USDA REPORTS: The Cotton Ginning report at the beginning of October has a running bales ginned total of 293,050. The data from Alabama, Georgia and Mississippi were not shown on the report, so as not to disclose progress of individual gins. On the graph, these states have a box around their state label. This is a historically slow start to ginning and a half a million bales behind last year's rate. Compared to average progress as of October 1st since 2000, this year's pace was more than 1.7 million bales behind. Similar to last year, ginning progress will continue to lag average levels in most states. However, look for stronger results in the Southeast by mid-November.
Since last month's report, USDA's all cotton production was lowered 440,000 bales to 12.99 million bales in their October Crop Production report. Texas was lowered 400,000 bales, while the Carolina's were the only states with increases.
COTTONSEED MARKET: Wet weather in the Mid-South and Southeast continue to provide price strength along with the firmness noticed with other feed ingredient prices. Typically by this time of the year most markets would have gins running at full throttle. This year however, especially in Eastern regions, crop development, harvest and ginning are all a couple weeks behind schedule. If they manage to get some clear skies, then gins should be able to get cranked up by the final week of October. Looking ahead, estimates are for the ginning season to be completed at roughly the regular time. It could be slightly longer in the Southeast as they are expected to have a larger crop. Wet weather in the Mid-South and Southeast continue to provide price strength along with the firmness noticed with other feed ingredient prices. Typically by this time of the year most markets would have gins running at full throttle. This year however, especially in Eastern regions, crop development, harvest and ginning are all a couple weeks behind schedule. If they manage to get some clear skies, then gins should be able to get cranked up by the final week of October. Looking ahead, estimates are for the ginning season to be completed at roughly the regular time. It could be slightly longer in the Southeast as they are expected to have a larger crop.
The Mid-South spot market is difficult to call as nearby supplies are nearly nonexistent. Most in the trade have sold out of old crop by this time, as they should because gins would usually be running. Some gins that cranked up had to shut down until more harvesting can get accomplished. This situation has had resellers scouring the market for any available load and has helped elevate new crop offers. There is the possibility that some gins might be interested in buying back and washing out their gin run contract. The reason for this is the uncertainty about their supply situation based on cool and wet conditions that have hampered the crop and harvesting.
The oil mill that has seed to sell in West Texas is holding firm on price and is continuing to find buying interest. The price was able to hold firm since there have been a limited number of sellers. In coming weeks, more gins will be up and running, therefore, the nearby price premium is apt to erode. New crop offers were raised slightly and the up tick didn't manage to get end users in the buying mood. It appears dairies will continue to hold off until there is ginning pressure, which should mean they will be able to buy at lower than today's price.
Prices are firmer in California as some resellers were willing to pay higher prices to cover nearby requirements. The price strength is a result of the weather related slowdowns in ginning and slow rail movement. In a couple more weeks, there could be a price dip once ginning begins in the East and rail supplies start making it to market.
COTTONSEED BALANCE SHEET:: The old crop balance sheet from USDA had a 26,000-ton reduction to the Feed, Seed and Other category. This changed increased the carryout to the level shown in the most recent US Census crush report for ending stocks at oil mills. USDA's new crop production was lowered 156,000 tons, which was down 3% from last month and inline with the reduction made to their cotton bales forecast from the October Crop Production report.
Informa's old crop balance sheet had a 4,000 ton reduction to the Feed, Seed and other category. This raised the ending stocks level by the same amount. This total does not account for supplies remaining in the hands of gins, which could represent roughly 30 to 50 thousand more tons.
New crop production for Informa was adjusted 149,000 tons lower. Cooler temperatures and rain as of late will likely hamper the development of the top of the plant. This is reason for production being adjusted lower in the Mid-South and Southeast. Output in the Southeast is pegged to be larger than the Mid-South. The Feed, Seed and Other category lost 15,000 tons, because dairy demand bookings continue to lag. Expectations are set for lighter usage, until milk prices show signs of holding at a level high enough for dairymen to have the financial incentive to formulate for larger production. Ending stocks dropped 130,000 tons due to lower production. The stocks-to-use ratio at 9.4% is a little more than a percentage point over the 5-year average, but below last year's high of 11.6%.
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For weekly cottonseed pricing and commentary contact:
James Bueltel - Phone 651-925-1052, Fax 651-925-1061
e-mail:
james.bueltel@informaecon.com
