Cotton's Week: February 20, 2004

Cotton's Week: February 20, 2004


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US Begins Steps to Phase Out Textile, Apparel Quotas

The US has notified the World Trade Organization (WTO) that it will phase out its import quotas on textiles and apparel by Jan. 1, ’05, as required under the WTO’s Agreement on Textiles and Clothing. The notification was required under WTO rules.

The US agreed to phase out its system of textile and apparel quotas in the ’94 Uruguay Round of trade negotiations. The agreement established a 10-year phase-out schedule beginning in ’95 for the US, Europe and Canada to eliminate quotas, which had been established under the WTO Agreement on Textiles and Clothing (ATC).

The US continues to have the right to implement a special safeguard provision to establish quotas on textile and apparel imports from China when it is determined that imports of products on which quotas were removed have reached levels which disrupt markets. The US recently utilized the safeguards on 3 product categories based on petitions filed by the US industry. The US also maintains the right to negotiate quotas with countries that are not currently members of the WTO – notably Vietnam, for example.

Congress Notified of US-Australia FTA Intentions

The Administration notified Congress on Feb. 17 of its intent to sign a free trade agreement (FTA) with Australia. US and Australian negotiators announced their agreement on the provisions of the FTA on Feb. 8.

The letter of notification begins a 90-day process, specified by the Trade Act of ’02, that must elapse before the agreement can be signed and implementing legislation can be sent to Congress. USTR announced that a text of the agreement will be available to the public later this month. The 90-day period would end in May, after which Congress, in committees of jurisdiction, could consider the implementing legislation before it is sent to the floor.

Since Congress will adjourn in late July for the respective conventions, there will be a relatively narrow window during which to approve the FTA. Since the agreement excluded sugar; provides limited market access for beef and dairy; and does not present labor and environmental concerns that have drawn opposition to other agreements, some Congressional observers compare it to the US-Singapore agreement that was approved in ’03 with two-thirds support in the House and Senate. Australia is the 13th largest US export market, and the US ran a trade surplus of $6.7 billion with Australia in ’03.

USTR Initiates Process for Thailand Trade Agreement

The Office of the US Trade Representative (USTR) formally notified Congress of US objectives for negotiating a free trade agreement (FTA) with Thailand. President Bush announced in October the US intention to negotiate such an agreement.

According to the provisions of the Trade Promotion Authority (TPA) legislation passed by Congress in August ’02, the USTR notification allows negotiations to begin in 90 days. In its announcement, USTR noted that Thailand is the US’ 18th largest trading partner and was the 16th largest export market for US agricultural products.

In related trade developments, USTR has requested public comments to provide guidance in developing objectives for negotiations on a FTA between the US and Andean countries – Colombia, Peru, Ecuador and Bolivia. A hearing is scheduled for March 17, and written comments are due by March 30.

Date Set for Re-Launch of Ag Negotiations in WTO Doha Round

The new chairman of the World Trade Organization (WTO) Negotiating Committees on Agriculture has scheduled a meeting for March 22-26 to formally re-launch the Doha Round trade talks. The New Zealand Ambassador on the negotiating group, Chairman Tim Groser, advised WTO members that he intends to schedule a formal meeting on the morning of March 22 and again on the afternoon of March 26, “with members using the time in between to organize negotiations among themselves.”

The meeting will be the first for the negotiating group since July ’03. Groser was appointed to chair the group on Feb. 11. He noted that members “have spent much of the time to date in building up coalitions amongst themselves, reflecting their shared concerns and shared objectives.”

Recently, US Trade Representative Zoellick wrote trade ministers outlining a proposal to restart the negotiations, and he has been on a worldwide trip promoting his proposals. There have also been a series of informal meetings in Geneva between various coalitions, including a meeting on Feb.12-13 between the European Union (EU) and the so-called Group of 20 developing country coalition on agriculture.

EU Agriculture Commissioner Franz Fishler, speaking in Washington on Feb. 19, said the EU welcomed Zoellick’s letter but said the EU would insist on discussing all forms of export competition, including export credits and surplus disposal. Fishler was responding to Zoellick’s call for an agreement to eliminate all export subsidies by a certain date. Fishler repeated his support for the EU’s recent offer to eliminate export subsidies on products of particular interest to developing countries. He reminded the audience that the current EU Commission is replaced at the end of October, and that factor, combined with US elections, likely means only the first half of ’04 is available for serious negotiations.

USDA’s Collins Says Ag Exports Will Approach Record Level

USDA’s Chief Economist, Dr. Keith Collins, told USDA’s Outlook Conference that US ag exports for fiscal ’04 are forecast to reach $59 billion, $2.8 billion above fiscal ’03 and near the ’96 record. If USDA projections are realized, it would represent the 5th consecutive year of expanding exports.

A USDA report issued Feb. 19 continued a forecast for US cotton exports at 13.3 million bales at a value of $4.1 billion. The report projects China’s total cotton imports from all sources at 7 million 480-lb. bales.

Collins also said that stronger prices and reduced export competition for corn and wheat offset a reduction in beef and cattle exports.

