Cotton's Week: May 2, 2003

Cotton's Week: May 2, 2003


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Cottonseed Assistance Sign-Up Through May 23

Sign-up for the ’02-crop cottonseed payment program began this week and will continue through May 23, according to an announcement by USDA’s Farm Service Agency (FSA). The program, authorized by the Agricultural Assistance Act of ’03, provides $50 million to help cotton ginners and producers recover from low ’02-crop cottonseed prices.

"We will provide ginners and producers this much-needed assistance as quickly as possible," said Jim Little, FSA Administrator. Program applications currently are being mailed to ginners, who must submit completed forms to FSA headquarters by May 23 to be considered for payment. All companies that ginned ’02-crop cotton are eligible for program payments, which are expected to be made in early June. Payments will be made in accordance with the provisions of the final regulations published in the April 25 Federal Register.

FSA estimates that the average payment rate will be about $8/ton of cottonseed or approximately $3 per average-weight bale. The exact payment rate will be based on the quantity of cottonseed that FSA estimates was produced from the bales and lint weight certified on the applications received from ginners.

Payments are being made to cotton ginners as first handlers of cottonseed. However, when applying for payments, ginners must agree to share payments with producers to the extent that the low cottonseed prices were borne by the producer rather than the ginner. Ginners who do not receive their application by May 5 should contact Gene Rosera, FSA Price Support Division, at (202) 720-8481, or by e-mail at

ATMI Says US-Vietnam Accord an Abandonment of Commitments

The US concluded a textile agreement with Vietnam on terms (see April 25 Cotton’s Week) which the American Textile Manufacturers (ATMI) labeled in its industry newsletter as "the most generous access to the US textile market ever granted in an initial bilateral textile agreement."

ATMI Chairman Billy Moore said, "This unfortunate agreement is coming at a very difficult time for the American textile industry. We are deeply dismayed that by signing it, the US government appears to have abandoned its commitments to the textile industry and our associates, and to textile state representatives.

" . . It is increasingly hard for this industry to reconcile the government’s action with the words of Commerce Secretary Evans 14 months ago when he . . . said, ‘We know what you are going through. Know that the textile industry now has a friend in Washington’."

NCC Chairman Bobby Greene said, "The doubling and tripling of quotas for Vietnam coupled with delays in implementing safeguards to deal with disruptive Chinese textile imports are highly damaging to the US cotton and textile industries."

James W. Chestnutt, president of the American Yarn Spinners Assn., said, "As a non-market economy, Vietnam subsidizes its textile and apparel industries. The US textile industry is being forced to compete, not only with the industry in Vietnam, but with the Vietnamese government for these artificially low-priced goods. This makes the huge quota levels all the more disturbing."

Chestnutt said he also is concerned about "the precedent this agreement sets, particularly at a time when the US is negotiating free trade agreements around the globe. This is the most generous bilateral agreement in U.S. history. . . . The U.S. textile industry has suffered terribly in recent years, with more than 25,000 jobs lost during the last year alone. We cannot afford any more bad agreements."

The agreement gives Vietnam access worth over $2 billion, the largest amount ever given in an initial textile agreement. The agreement also breaks with a 40-year plus history of the US textile program by awarding Vietnam quotas based on current trade rather than on base levels set during the initial negotiation.

Payment Limit Commission Schedules Public Workshop in June

The Commission on the Application of Payment Limits for Agriculture will hold a public workshop on June 17 to address a range of issues related to limitations on farm program payments.

"The Commission is seeking more detailed information on the effects of tighter payment limitations," said Commission Chairman Keith Collins. "Agricultural program experts have been invited to the Commission’s next meeting to present their views on the topic."

The ’02 Farm Bill created the Commission to conduct a study on the potential impacts of further payment limitations on agricultural producers and others. The Commission has met several times since January and solicited written public comments during February. At its most recent meeting, the Commission concluded that input from agricultural program experts would be important as it completes its assessment. The Commission is scheduled to complete its study after the public workshop.

Experts invited to make presentations include: Dr. Mark Lange, President and CEO, NCC; a representative from the Food and Agricultural Policy Research Institute, U. of Missouri and Iowa State U.; Dr. Bruce Gardner, Distinguished Professor, U. of Maryland; Roger Johnson, Commissioner of Agriculture, State of North Dakota; Dr. Daryll Ray, Professor and Blasingame Chair of Excellence and Director of the Agricultural Policy Analysis Center, U. of Tennessee; and Dr. Daniel Sumner, Professor and Frank H. Buck, Jr., Chair in Agricultural Business, Department of Agricultural and Resource Economics, U. of California, Davis, and Director of the Agricultural Issues Center, University of California.

Each presenter will provide comments to the Commission followed by questions and discussion. After the presentations, there will be an opportunity for members of the public to provide comments.

The workshop is scheduled for 9 a.m.-3 p.m. in room 107-A at the USDA Whitten Building, Jefferson Drive, Washington, DC. Register by calling or emailing Shirley Brown at (202) 720-4164 or

March Consumption at Annualized Rate of 7.2 Million Bales

According to the Commerce Department, March (5-week month) total cotton consumption in domestic mills was 350.4 million pounds for a seasonally adjusted annualized rate of 7.2 million 480-lb. bales. Last year’s March annualized rate was 7.6 million bales. The February (4-week month) estimate of domestic mill use of cotton was raised by 1.3 million pounds to 276.4 million. The revised seasonally adjusted annualized rate of consumption for February is 7.4 million bales. This is lower than last year’s February annualized rate of 7.5 million bales.

