tons. On the disappearance side, crush is boosted 100,000 tons thanks to shorter soy oil stocks and anticipated improved oil demand. The feed, seed and other category is increased 383,000 tons. USDA’s Oil Crops Outlook anticipates more cottonseed will be fed in order to fill in for shorter soybean meal supplies. Total disappearance is raised 483,000 tons leveling ending stocks at the same level. The stocks to usage ratio is the lowest since the 1999/00-crop year, but the difference this year is the crushing industry is in much better condition. The current strong cottonseed prices suggests that the market is actively and successfully rationing demand, so supplies aren’t too scarce later in the year.

The Sparks balance sheet is not quite as bullish as USDA’s due to less disappearance and larger ending stocks. New crop production shows a smaller cottonseed crop with a 260,000-ton increase. In previous months, production estimates from Sparks were higher than USDA. Disappearance is up marginally. The largest increase is in the crush, raised conservatively 80,000 tons, because the crushing season is still young and this year’s start has been slow. Once more crushing progress is completed, this number may edge higher in February or March. Exports are upped 40,000 tons, while the feed, seed and other category is raised a mere 60,000 tons. Lack of forward end user bookings thus far and questionable dairy economics beyond February could put a drag on demand. Ending stocks at 452,000 tons are above average. But, as long as most buying remains in the nearby and prices remain strong, there is the chance demand will be lost and more supplies could be carried into next year.