Cotton's Week: November 5, 2004

Cotton's Week: November 5, 2004

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Election Alters Cotton Delegation

The Cotton Belt Congressional delegation has some new faces and some old friends in new positions.

Republicans will continue to control the House of Representatives with a majority of 231 to 201 (there will be a Dec. 4 run-off for 2 House seats in Louisiana) and will control the Senate with a majority of 55 Republicans, 44 Democrats and 1 Independent. Both sides will caucus between now and Jan. 2 to determine party leadership, committee chairmanships and committee assignments.

This year’s election had 6 open Senate seats in the Cotton Belt, and every House member was up for reelection. Newly elected Senate members are: Richard Burr (R-NC), Jim DeMint (R-SC), Johnny Isakson (R-GA), Mel Martinez (R-FL), David Vitter (R-LA) and Tom Coburn (R-OK) – and 5 of the 6 are former Congressmen.

Newly elected House members are: Jim Costa (D-CA), Dan Lungren (R-CA), John Barrow (D-GA), Cynthia McKinney (D-GA), Tom Price (R-GA), Lynn Westmoreland (R-GA), Virginia Foxx (R-NC), Patrick McHenry (R-NC), Dan Boren (D-OK), Bob Inglis (R-SC), Mike Conaway (R-TX), Henry Cuellar (D-TX), Louie Gohmert (R-TX), Al Green (D-TX), Kenny Marchant (R-TX), Michael McCaul (R-TX), Tex Poe (R-TX) and Thelma Drake (R-VA). The new members will begin their term in January and assemble their staff and offices.



Brazil Files Cross Appeal

Brazil filed a cross appeal in the US-Brazil upland cotton dispute before the World Trade Organization (WTO). While complete details have not been made public, it was reported that Brazil appealed the many aspects of the original Panel decision that went against Brazil, including the Panel's failure to find that the US cotton program posed a future threat of serious prejudice to Brazil.

Brazil and the United States will file responses to their respective appeals within a short time. An oral hearing on the appeal is expected in December in Geneva.



Textile Safeguard Petitions Accepted

The Committee for Implementation of Textile Agreements (CITA) has accepted 6 of the first 7 threat-based China textile safeguard petitions formally filed. The first petition, for trousers, was announced Oct. 28, marking the beginning of a 30-day comment period, which will be followed by a 60-day window during which CITA could announce at any time its decision on whether or not to impose safeguards. On Nov. 3, industry organizations were informed that petitions for 5 additional categories had been accepted. Petitions now accepted on their technical merits include:  347/348 - men’s and boys’ and women’s and girls’ cotton trousers; 647/648 - men’s and boys’ and women’s and girls’ man-made fiber trousers; 338/339 - men’s and boys’ and women’s and girls’ cotton knit shirts; 638/639 - men’s and boys’ and women’s and girls’ man-made fiber knit shirts;  340/640 - non-knit cotton and man-made fiber shirts; and 352/652 - cotton and man-made fiber underwear. A 7th petition for category 301, cotton yarn, is still under CITA review.

The National Council of Textile Organizations and other industry associations are completing petitions for additional categories, including 447 - wool trousers, 361 - cotton sheets and 620 - synthetic filament fabrics. Petitions also are being prepared to request renewal of safeguard action granted earlier for 3 categories, and more threat-based petitions could be filed later.

The threat-based safeguard action requested by the US textile industry and supported by its suppliers is authorized under provisions of the accession agreement by which China became a member of the WTO. If CITA makes a determination that Chinese imports are disruptive or threaten to impede the orderly development of trade, the rules of the accession agreement permit the United States to seek consultations with China. Once the request for consultations is made, import growth can be limited to 7.5% annually.



CSP Watersheds Announced

USDA said 202 watersheds – with at least 1 in each state – were selected and are eligible for the FY05 Conservation Security Program (CSP) signup this winter.

Authorized by the ’02 farm law, the CSP was created to reward farmers for conservation on working lands. NCC submitted comments to USDA throughout the rule-making process and continues to follow the program’s progression to ensure it will be viable for cotton producers. Additional CSP information, including a map of the FY05 watersheds and eligibility requirements, is at www.nrcs.usda.gov/programs/csp.



Pink Bollworm Panel Committed

The Pink Bollworm Action Committee (PBAC), meeting in Chandler, AZ, reviewed progress of pink bollworm eradication programs initiated in ’00 and ’01 in Phase I areas of Trans Pecos/El Paso, New Mexico and Mexico. Reports showed pink bollworm moth captures reduced up to 97%. PBAC Chairman Bill Lovelady, a Texas producer, concluded, “the program is technologically sound, but the challenge is to secure funding to fully implement the sterile moth rearing and release component of the program.”

The committee agreed to remain committed to securing the full funding as top priority, adopting a second priority option that, with less than optimal funding, would allow the program to move in smaller increments, but with eradication as an objective by implementing the program’s sterile moth component. Clyde Sharp, president of the Arizona Cotton Growers Assoc., told the committee that last spring, almost 80% of that group’s growers approved the statewide eradication referendum and are anxious to begin the program.

In welcoming the 13 attendees from Mexico and acknowledging their excellent cooperation/partnership, Lovelady said, “I think that we have an opportunity to make a real contribution along the US and Mexico border with eradication of both the boll weevil and pink bollworm.”

