CCC Loan FAQ and Glossary

"Blending" is used to transition the AWP from one crop year to the next. Instead of using an AWP based solely on the current "A" Index, the forward (or new crop) "A" Index is introduced on a graduating scale. The process begins by giving the current "A" Index two-thirds weight and the forward "A" Index one third for two consecutive weeks. For the next two consecutive weeks, each index receives equal weight in the calculation. During the next two consecutive weeks, the current "A" Index receives one third of the weight while the forward "A" Index gets two thirds. At the conclusion of the six weeks of blending, only the forward "A" Index is used.

Blending of the AWP begins with the introduction of the forward "A" Index provided that the initial week of blending includes April 15 or later. For example, introduction of the forward "A" Index the first week of April would not trigger blending.

Producers should be aware that to redeem loan at current adjusted world price (AWP), repayments, including CCC Form 605 with original signatures, must be filed no later than 3:59 p.m. Eastern Time Thursday. Loan deficiency payment (LDP) application must be submitted and approved by Farm Service Agency (FSA) by 3:59 p.m. eastern time Thursday to obtain LDP rate applicable under current AWP. No loan repayments or LDP applications are processed between 4 and 5 p.m. on Thursday. At 5 p.m. EDT, FSA begins processing loans and LDPs using new AWP.

Producer is eligible to receive LDPs only with respect to cotton that is eligible to be placed in loan program. Cotton that has previously been sold or previously been placed in loan is not eligible for LDP. Producer must have beneficial interest in cotton on which LDP is to be made. To receive LDP, producer must file application form with Farm Service Agency (FSA). LDP rate is locked in on date form is appropriately filed.

FSA recently issued notice requiring presentation of warehouse receipts in order to receive LDP. Gin tag lists can be used for '98 crop with respect to cotton that is sold gin-direct. FSA may accept gin tag lists for '97 crop only if producer can otherwise prove beneficial interest in cotton and cotton is eligible for loan.