Cotton's Week August 17, 2001

Cotton's Week August 17, 2001

Cotton's Week: August 17, 2001
NCC Chairman Calls for Industry Unity on Farm Bill Needs

NCC Chairman James Echols told American Cotton Producers (ACP) that he is encouraged with House's progress on enacting new farm bill - one that meets many of NCC's goals. In addressing ACP meeting in Monterey, CA, he said farm bill process will boil down to decisions about money and its allocation.

"I know every (industry) segment will have its own ‘wish list’ as we continue to work for the best possible farm bill," the Memphis merchant said. "Everything I hear suggests that we may have trouble holding what we have in the House bill."

He said that although Senate Agriculture Committee Chairman Harkin (D-IA) has some farm policy ideas considerably different than NCC’s, US cotton will be able to work closely with Sens. Cochran (R-MS), Helms (R-NC), Lincoln (D-AR), Hutchinson (R-AR) and Miller (D-GA).

NCC priorities in future farm legislation, Echols said, include elimination of 1.25-cent threshold under Step 2, permanent cottonseed assistance and freezing Extra Long Staple (ELS) loan rate. In addition, NCC continues to seek additional ways to help offset negative impact on cotton of strong US dollar.

"Throughout the past 2 months," he noted, "we have communicated these objectives to Congressional leaders and Administration officials, pointing out the destructive impact the strong dollar has had on our industry, the continuing weak prices of cottonseed and the need to ensure that ELS cotton remains a viable choice for western producers."

Echols suggested that elimination of 1.25-cent Step 2 threshold in cotton competitiveness program needs to be among industry’s highest priorities. He said that may not be enough to help salvage US textile sector, but would be start.

"Beyond that, we need to find a way to help the mills offset the devastating impact of the strong dollar," Echols said.

He said NCC's Economic Services staff estimates that if dollar’s value had not risen from its ’95 relationship to other currencies, today’s US mill consumption rate would be 12.3 million bales - about 4.5 million bales higher than actual rate.

"Think how far that would go toward solving our price and offtake dilemma," he said.

Echols said exchange rate provisions will cost money and House already spends all of $73.5 billion that was authorized for farm bill. He said industry might have to consider possibility that funding for exchange rate adjustments for cotton might have to come from cotton’s share of that amount.

Senate Ag Committee Developing Farm Bill Concept Paper

John Gilliland, agriculture legislative assistant to Sen. Lincoln (D-AR), said in address to American Cotton Producers meeting that Senate Agriculture Committee may have farm bill concept paper to review as early as week of Sept. 3. Committee Chairman Harkin’s (D-IA) top priority is to make conservation central component of new farm bill.

"Preserving the integrity of the commodity title is very important to those of us in the Cotton Belt," Gilliland said. "We have made that clear to Mr. Harkin. He has assured us that he has no desire to impinge on the commodity title with his conservation title, but it certainly does add to the deliberations and does add a bit of tension...."

Gilliland noted there is some concern among commodity groups that making conservation bill central component of farm bill would take away from commodity title money. Overall goal of Senate Ag Committee is to be ready for mark-up in early October, he said.

"You’ve got a number of competing interests [in the Senate]," said John Maguire, NCC vice president Washington operations. "So when we put a package together in the Senate, it’s going to be more difficult to get the kind of focus on commodity programs that you’re going to see when we talk about the House bill."

Gilliland said there will be balancing act in Senate to marry strong commodity title in House bill with strong conservation spending. Sen. Harkin and Majority Leader Daschle (D-SD) have both said conservation is their priority.

"It’s clear to us that the budget forecast when we come back in January will show that the surplus has essentially gone away," Gilliland said. "The surplus we began with this year is coming down because the economy is slowing down. The tax cut, which we also support, has taken some of that, as well as defense and education bills that are going to be passed this fall."

In any case, he said, because of budget forecast, it will be imperative for Senate to pass legislation before end of year.

President Signs $5.5 Billion Emergency Agriculture Assistance Bill

During signing ceremony at his Texas ranch, attended by several Texas cotton producers at White House invitation, President Bush said funds provided by $5.5 billion Emergency Agriculture Assistance bill will provide economic assistance to "ag communities all across America." President also commented that strong ag sector is key to national security and that ag economy must be healthy.

