Cottonseed Supply/Demand Balance Sheet(000 tons)
|Yrs beg Aug 1||USDA|
|COTTONSEED fob points|
|Prices 7-15-11||Bid / Offer / Trade||Yr Ago|
330b / 335-340o / 332-335t
230b / 235o
340b / 344o
230b / 235o
340b / 350o
340b / 360o / 353-355t
270b / 275o / 271t
370b / 380-385o / 380t
350b / 357-360o / 350t
405b / 415o / 415t
Cal. Corc. N
455b / 480o / 470-480t
445b / 450o
355b / 362t
|Specially Processed Products||($/ton)|
|Easi Flo ™ Courtland, AL|
|b = bid o = offer t = trade n/a = not available|
|COTTONSEED dlvd. points|
|Prices 7-15-11||Dump||Hopper||Live Floor||Rail|
W. New York
MI (Grand Rpds.)
Texas / Dublin-
|Rail - fob track points||($/ton)|
|b = bid o = offer t = trade n/a = not available|
Cottonseed Dairy Buyer Profiles
GROUP 1: Base demand group that will formulate cottonseed in at a 4-6 lb. inclusion rate regardless of price.
ACREAGE REPORT: The USDA Acreage report showed 13.725 million acres sown to cotton this year. Compared to USDA's Prospective Plantings report in March, this is an increase over 1.1 million acres. The region with the largest increase was the Southwest with 975,000 more acres, followed by the Far West with an increase of 55,000 acres. In general the increase in acreage was quite evenly distributed across the Cotton Belt, thanks to the strength in cotton fiber prices at the end of last year and over the winter months. On a percentage basis, Pima plantings have increased the most up 41.5% with the majority of the increase in acres coming from California.
COTTONSEED MARKET: The bullish news in the USDA WASDE report at mid-month and the subsequent strength in corn prices helped draw more buyers into the market. This sparked additional buying interest. Nearby markets continue to garner price support based on concerns related to new crop supply. Dairy margins have improved and this is keeping a steady flow of nearby buying. It appears that July will have the strongest Class III milk prices. There has been more inquiries and some trading for new crop supply as well.
Supply in the Southeast has tightened up and offers firmed. It looks like the remaining supply of seed is held in firm hands. The conditions of the crop in North Carolina are the best in the region with two-thirds in the Good or Excellent classification as of mid-July. The crop in Georgia has improved, but there are still spotty dry areas. Regardless of the improved crop outlook, new crop offers were raised several dollars. It appears that there has been enough new crop interest in the market for sellers to push prices higher. However, gins involvement in new crop trading is limited.
The Mid-South market was quiet after a flurry of trading in the first week of July. It appears that merchants have enough ownership that they are able to comfortably sell to the interested dairies that are coming to market. Oil mills haven't been active in the new crop, as prices are not well defined and not much has traded. Gins are not willing to show offers even if the crop looks the best in the country. They are still reluctant to sell. There is hope among gins that oil mills will be able to pay as strong of prices for their cottonseed as they did last year. At this time, it appears possible as long as vegetable oil prices remain strong. But, with a lighter crush expected, oil mills may not need to buy as much seed, which could potentially limit their support for prices. Nonetheless, current prices should be reasonable for crushers to turn a profit.
Nearby offers in West Texas vary with some trades reported at lower numbers. It appears that some merchants are willing to sell out of their supply at these levels, because ginning is getting underway in the Southern Valley and by the end of the month, several gins are expected to be up and running 24/7. Due to the less than ideal growing conditions, yields are projected to be light and runtimes will likely be shorter than normal.
California prices managed to rebound by mid-month, as stronger grain prices have motivated some dairies to start buying. There was more new crop buying being done as well. Nearby supply tightness is a concern and has the potential to drive spot prices higher before the end of the month.
COTTONSEED BALANCE SHEET: USDA's old crop balance sheet had a 10,000-ton reduction to exports, which offset an increase to the Feed, Seed and Other category. Old crop ending stocks remain unchanged. For new crop, production dropped 345,000 tons on crop losses expected from the drought conditions in West Texas. Imports appeared on the balance sheet this month at the 100,000-ton level. Exports were lowered 75,000 tons while the Feed, Seed and Other category fell 25,000 tons. The net effect of the changes was ending stocks being lowered by 45,000 tons.
The Cottonseed Digest's old crop balance sheet had exports lowered 5,000 tons, as stout prices and recent strength in the dollar are expected to prevent any new sales in the remaining weeks of the crop year. End users' demand has proven to be stronger than anticipated and for this reason the Feed, Seed and Other category was raised 68,000 tons. As a result of these changes ending stock were lowered 63,000 tons, which brings the stock-to-use ratio down to 9.2%.
The largest change for new crop was the 259,000-ton drop in production. This is based on over half of the Texas cotton crop being classified as being in Poor to Very poor condition. Easily a third of the crop in West Texas could be lost and the remaining acreage will have below average yields. Total supply was lowered 222,000 tons. On the demand side, the crush was lowered 100,000 tons, on tighter seed supply while the industry should have ample stocks of oil to start the new season. Exports were lowered 40,000 tons, as price levels are apt to limit demand and importing countries may satisfy their needs from purchases from Australia. Feed demand is unchanged which will be lower than last year due to tighter supply. Ending stocks dropped 82,000 tons, which suggests prices will remain stout.
For weekly cottonseed pricing and commentary contact:
Informa Economics, Inc.
3464 Washington Drive, Suite 120
Eagan, MN 55122