The panel also received a report about the growing pink bollworm concern in the Texas High Plains from Dr. Jim Leser, Texas Cooperative Extension, Lubbock, who said the pest is centered primarily in Gaines and Yoakum counties, but seems to be spreading.

The San Joaquin Valley pink bollworm program, conducted for the past 30 years, released more than 250 million sterile moths with only 63 native moths detected. Jim Rudig, California Dept. of Food and Agriculture, reported that 50 of the 63 native moths were from Kern County. 

The committee also reviewed research updates on pink bollworm from the U. of Arizona, New Mexico State U. and USDA. The Pink Bollworm Technical Advisory Committee also met with the PBAC.



CPSC Recommends Flammability Standards

The Consumer Product Safety Commission (CPSC) staff has recommended that the commission: 1) propose a draft standard for mattress flammability with requirements to prevent or delay flashover from an open flame fire and 2) issue an advance notice of rulemaking (ANPR) requesting comments on whether a standard is needed to address the flammability of bedclothes. The commissioners will vote on whether to publish these proposals in the Federal Register, and no vote timetable has been decided.  

The CPSC ANPR for bedclothes will address all top of the bed products, including filled bed products (e.g., comforters, mattress pads and pillows), blanket, sheets and pillowcases – products that use more than 2.3 million cotton bales. The mattress and foundation market (excluding filling) is about 65,000 bales.

The CPSC staff also recently presented a revised draft standard for upholstered furniture flammability to furniture, fabric and filling material industry representatives. The requirements will be contained in a draft standard as part of a briefing package scheduled for the end of November and to be presented to the CPSC commissioners for consideration. The draft provides a set of performance tests for major upholstery materials, including requirements for cigarette and small open flame ignition performance of fire barriers and filling materials and a cigarette test but no open flame ignition test for fabrics. The upholstery and slipcover market consumes more than 725,000 bales.

Cotton Incorporated will be doing testing to determine how cotton and cotton blend fabrics will perform in these draft flammability tests.



Warehouse Security Fact Sheet Available

The NCC has developed a fact sheet for its warehouse members to help them comply with USDA security plan requirements. Cotton warehouses are required to have security plans because of Homeland Security Presidential Directives. These directives caused USDA to add functioning security plan requirements to cotton storage agreements. The fact sheet, which also identifies useful security plan resources, can be found at www.cotton.org/tech/safety/warehouse-security.cfm.

The NCC also updated a previously-issued memo/fact sheet to the ginner and cottonseed sectors regarding the Food & Drug Administration’s Food/Feed Bioterrorism Rule promulgated in response to the Bioterrorism Act of ’02. Gins and cottonseed facilities not registered by Aug. 13, ’04 are in violation and subject to fines. The updated fact sheet is at www.cotton.org/tech/safety/ncc-bioterrorism-memo.cfm.



Exports On Last Year’s Pace

Net export sales for the week ending Oct. 28, ’04 were 154,300 bales (480-lb.), resulting in total ’04-05 sales of almost 6.6 million. Total sales at the same point in the ’03-04 marketing year were approximately 6.7 million. Total new crop (’05-06) sales are 191,200 bales (480-lb.).

Shipments for the week were 106,700 bales, bringing total exports to date to 1.6 million, below the 1.9 million at the comparable point in the ’03-04 marketing year.



Industry Represented on Air Quality Panel

Cotton is well represented on the recently appointed USDA Agricultural Air Quality Task Force (AAQTF). Terms are for 2 years and end Aug. ’06.

Members include: Dr. Phillip Wakelyn, NCC; Dr. Calvin Parnell and Dr. Brian Shaw, Texas A&M U.; Kevin Rogers, AZ producer; Bob Avant, producer and head of the Texas Food & Fiber Commission; and Roger Isom, California Cotton Growers & Ginners Assoc.

The AAQTF was created by the Federal Agriculture Improvement & Reform Act of 1996 to provide recommendations to the Secretary of Agriculture for guidance on the development and implementation of air quality policy. The AAQTF plays an important role in obtaining cooperation between the USDA and the EPA on agricultural air issues such as fine and coarse particulate matter and ozone. Volatile organic compounds from pesticide applications are considered to contribute to ozone formation.



Step 3 Import Quota Opened

Competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending Nov. 4.

When the Friday through Thursday weekly average US northern Europe price, adjusted for the value of the cotton market user certificate (Step 2), exceeds the northern Europe price ("A" Index) for 4 consecutive weeks, a special Step 3 import quota is triggered. The quota is for 122,752 bales (480-lb.), equal to 1 week of mill use based on the most recent 3 months’ seasonally adjusted data.

The quota will be established as of Nov. 11 and applies to upland cotton purchased no later than Feb. 8, ’05 and entered into the US no later than May 9, ’05.



Prices Effective November 5-11, 2004

Adjusted World Price, SLM 1 1/16

35.43 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.51 cents

Marketing Loan Gain Value

16.57 cents

Import Quotas Open

 1

Step 3 Quotas (480-lb. bales)

122,752

ELS Payment Rate

33.08 cents

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

50.49 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

 49.12 cents

Current US c.i.f. Northern Europe

 53.00 cents

Forward US c.i.f. Northern Europe

 No Quote

 
2003-04 Weighted Marketing-Year Average Farm Price  
 
Final Marketing Year Average Price

61.80 cents

 


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