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2011 Cottonseed Prices: May

Cottonseed Supply/Demand Balance Sheet(000 tons)
Yrs beg Aug 1USDA

May/USDA

May/ USDAMay/ USDAMay/ CSD
%space%

2009/10

2010/11E

2010/11E

2011/12F

2011/12F

Beg. Stocks

514

342

342

443

605

Imports

24

0

0

0

0

Production

4149

6098

6098

6220

6164

Total Supply

4687

6440

6440

6663

6769

Crush

1900

2500

2450

2650

2550

Exports

291

300

310

300

290
Feed, Seed, & "Other"21543197307532803273

Total Disappearance

43055997583562306113

End Stocks

342

443

605

433

656

COTTONSEED fob points
Prices 5-13-11Bid / Offer / TradeYr Ago
Southeast($/ton)

No. Carolina

Spot

295b  /   300o

200o

(as ginned)

OND

195b  /   200o

140o

So. Carolina

Spot

295b  /   300o

205o

(as ginned)

OND

195b  /   200o

140o

Georgia So.

Spot

295b  /   300o

197-200o

(as ginned)

OND

195-200o

140o

Mid-South($/ton)

Memphis No.

Spot

300b  /   308o  /   305-307t

215-218t

 

My-Ag

315o

225o

(as ginned)

OND

230b  /   235o

160-165o

MO Bootheel

Spot

310o

218t

 

June

310t

n/a

(as ginned)

OND

230-235o

165o

Southwest($/ton)

West Texas

Spot

345o  /   342.50t

230t

 

Jn-Sp

350o

235o

(as ginned)

OND

265-268o  /   265-268t

163t

Far West($/ton)

Arizona

Spot.

375b  /   385o  /   375t

275o

Cal. Corc. N

Spot

405o

300t

& Stockton

My-Sp

403-405o  /   400t

308o

 

OND

325-330o

250o

Specially Processed Products($/ton)

Easi Flo „¢ Courtland, AL

Spot

347o

250o

b = bid o = offer t = trade n/a = not available

COTTONSEED dlvd. points
Prices 5-13-11DumpHopperLive FloorRail
Northeast($/ton)

W. New York

Spot

352o

 

 

 

 

OND

252o

   

SE Pennsylvania

Spot

335o

 

 

 

 

OND

235o

   
NE Ohio

Spot

352o

   

 

OND

252o

 

 

 

Midwest($/ton)

MI (Grand Rpds.)

Spot

362o

 

 

 

 

OND

262o

 

 

 

MN (Rochester)

Spot

 

369-371o

379-381o

 

 

My-Ag

 

373-376o

380-385o

 

WI (Madison)

Spot

 

358-360o

369-370o

 

 

My-Ag

 

368-370o

373-375o

 

Southwest($/ton)

Texas / Dublin-

Spot

 

375o

 

 

Stephenville

My-Sp

 

380o

  
Rail - fob track points($/ton)

Laredo TX

(Mid-Bridge)

Spot

 

 

 

No quote

California

Spot

 

 

 

395o

Idaho (UP)

Spot

 

 

 

395o

 

JAS

 

 

 

405o

 

OND

 

 

 

320o

WA/OR (BN)

Spot

 

 

 

395o

 

OND

 

 

 

320o

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.
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 MARKET: Since the last installment, old crop prices have soared roughly $20 -30/ton higher. Recently, the price strength has not been as dynamic as it was since Easter. The upward momentum may be easing some. However, until there are improvements to the outlook for rain in West Texas and there is more clarity about the Mid-South crop following the flood along the Mississippi, market participants are willing to stay on the sidelines. This uncertainty surrounding new crop production has only entrenched the standoff situation between buyers and sellers.

Southeast nearby offers continue to climb and have been the main focus of reseller buyers. The export buying interest that was lingering in the market over the past couple months, has disappeared suggesting that price levels have reached a level that may keep this demand out of the market for the balance of the crop year. Compared to other regions, gins appear to be more willing sellers, as the cotton crop is starting off without major concerns. The main issue in the region is the lack of rain in southern Georgia, but growers in the Carolinas are not concerned about their crop.