Based on Commerce estimates from Aug. 1-April 5, projected total pounds consumed during crop year ’02-03 would be 3.7 billion pounds or 7.6 million bales. USDA’s latest estimate of ’02-03 crop-year mill use is 7.6 million bales.

Preliminary April domestic mill use of cotton and revised March figures will be released by Commerce May 29.

West Africa Countries Challenge US Cotton Program

In a letter to the World Trade Organization (WTO), four West Africa countries have called on the organization to negotiate the scrapping of US farm program benefits to US cotton.

Officials of Benin, Chad, Burkina Faso and Mali signed the letter, which also demanded that the countries be compensated while the negotiations take place.

Samuel Amehou, ambassador for Benin in Geneva, confirmed that the letter had been sent and said that millions of African farmers were suffering because of the subsidies.

This is a recurring, unjustified complaint from these specific nations, said NCC President and CEO Mark Lange.

In addressing a World Bank forum last year, Lange said, "The cotton-growing West Africa governments extract the equivalent of extraordinary export taxes from their own growers. They control access to seeds, fertilizer, ginning, sales and transportation. This situation is actually foreign government revenue management (taxation) that is in no way associated with US farm programs.

"Because of the application of export taxes by their own governments, most West Africa cotton farmers realize about 12 cents per pound less than producers in other parts of the world. The continued focus on the low prices in ’01 is misplaced. The prices of many commodities in world trade, both agricultural and other, reached 30 and 40-year lows during ’01. Pointing to US agricultural policy as the culprit is simply not sustainable."

Texas Cotton Producers Urge Congress to Maintain Farm Bill

A delegation of Texas cotton producer leadership along with representatives of the Texas Corn Growers urged the Texas Congressional delegation to protect the farm bill from any damaging funding reductions or payment limit amendments.

The delegation was led by Texas Cotton Producers and Rolling Plains Cotton Assn. President Ronnie Riddle from Abilene. NCC Vice Chairman Woody Anderson, American Cotton Producer Chairman and Plains Cotton Growers President Mark Williams and incoming National Corn Growers Assn. President Dee Vaughn were part of the group along with representatives from Texas cotton and corn producer organizations.

In visits with Sen. Cornyn (R), Congressmen Stenholm (D) and Bonilla (R) along with other key members of the Texas Congressional delegation, the group stressed the importance of maintaining the funding for the farm bill and protecting it from any damaging payment limit amendments. Appreciation was expressed to Sen. Cornyn for his strong support of the farm bill during the Senate Budget Committee consideration of the Budget Resolution.

The group also urged support for adequate funding for the boll weevil and pink bollworm eradication programs and voiced concern about recent action by the Administration regarding the Vietnam trade agreement. Visits also included sessions with key USDA personnel to discuss implementation of the farm bill and disaster assistance legislation and crop insurance matters. Several members of the Congressional delegation complimented the group for including both corn and cotton representatives.

Congress Pushes for End to EU Biotech Ban

In a letter to US Trade Representative Zoellick, Sen. Grassley (R-IA) continued his push for the filing of a case against the EU in the World Trade Organization. Many in Congress have stated they favor taking action now that the EU has taken its time to review any new biotech legislation.

Grassley notes that not only has the EU's action been detrimental to trade with the US but also the refusal to approve new biotech products has "contributed to the spread of anti-biotechnology hysteria to other parts of the world," Grassley says.

He adds that the Bush Administration originally waited on this action in advance of the war in Iraq, but Grassley says that now that the Saddam Hussein regime has been defeated, there's no reason to put off the WTO challenge.

Export Sales Continue Pace to Meet USDA Projection

Net export sales for the week ending April 24 were 57,900 bales (480-lb.), resulting in total ’02-03 sales of approximately 11.7 million bales. Total sales at the same point in the ’01-02 marketing year were approximately 11.8 million bales. Total new-crop (’03-04) sales are 984,500 bales (480-lb.).

Shipments for the week were 300,700 bales, bringing total exports to date to 8 million bales, down from 8.3 million at the comparable point in the ’01-02 marketing year. If the pace of recent weeks is maintained, exports for the marketing year would reach USDA’s projection of 10.8 million bales.

Prices Effective May 2-8, 2003

Adjusted World Price, SLM 1 1/16

48.14 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

5.58 cents

Marketing Loan Gain Value

3.86 cents

Import Quotas Open


Step 3 Quotas as of 5/1 (480-lb. bales)


*No Adjustment Made Under Step I
Five-Day Average
Blended 3135 c.i.f. Northern Europe

61.23 cents

Current 3135 c.i.f. Northern Europe

59.57 cents

Forward 3135 c.i.f. Northern Europe

62.88 cents

Coarse Count c.i.f. Northern Europe

59.04 cents

Current US c.i.f. Northern Europe

65.15 cents

Forward US c.i.f. Northern Europe

65.90 cents

Weighted Marketing-Year Average Farm Price  
Year-to-Date (August-February)

42.47 cents


**August-July average price used in determination of counter-cyclical payment

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