Archive

Cotton's Week May 11, '01

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Budget Increases Agriculture Funds,
Paves Way for Tax Cut

House and Senate approved FY02 budget resolution, with House approval coming on 221-207 party line vote and Senate approval occurring on 53-47 vote with 5 Democrats joining 48 Republicans. Budget includes $1.25 trillion tax cut over next 10 years and $100 billion in immediate relief to stimulate economy. Resolution would allow $661 billion for discretionary spending - programs subject to annual funding by Congress. Final agreement drops White House proposal to set aside funds for unexpected natural disasters, move which likely will clear way for Congress to develop emergency spending bill later this year.

Included in budget resolution is $5.5 billion for direct assistance to farmers for FY01 and $7.35 billion for FY02. Additional $66.2 billion over next 9 years (FY03-11) will help pay for new farm legislation. Although additional funds available for emergency assistance for FY01 are short of $9 billion made available last year for economic and weather-related losses, Congress could provide assistance in short term and then utilize FY02 funds for additional assistance later this year.

Additional $66.2 billion for FY03-11 is somewhat less than funds requested by NCC and other groups, but absence of restrictions on how funds would have to be allocated on year-to-year basis could provide Congress with sufficient flexibility to begin to develop significantly improved commodity programs. Groups have also pointed to development of last year's crop insurance bill that ultimately required $2 billion more than initially made available in budget resolution.

House Agriculture Committee Chairman Combest (R-TX) indicated his intention to continue work to develop comprehensive farm legislation and has advised groups he wants to complete initial draft prior to Aug. 4 Congressional recess.

Following approval of budget resolution, Senate Finance Committee intensified efforts to develop tax reform package to be considered by Senate as early as week of May 14. Because resolution allows cuts totaling $1.25 billion, Senators are attempting to develop consensus for package to include some combination of income tax reductions, child tax credits and estate tax relief.

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Deadline Nears For '00
Cottonseed Assistance Applications

Response by gins in return of "Cottonseed Payment Application and Certification" forms (CCC Cotton A-6) has been swift. Ninety percent of applications mailed were returned to USDA by May 10. May 18 is deadline for return of all applications. Because forms from all eligible gins must be returned before payments are made, gin managers are encouraged to contact Gene Rosera at USDA (202-720-8481) if they have not yet received form.

Application requests verification of individual gin's 5-digit code number and number of running bales processed during '00 crop year, according to USDA-AMS records as of April 13, '01. Total lint pounds ginned must be provided by gin, which USDA will use to calculate tons of cottonseed based on lint-to-seed formula. Gin's bank account direct deposit information also is required. Detailed instructions are included with form.

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Court Urged to Set Aside
EPA / Environmental Group Agreement

NCC submitted comments to EPA opposing Consent Decree entered into between EPA and Natural Resources Defense Council (NRDC) regarding review of certain pesticides. In settlement reached during last days of Clinton Administration in suit filed by NRDC, EPA agreed to unreasonable timetable in its review of crop protection products critically important to cotton production - organophosphates and carbamates. Court involved in case required agency to solicit public comments on Consent Decree after receiving complaints from agricultural groups.

In its comments, NCC asserted that Consent Decree will force EPA to make decisions for which it lacks data and scientific methodologies to complete accurately. Letter stated that result would be unnecessary loss of crop protection tools for US farmers, causing potentially huge crop losses with no improvement in overall safety. Cotton industry is critically dependent on several of pesticides that will be rushed to judgment under agreement and stands to be severely affected by decision. Letter urged court to set aside Consent Decree as being unfair, unreasonable and inequitable.

Other interested parties may comment on Consent Decree. Deadline for comments is May 21. Additional information and full copy of NCC comments are available on NCC web site, www.cotton.org in members' only section.

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'00-01 Production: 17.19 Million Bales

In final estimate of '00-01 US cotton crop, USDA lowered total production to 17.19 million bales, down from previous estimate of 17.22 million. Upland crop estimate was reduced to 16.80 million and ELS estimate was lowered to 389,100.

Final planted area is estimated to be 15.52 million acres, down 19,300 acres from previous estimate, while estimate of harvested area was reduced 44,500 acres to 13.05 million. National average upland yield is estimated at 626 lbs./harvested acre, up slightly from 5-year average. Estimated national average ELS yield of 1,105 lbs./harvested acre represents 112-pound increase from 5-year average. Total '00-01 cottonseed production is estimated at 6.44 million tons.

Final '00-01 US Crop Estimate

 

Planted

Harv.

Harv.

Avg.

Pound

 

Acres

Acres

Acre

Yield

Bales

 

Thou.

Thou.

Lb.

Lb.

Thou.

