JESS SMITH & SONS COTTON

P.O. BOX 1178, BAKERSFIELD, CALIFORNIA 93302 Almond Marketing

Phone : (800) 349-5377 Fax : (661) 325-9745 www.jesssmith.com (VISIT OUR WEBSITE)

October 17, 2009 A Index (Far East) 68.05 +270

(09/10)
COTTON MARKETING Pakistan 62.50 +150
ERNIE SCHROEDER, SR.
New York Futures
Tanzanian 66.75 +300
ERNIE SCHROEDER, JR. Week Week Friday Week Indian 68.50 +300
KEVIN MCDERMOTT High Low Close Change Uzbekistan 71.25 +300
JOE VAN BOENING Dec'09 69.49 6302 68.21 +519 Syrian 71.25 +300
STRATEGIC DEVELOPMENT
ANDREW DOWNIE
Mar’10 71.45 65.63 70.38 +475 Memphis Eastern 75.50 +400
GROWER REPRESENTATIVES May'10 71.78 66.84 71.23 +439 MOT 75.50 +350
LIBANIO MENDES (California) Jul'10 72.65 67.98 71.88 +376 California Arizona Not Quoted
JIM LEAR (Mississippi) SJV Not Quoted
Dec'10 73.85 69.50 73.27 +357
DENNY CALHOUN (Southwest)
GROWER FINANCING
Corn Dec‘09 388 ½ 368 ¾ 372 +9 ¾ A.W.P. 49.44 +210
ALBERT PACINI Soybeans Nov‘09 1008 ½ 972 ½ 977 ½ +13 ½ P.O.P. 2.56 -210
BOB LANKFORD Wheat Dec‘09 529 465 498 ¼ +33 ½ USDA Spot Price 97.00 0
U.S. EXPORT REPORT – Export sales continued on a Pima Market Cert 5.03 -20
weak pace with just 73,000 bales sold last week. Over Mill - Far East 112.00 +400
the last 5 weeks sales have averaged just Export Sales Report As of Oct 8, 2009
85,000 per week, compared to the 160,000 pace (mln's RB) Sales Shipments
Week 2008/09 Week 2008/09
needed to reach USDA estimate. Total Upland 0.058 3.511 0.214 1.735
commitments are now 3.73 million RB. Pima 0.015 0.214 0.008 0.091
However, shipments remained seasonally Total 0.073 3.725 0.221 1.826
heavy at 221,000 bales last week. Pima sales continued active at 14,700 last week. Most of
2008/09 carryover has been sold. Total commitments at 221,000 bales have almost reached last
season’s final shipments of 225,000 bales.
MARKET NEWS AND PRICE OUTLOOK – December cotton prices closed up every day
this week, finishing with gain of 519 points. Some attribute gain to weak US dollar, others to
excessive rains in Delta, or new speculative buying, and some to sharp reduction in Chinese
crop. There seems to be many reasons for firmer prices, perhaps one of the best might be the
trade now short futures about 12 million bales, practically entire US crop. Who is left to sell on
any rally? Hedging of 2010 crop flattened the board this week, with December March spread
narrowing to 217 points, almost flat after 200 point crop year penalty. Cert Stocks tried to
increase but persistent decerts limited any gains to just 7,000 bales with 350,000 bales available
for delivery on the December contract. The Adjusted World Price rose to highest level in over
a year at 49.44, a gain of 210 points. The POP value dropped to 2.56 cents. The implied POP
based on Friday’s close is practically zero.
The China Cotton Association(CCA) released a new crop estimate of 6.7 MMT(30.75 mln SB),
down from 7.0 MMT (32.5 mln SB), same as USDA estimate, previously. Many think the crop
might be as low as 6.5 MMT. The China Cotton Index rose 319 Yuan (about 212 points in US
$) to 13,570(90.12 US cts). Only about 160,000 MMT of released Reserve stocks remain to be
sold, raising questions of when more stocks might be released or new import quotas.
The extent of rain in Delta and Southeast is
shown in attached graph, where many areas
have received 20 inches in the last month.
Starting Friday, forecast is for dryer weather until next Thursday, then rain again. Very
little has been defoliated, so limited will be harvested prior to next rains. Not only is
the crop lower grade, it is extremely late. Just 438,000 bales have been classed
compared to 1.9 million last season at this
time. Early SJV yields and quality appear
excellent.
The Cotlook landed mill Pima quotes rose
4 cents this week to $1.12, while sales were reported at 5-10 cents higher. Talk in China is of
smaller ELS crop, along with concern over quality. The Pima Competiveness Payment
Program (CPP) value is now 5.03 cents for the coming week, down 20 points, but forecast to
increase to 6.23 cents next week based on Friday quotes. As mentioned before, once we
passed the September 30 maturity date, Pima prices were expected to increase.
USDA announced final 2008/09 CCP at maximum 12.58, with remaining 7.55 cents to be paid out immediately.
Members : International Cotton Association American Cotton Shippers Association National Cotton Council
California Cotton Growers & Ginners Assoc. Supima Association InterContinential Exchange
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