Appearing at Texas Agriculture Forum in Lubbock, Ag Secretary Veneman joined Agriculture Committee Chairman Combest (R-TX) and Ranking Member Stenholm (D-TX) in announcing distribution schedule for emergency assistance. Tentative time schedule is as follows: supplemental market loss assistance payments – Aug. 14; supplemental payments to ’00 crop oilseed producers – Sept. 7; and $84.7 million in cottonseed assistance for ’00 crop – Sept. 7. Eligible farmers will not be required to file additional forms to receive market loss assistance payments.

Farm Service Agency (FSA) has sent letters to ginners requesting updated information necessary to facilitate fund transfer for additional ’00 crop cottonseed assistance payments. All funds must be distributed by Sept. 30.

Ginners are reminded to verify address, employer identification or Social Security number and bank account information with FSA by Aug. 24 to receive additional ’00-crop cottonseed payment. New payment is subject to terms and conditions contained in ginner’s ’00-crop cottonseed payment application.

Letters to ginners this month from FSA requested verification or update of information needed for payment. Letters may be returned to FSA at 202-720-9069 or by mail to: Gene Rosera, USDA/FSA, 1400 Independence Ave., SW, Stop 0512, Washington, DC, 20250-0512. For questions, Rosera may be contacted at 202-720-8481.

Proper Bale Sampling Procedures Urged

NCC is urging diligence by ginners and warehousemen in taking proper samples from cotton bales this season.

"Ginners and warehousemen play a key role in bale sampling and integrity of the USDA’s cotton classification procedure," said Dale Thompson, NCC’s manager, marketing and processing technology. "As licensed samplers, cotton ginners and warehousemen are responsible for ensuring that the samples represent what is in the bale. Their efforts go a long way in helping US cotton maintain its outstanding reputation in the world marketplace."

With 20-million bale US crop expected this season, NCC urges ginners to put emphasis on bale press maintenance, especially sampling procedures. That includes checking press doors, hydraulics and other machinery and, in particular, making sure bale sampling mechanisms (cookie cutters) are sharp and sized properly.

Thompson noted that each sample must be taken by licensed sampling agent for delivery to local USDA Agriculture Marketing Service (AMS) classing facility. He said ginners and warehousemen are encouraged to: 1) communicate with their respective AMS director to ensure that all of their sampling procedures are meeting AMS guidelines and 2) properly supervise their bale sampling personnel regarding those procedures.

"The proper cutting of samples is essential for the continued success of USDA-classed cotton, for US cotton’s marketability," Thompson said.

California Governor Signs Ag Tax Relief Package

California Governor Gray Davis recently signed into law largest tax relief in more than 3 decades for state’s agricultural industry. Before signing, Davis said, "It is a source of great pride to me to know that California agriculture is the leading agricultural state in America. But in this increasingly competitive economy, we must reinvest in our farms and keep them No. 1."

The bill provides $51 million in state sales tax exemptions for diesel fuel, liquefied petroleum gas, new tractors and other farm and forestry equipment. Over course of next decade, total credits will amount to $480 million.

California Cotton Growers and Ginners associations President and CEO Earl Williams said bill is of monumental significance to agriculture in the state of California. "We’re proud of the fact that both of our associations were integrally involved in this whole process," said Williams. "There were 6 agriculture groups that really stepped up to the plate … and we were given credit for getting this budget process moved."

Cotton Sales Lower than Previous Week

Net export sales for week ending Aug. 9 were 145,300 bales (480 lb.), approximately 22% lower than previous week’s sales, raising total ’01-02 sales to almost 5.2 million bales. Total sales at same point in ’00-01 marketing year were approximately 3.1 million bales.

Shipments for week were 133,500 bales, bringing total exports to date to approximately 175,600 bales, up from approximately 148,500 at comparable point in ’00-01 marketing year.

Certificate Decline Closes Step 3

Step 2 certificate for week ending Aug. 23 fell to 6.26 cents. Decline in certificate value ended further opening of Step 3 special import quota, which had opened in 2 previous weeks.

Effective Aug. 17-23, ’01

Adjusted World Price, SLM 1 1/16     29.52 cents*
Coarse Count Adjustment               0.00 cents
Current Step 2 Certificate Value      6.26 cents
Marketing Loan Gain                  22.40 cents
*No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe  43.49 cents
Forward 3135 c.i.f. Northern Europe     No Quote
Coarse Count c.i.f. Northern Europe  42.37 cents
Current US c.i.f. Northern Europe    51.00 cents
Forward US c.i.f. Northern Europe       No Quote