UPLAND

          

SOUTHEAST

3,560

3,309

622

606

4,286

AL

590

530

492

562

543

FL

130

106

480

538

106

GA

1,500

1,350

591

636

1,663

NC

930

925

742

586

1,429

SC

300

290

627

595

379

VA

110

108

738

683

166

MID-SOUTH

3,940

3,878

656

685

5,297

AR

960

950

720

724

1,425

LA

710

695

629

665

911

MS

1,300

1,280

642

745

1,711

MO

400

388

668

609

540

TN

570

565

603

573

710

SOUTHWEST

6,720

4,582

431

458

4,114

KS

40

37

288

396

22

OK

280

145

503

353

152

TX

6,400

4,400

430

462

3,940

WEST

1,127

1,115

1,335

1,087

3,102

AZ

280

278

1,366

1,182

791

CA

775

770

1,378

1,084

2,210

NM

72

67

724

664

101

TOTAL UPLAND

15,347

12,884

626

618

16,799

ELS

170

169

1,105

993

389

AZ

5

5

705

811

7

CA

145

144

1,154

1,084

346

NM

4

4

539

653

5

TX

16

16

930

767

31

ALL COTTON

15,517

13,053

632

625

17,188

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USDA Drops US Offtake to 15.6 Million Bales

USDA reduced estimate of '00-01 US mill use by 100,000 bales to 9.2 million in May report. Export estimate was reduced 500,000 bales to 6.4 million for total reduction in US offtake of 600,000 bales to 15.6 million. With small decline in estimated production, US ending stocks for '00-01 are now estimated to be 5.5 million bales, up 500,000 from previous estimate. This has corresponding ending stocks-to-use ratio of 35.3%.

USDA also released first projection of US supply and offtake for '01-02 marketing year, projecting 18.8 million bales based on expected harvested area of 14.2 million acres and expected yield of 635 pounds. US mill use and exports are both projected to reach 9 million bales, for total '01-02 offtake of 18 million bales. With expected crop larger than offtake, ending stocks for '01-02 are projected at 6.3 million bales, for ending stocks-to-use ratio of 35%. If this level of ending stocks is reached, it will be largest carryover since '88-89 marketing year, when ending stocks exceeded 7 million bales.

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Projected World Supply, Offtake Reduced

USDA reduced expected '00-01 world production by 320,000 bales to 87.22 million in May report. Pakistan (-200,000 bales) and Australia (-100,000) account for most of reduction. Estimate of '00-01 world mill use was increased by 60,000 bales to 91.72 million, with increase in expected Chinese mill use (+500,000 bales) offsetting declines for US (-100,000 bales) and Mexico (-200,000 bales). Estimated world ending stocks for '00-01 are 37.12 million bales, decrease of 390,000 from previous month. This has corresponding ending stocks-to-use ratio of 40.5%.

In its first projection of world supply and demand for '01-02 marketing year, USDA projected world production of 93 million bales. World mill use was likewise projected to reach 93 million bales. Consequently, world ending stocks for '01-02 are projected to remain unchanged compared to previous year at 37.12 million bales, for stocks-to-use ratio of 39.9%.

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Environmental Task Force Meets in DC

NCC's Environmental Task Force met in Washington, DC, to discuss current environmental issues with EPA and USDA officials, Congressional staff members and industry representatives to review current status of environmental issues. Included in review were biotechnology and Bollgard re-registration, Food Quality Protection Act implementation, conservation programs and farm bill and Total Maximum Daily Load rule. Task force members will submit comments to EPA on Natural Resources Defense Council Consent Decree and will be communicating with NCC staff on regular basis.

Membership of task force recently was revised and consists of Chairman Jimmy Dodson, Robstown TX; Bobby Carson, Jr., Marks, MS; Barry Evans, Kress, TX; Jay Hardwick, Newellton, LA; Tom Isom, Casa Grande, AZ; Allen McLaurin, Laurel Hill, NC; Bill Tracy, Buttonwillow, CA; David Wildy, Manila, AR; and Buddy Wren, Lewisville, GA.

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President Outlines Broad Trade Agenda

President asked Congress for approval of fast-track negotiating authority, now referred to as "trade promotion authority." In addition, President outlined broad trade agenda that includes US-Jordan free trade agreement, US-Vietnam free trade agreement, renewal of Andean Trade Preference Act and reauthorization of Generalized System of Preferences.

In effort to break deadlock over how to deal with labor and environmental conditions in trade negotiations, President proposed "toolbox" of steps US could take "in combination with" negotiations with other countries. House Republican leaders urged Democrats to be receptive to new outline so Congress can move forward in bi-partisan way.

Speaker Hastert (R-IL) indicated House would take up trade promotion authority in "late spring or early summer." Sen. Grassley (R-IA), Chairman of Finance Committee, repeated his earlier statements that committee would use month of June to take up trade measure.

