Cottonseed Market Prices
COTTONSEED MARKET: Throughout November, the cottonseed market’s primary focus was on the quality and quantity of seed that were being ginned as new-crop seed made its way into the market. Slow harvest progress delayed ginning in several regions, causing a volatile spot market until new-crop cottonseed was adequate. Texas and the Southeast, particularly Georgia, spot market offers were more volatile than others, which provided support to the Mid-South market. Excessive rains throughout Texas, the Mid-South, and the Southeast coupled with temperatures in the mid-60s to lower 70s contributed to cottonseed quality issues. In the last weekly national Crop Progress report of the year released November 26, cotton harvest was reported as being seven percentage points behind the five-year average at 77 percent. The unfavorable harvest weather conditions caused some gins to temporarily run out of cotton to gin, which created further issues for the new-crop supply of cottonseed. There were reports of seed sprout, degeneration, and high moisture content seen in areas that received excessive rains after the crop was defoliated and unable to be harvested, sitting for days to even weeks in some areas. As the quality and supply concerns were prominent in the Southeast, traders were focusing on filling prior commitments due to the tightness of seed supply seen earlier in the month and were not willing to reduce prices even though gins were running at full capacity. New trades were scarce for much of November, but there was some buying interest into the deferred months with prices remaining supportive.
Weather events that occurred in October caused issues that carried over into November, affecting prices and supplies for different areas within regions. It has been a wet autumn, causing a delay in both cotton harvest and ginning this year. USDA released its Crop Production and WASDE reports November 8. As expected, USDA lowered US all cotton production 1.35 million bales to 18.4 million bales. Even though cotton production was lowered in eight of the 15 states, USDA forecast record yields in California and Missouri. Yields were reduced from the October report in most of the South-eastern states that were affected by Hurricane Michael, which was the main reason for the lower cotton production. IEG Vantage adopted USDA’s 2018/19 cotton production of 18.4 million bales, which led to significant changes to IEG Vantage’s 2018/19 cottonseed balance sheet. The decrease in cotton production led to a 180,000-ton decrease in IEG’s 2018/19 cottonseed production to 5.87 million tons. With the decrease in cottonseed production, cottonseed crush is expected to fall about 5,000 tons from the previous forecast to 1.9 million tons and exports are to decrease 80,000 tons from the previous forecast to 370,000 tons. Feed, seed and residual use is forecast to decrease about 100,000 tons from the previous forecast to 3.7 million tons. These adjustments through the balance sheet led to 2018/19 ending stocks totaling 336,000 tons, which is lower than the previous forecast.
COTTONSEED BALANCE SHEET: USDA released its Oil Crops Outlook report November 13, which showed significant changes to its balance sheet. USDA lowered its 2018/19 cottonseed production 385,000 tons from the previous forecast to 5.79 million tons. This decrease in cottonseed production led USDA to reduce its crush by 100,000 tons from its previous fore-cast to 1.8 million tons, and to decrease its feed, seed and residual use by 247,000 tons from the previous forecast to 3.62 million tons, bringing USDA’s 2018/19 ending stocks forecast down 38,000 from its previous forecast to 400,000 tons. IEG Vantage adopted USDA’s 2018/19 cotton production forecast into its lint-to-seed ratio for 2018/19 cottonseed production, which brought IEG’s 2018/19 cottonseed production to 5.87 million tons. September’s cottonseed crush totaled 157,500 tons, which was 35,520 tons above the five-year average but 20,400 tons lower than August’s crush of 177,900 tons. NOPA reported an October soybean crush of 172.4 million bushels, which was a record and about 500,000 bushels above the previous record of 171.9 million bushels, Strong soybean meal demand continues to provide an incentive to crush soy-beans despite some weakness in crush margins that has been pressured by soybean futures market’s optimism of an agreement between US and China being reached soon. Considering the decrease in 2018/19 cotton production and cotton-seed production along with some of the quality issues that have been reported thus far in the year, it is expected for prices to remain stable for December. Cottonseed demand is expected to increase into the winter months due to livestock feeding requirements.
Cottonseed Intelligence Monthly is published monthly.
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