COTTONSEED MARKET: Trading activity slowed leading up to and following the Easter holiday break. Corn and soybean meal futures have nudged lower in recent trading sessions keeping a bearish tone in the market. There has been an increase in selling interest in the market while end users are only covering nearby needs. Whole cottonseed and other competing feed ingredient supplies remain ample keeping it a buyers' market. The graph shows that cottonseed's relative price to distillers dried grains has softened during April and is below year ago levels, yet remains 40 percentage points above the April 5-year average. The relative price to soybean meal has kept within a couple-percentage-point range this year and continues to hold roughly 15 percentage points below its 5-year average. Dairy demand remains light for cottonseed since there are other abundant and competitively priced feed ingredients available to take up space in feed rations.
Price ranges shifted lower in West Texas on ample supply and limited buying interest. Currently local dairy buyers haven't shown much interest in taking on more ownership. It appears that end users are willing to hold off on making purchases until prices move lower. The concern is that poor dairy margins for the next couple months will limit cottonseed demand and apply additional downward price pressure as the crop's marketing year winds down with more than normal burdensome supplies being carried over into new crop.
The California truck market had lower prices on whole fuzzy seed, while Pima prices continue to hold firm. The price spread between fuzzy white seed and Pima is narrower than normal. Given limited Pima supply available prices are apt to remain firm. Fuzzy white seed supply hasn't been a concern with improved rail movement and there should be comfortable supply for the next several weeks. Forward offers are holding steady at prices close to the nearby.
The Mid-South and Southeast markets were not well tested at mid-April due to the lack of end user demand. Without this demand for the nearby or forward positions prices look to be pressured lower in coming weeks. There may not be as much supply as in West Texas, but supply fundamentals appear to be an overriding negative factor for prices. .
COTTONSEED BALANCE SHEET: The USDA balance sheet was unchanged from last month. There haven't been radical changes to supply fundamentals. The main story for this crop year continues to be the large supply situation. Dairy ration inclusion rates are suspected of being lower than in past years which could inflate ending stocks. The Cottonseed Digest's balance sheet had exports raised 5,000 tons on larger than expected February exports.
US cottonseed exports for February were 34,036 tons. This is the largest result for the year thus far and the largest for February since 2008. The accumulative total reached 172,358 tons, which exceeds the 5-year average by over 64,000 tons. For exports to reach the projected 260,000-ton level, monthly exports should average 17,550 tons.
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