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Administration Supports ATPA Extension

US Trade Representative Zoellick told Ways and Means Committee Administration supports extending Andean Trade Preference Act (ATPA), which expires in December, to '05 and "broadening" law to include new products.

Zoellick said Administration wants to be on "parity" with legislation approved last year that improved access for products from Africa and Caribbean, including certain textiles and apparel. American Textile Manufacturers Association Executive Vice President Carlos Moore told committee ATMI opposes broadening ATPA to include textiles and apparel. Act currently provides duty free or reduced tariff access to US markets for specific Andean products except textiles, apparel, canned tuna and certain footwear.

Representatives from four Andean countries, plus Venezuela, expressed support for renewing and expanding ATPA.

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Senate Ag Committee Holds Confirmation Hearings
for USDA Nominees

Senate Agriculture Committee held confirmation hearing for J.B. Penn, nominated to serve as Under Secretary for Farm and Foreign Agriculture Services; Mary Waters, nominated to serve as Assistant Secretary for Congressional Relations; and Lou Gallegos, nominated to be Assistant Secretary of Agriculture for Administration

In response to request by Lugar for policy recommendations from Administration, Penn indicated Administration would draft policy recommendations rather than submit "full blown bill or proposed legislative language."

Penn, Waters and Gallegos are expected to be confirmed as early as week of May 14.

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Exports Reach 4.7 Million Bales

Export shipments for week ending May 3 were about 160,000 bales (480 lb.), raising total '00-01 exports to about 4.7 million, down from 5.2 million at comparable point in '99-00 marketing year. Lagging pace of shipments prompted USDA to reduce its projection of '00-01 exports by 500,000 bales to 6.4 million in May report. To reach USDA projection, shipments must average about 130,000 bales over remaining 13 weeks of '00-01 marketing year.

Net sales for latest week were slightly under 79,000 bales, bringing total '00-01 commitments to over 7.5 million. New crop ('01-02) commitments through May 3 were almost 1.6 million bales. Given likely carryover and expected new crop sales, US will probably begin '01-02 marketing year with total export commitments of about 3 million bales.

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EPA Water Chief Nominee Prioritizes
Non-Point Source Pollution

President Bush has nominated George Tracy Mehan, III, to fill position of EPA Assistant Administrator for Water. Mehan is currently Director of Office of Great Lakes in Michigan Department of Environmental Quality. He served as Associate Deputy Administrator of EPA from '92 to '93

If confirmed, Mehan will oversee Total Maximum Daily Load (TMDL) implementation. Reducing non-point source pollution (NPS) will be top priority for Office of Water, according to Mehan. He said that he would not rule out new regulations on NPS but most likely approach will involve market incentives or other voluntary measures.

TMDLs could be useful tool in giving states information about specific watershed, but Mehan questioned whether states have enough money to set discharge regulations for all watersheds. TMDL was signed by former Administrator Browner in July '00 and has been harshly criticized by many members of Congress. Rule is scheduled to go into effect in October.

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Peltier Named EPA Ag Advisor

EPA Administrator Whitman announced re-establishment of position of Counselor to Administrator on Agriculture Policy and named Jean-Mari Peltier of California to fill post. New advisor also will serve as central contact for EPA cooperation efforts with USDA, including work on joint policy, cooperative efforts between agency staff and other interagency issues. Advisor also will monitor Congressional activities related to agricultural issues.

Peltier, of Newcastle, CA, most recently represented California Citrus Quality Council, serving as its President since May '99. Peltier served on numerous industry and government advisory committees including US delegation to Codex Alimentarius Committee on Pesticide Residues, Tolerance Reassessment Advisory Committee, EPA Committee to Advise on Reassessment and Transition, North American Plant Protection Organization and USDA Agricultural Technical Advisory Committee on trade

Last time official position at EPA was geared toward advising Administrator on agriculture issues was under previous Bush Administration.

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Applications Available for Cotton Leadership Class

Applications for '01-02 Cotton Leadership Class are now being accepted and must be received by July 1. Industry members between ages of 30 and 45 as of July 1 are eligible. Application form is available online at www.cotton.org/cf/leadership/.

Applications can be completed online and then printed for mailing to Janice McRae, P.O. Box 820284, Memphis, TN 38182-0284. Application also is available by contacting Ms. McRae at 901-274-030 or jmcrae@cotton.org.

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Effective May 11-17, '01

Adjusted World Price, SLM 1 1/16            37.73 cents*
Coarse Count Adjustment                      0.00 cents
Current Step 2 Certificate Value             1.30 cents
Marketing Loan Gain Value                   14.19 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe         51.37 cents
Forward 3135 c.i.f. Northern Europe         51.85 cents
Coarse Count c.i.f. Northern Europe         49.42 cents
Current US c.i.f. Northern Europe           53.44 cents
Forward US c.i.f. Northern Europe           56.63 cents

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