The Mid-South market has been quiet over the past few weeks. Flooding in the region did threaten some storage along the Mississippi, which pressured spot prices lower and a buyer that had trucks readily available to move supplies was able to buy a couple dollars below the market. The amount of cotton acres lost to flooding in the Mid-South is unclear, but certainly the delayed start to planting is anticipated to limit this crop€™s production potential. For this reason, gins are not willing to trade new crop. End users in delivered markets are dealing with sticker shock and not willing to buy at these levels. If the value of corn or other grain byproduct ingredients rebound, prices will edge higher. There is a heavier tone in the market at mid-month due to the lack of trading, but prices will likely remain firm. It is still early in the summer and sellers appear to be optimistic that there is more upside price potential. New crop trading is limited, as ginners are concerned about lower than average yields.

Nearby West Texas offers were raised a few dollars compared to last week with only small trades being made. Local dairies have threatened to stop using cottonseed and switch to other ingredients because of such high prices. The ongoing drought conditions in West Texas continue to be the main feature of the market. Those that have old crop supply yet to sell are willing to wait for higher prices. Regarding new crop supply, gins and resellers are not willing to participate in the market, as they are not willing to take on the risk. This standoff situation is expected to continue until the new crop outlook shows signs of improving. For this to happen, West Texas will need to have beneficial rains. The weather outlook for the last half of May is for continued dry conditions, which suggests that this year€™s dryland abandonment rate will be higher than average.

In the Far West, prices have been steadily climbing higher, as there appears to be a short position in the market continuing to support prices and paying higher prices with each subsequent trade. There have been some locations in California that have run out of seed, which suggests that rail turnaround times are not as quick as anticipated. Higher replacement costs are being cited as reason for has been limited new crop sales being done, but volumes are well below average levels for this time of year. It appears that there is still risk for prices to continue to climb higher on concerns about the production outlook for the West Texas crop.

COTTONSEED BALANCE SHEET: USDA€™s May Crop Production Report lowered old crop cottonseed output by 93,000 tons. This amount had an offsetting reduction in the Feed, Seed and Other category. The old crop stocks/use ratio is 1.4% below the 5-year average; meanwhile the crush/ supply ratio is within a percentage point of the 5-year average.

New crop production from USDA was 122,000 tons above old crop, yet they acknowledged that due to various crop issues the amount could be lower if planted acres is lower or abandonment in Texas is higher than average. Compared to last year, the Crush category was raised the highest, up 150,000 tons. The last time the crush was larger than the posted level was in the 2007/08-crop year when more oil mills were in production.

As old crop production typically does not change after the May report, we are adopting USDA€™s number. Thus old crop production has been lowered by 112,000 tons. There was a corresponding reduction made to the Feed, Seed and Other category. Higher prices and the lack of offers in the market suggest there is less supply available and less is being used by dairies. Exports are left unchanged, but might need to be raised. Oil mill holdings remain large and due to concerns related to new crop it appears that oil mills will carry a larger amount of seed into new crop. The last time the carryover was above 600,000-ton level was in the 2007/08-crop year.

Regarding new crop production, the initial outlook is dire and there is a bias for results to be below average levels. The drought in Texas will likely mean higher than average abandonment and lower than average yields for what is harvested. In the Mid-South there is flooding along the Mississippi which has the potential to cause delays in planting or growers will switch to planting soybeans. The crush was raised 100,000 tons as economics for crushers are expected to remain favorable due to increased demand for vegetable oils aided by increases in biodiesel production. The Feed, Seed and Other category was raised as dairy demand is projected to improve.










For weekly cottonseed pricing and commentary contact:

James Bueltel
Senior Analyst/Editor
Informa Economics, Inc.
3464 Washington Drive, Suite 120
Eagan, MN 55122
Direct: 651-925-1052
Main: 651-925-1060
Fax: 651-925-1061
james.bueltel@informaecon.com
www.Informaecon.com


Every effort has been made to assure the accuracy of the information and market data which is provided in this publication as a compilation for the use of its readers. Information has been obtained by Informa Economics, Inc. from sources believed to be reliable. However, because of the possibility of human or mechanical error, Informa does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

Published by Informa Economics, Inc., 3464 Washington Drive, Suite 102, Eagan, MN 55122-1438.

 

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