He noted that crop production declines in a number of locations have led to reduced stocks of most commodities. In the case of coarse grains, world stocks-to-use relationships are expected to reach an all-time low by the end of the ’03 marketing year. Collins noted that the tighter balance sheet led to sharply higher prices in ’03, with cotton prices up by 37% relative to the 5-year average while corn and soybean prices are up by 25 and 52%, respectively. USDA expects the stronger prices will lead to increased crop acreage in the US. In the case of cotton, Collins indicated that acreage is expected to be up by 8% in ’04, with a crop of 18.3 million bales. This is marginally higher than the ’03 production of 18.2 million bales.

The favorable outlook for US agriculture was tempered by the emergence of increased competition from other exporters. Collins focused on Brazil as a source of increasing competition. He noted that production of several major commodities had grown by 25-75% since the late ’90s.

Collins concluded his report with an assessment of net cash farm income. After reaching a record level of $63 billion in ’03, net cash farm income is expected to fall to $56 billion in ’04 due to lower cattle receipts and higher production expenses. Although down from last year, Collins indicated that by historical standards, the ’04 number is “still a reasonably good farm income.”

NCC Develops Draft CSP Comments

NCC staff held a conference call with NCC’s Environmental Task Force, American Cotton Producers officers, NCC producer directors and producer Interest Organizations to discuss the NCC’s comments regarding the Conservation Security Program (CSP). CSP was created in the ’02 farm bill as a program to provide financial and technical assistance to producers who advance the conservation and improvement of soil, water, air, energy and plant and animal life on working lands. USDA has issued a Proposed Rule that outlines eligibility requirements, payment rates and the application process.

NCC is working with other national commodity groups to develop joint comments to submit to USDA. These groups, as well as NCC, have serious concerns about how the program will be administered and specifically about the regimented eligibility requirements stated in the proposed rule. A summary of the Proposed Rule can be viewed at

Comments for the Proposed Rule must be received by USDA no later than March 2. Comments may be mailed to: Conservation Operations Division, Natural Resources Conservation Service, P.O. Box 2890, Washington, DC 20013–2890, or comments may be sent by e-mail to, attn: Conservation Security Program.

Endangered Species Lawsuit Filed in Texas

The Save Our Springs Alliance and the Center for Biological Diversity filed suit against the EPA claiming that the agency had not considered the effects of 5 commonly used crop protection products on the Barton Springs salamander. The environmentalists requested that pesticide use in the Barton Springs area of Texas be restricted.

Environmentalists are concerned about the effects of atrizine, diazinon, prometon, metolachlor, carbaryl, and simazine on the water quality in the Edwards Aquifer in the Austin area. The Edwards Aquifer covers 12 counties in central Texas, 3 of which had cotton production in ’03.

A similar lawsuit in the Pacific Northwest restricted pesticide use for over 40 crop protection products by placing buffers by potential salmon-bearing habitat. The Texas lawsuit could impose similar or stricter regulations to the products of concern. The courts’ activities set precedent for environmental groups to place restrictions in areas with any one of over 1,200 listed endangered species.

Counterpart regulations have been released from the Fish and Wildlife Services in an attempt to bring EPA into compliance with the Endangered Species Act but are not expected to be finalized until this summer at the earliest.

Dates Set for Popular Ginners School

Registration is now open for the popular ginners school, which will be offered at Lubbock, TX, Las Cruces, NM, and Stoneville, MS, this year.

Now entering its 19th year of classes, the school strives to teach the basics of cotton ginning. However, courses are offered at 3 levels depending on students’ experience.

School cooperators include USDA-ARS, the National Cotton Ginners Assn. (NCGA) and its member associations, the NCC, Cotton Incorporated, gin machinery/equipment manufacturers and suppliers, the Cooperative State Research, Education and Extension Service and select land grant universities.

The Southwest Ginners School will be held March 29-31 at the South Plains Ginning Laboratory in Lubbock; the Western school will be May 25-27 at the Southwest Ginning Research Laboratory in Las Cruces; and the Stoneville school will be June 15-17 at the USDA Ginning Laboratory in Stoneville.

The registration fees are $175 per student for 3-day attendance and $100 per student for single topic/single day attendance. Complete information and registration forms are available online at Students can download a PDF version (59.7 kb) of the registration form and fax it to Betty Thorne at 901-725-0510, then send payment made payable to National Cotton Ginners Assn. to: Ginners School, P.O. Box 820285, Memphis, TN, 38182-0285. Cancellations must be made one week in advance of school to receive a refund.

Export Sales for Week Ending Feb. 12

Net export sales for the week ending Feb. 12 were 596,000 bales (480-lb.), resulting in total ’03-04 sales of almost 11.4 million bales. Total sales at the same point in the ’02-03 marketing year were approximately 8.9 million bales. Total new crop (’04-05) sales are 496,100 bales.

Shipments for the week were 300,600 bales, bringing total exports to date to 5.7 million bales, ahead of the 4.9 million bales at the comparable point in the ’02-03 marketing year.

Prices Effective February 20-26, 2004

Adjusted World Price, SLM 1 1/16

60.45 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

0.00 cents

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

73.85 cents

Forward 3135 c.i.f. Northern Europe

 No Quote

Coarse Count c.i.f. Northern Europe

71.78 cents

Current US c.i.f. Northern Europe

74.35 cents

Forward US c.i.f. Northern Europe

 No Quote

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

62.88 cents


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

Error in element (see logs)