Cotton's Week: November 12, 2004

In its November report, USDA projects the ’04-05 US crop to reach 22.5 million bales, up 1.0 million bales from the October report. US mill use was unchanged at 6.10 million bales and exports increased 200,000 bales to 12.5 million, resulting in total ’04-05 offtake of 18.6 million bales. Ending stocks for ’04-05 are projected to be 7.5 million bales for an ending stocks-to-use ratio of 40.3%.

USDA put US ’03-04 cotton production at 18.26 million bales. Both mill use and exports were unchanged at 6.49 million bales and 13.76 million bales, respectively. As a result, estimated total offtake remained unchanged at 20.25 million bales, generating an ending stocks value of 3.51 million bales. The estimated stocks-to-use ratio is 17.3%.

Meanwhile, USDA sees ’04-05 world production of 111.72 million bales, up 2.05 million from the October report and more than 13% above the previous record set in ’01-02. The world mill use estimate was raised 1.53 million bales from the October report to a projected 102.93 million bales. Consequently, world ending stocks for ’04-05 are projected to be 44.55 million bales for a stocks-to-use ratio of 43.3%.

USDA’s ’03-04 world production estimate was raised 210,000 bales to 94.72 million bales. The beginning stocks estimate increased 1.44 million bales, resulting in a world supply of 132.90 million bales. (The change in beginning stocks is due to revisions by USDA of China’s stocks. The USDA revision goes back to ’91-92 and is based on recent evidence which suggests that historical stocks were larger than previously estimated.) The world mill use estimate fell 400,000 bales to 98.51 million bales. World ending stocks on July 31, ’04 are now pegged at 35.49 million bales. This has a corresponding stocks-to-use ratio of 36%.

Cotton Council International (CCI) received an additional $1.4 million in FY04-05 Market Access Program (MAP) funds. The additional award includes $1.1 million in base funding and more than $280,000 in funding for Industry Specific Initiatives (ISI).

The allocation of these additional funds increases CCI's total MAP ceiling for the ’04-05 fiscal year to $11.5 million.

The NCC joined 13 other member organizations of the American Textile Alliance in calling on the Office of the US Trade Representative (USTR) to include special textile and apparel safeguards in any WTO accession agreement negotiated with Vietnam.

In a letter to Ambassador Robert Zoellick, the organizations expressed concern that “disruptions are inevitable unless the accession agreement includes special textile and apparel safeguards similar to those in the China accession agreement.”

The letter noted that Vietnam already has demonstrated its capability for disruptive exports to the US market.

“Over the 2-year period, 2001-2003, Vietnam exports of all textile products to the U.S. market increased more than 2500%, with total volume exceeding 827 million square meter equivalents (SMEs) in 2003,” the letter stated.

The letter also noted that this enormous increase occurred because Vietnam engaged in multiple unfair trade practices, including a state-owned and subsidized textile and apparel sector and a state-controlled currency.

As a prerequisite for Vietnam’s entry into the WTO, the organizations urged USTR to insist on textile and apparel safeguard provisions in the accession agreement that: (a) clearly authorize implementation of the safeguards when imports of textiles and apparel from Vietnam threaten to disrupt orderly trade and before disruption actually has occurred, (b) accord standing for any affected party to file a safeguard petition, without a requirement that such party make the “like product,” (c) impose stiff penalties for counterfeiting of visas or other rule-of-origin violations, and (d) require practical and equitable environmental and labor standards that do not disadvantage the US and its other trading partners.

NCC, Cotton Incorporated, U. of Georgia and industry specialists will meet next week to develop a plan to determine how crop production and harvesting decisions affect crop quality.

In the Tifton, GA, meeting, a small technical team of agronomists, physiologists, geneticists, entomologists, engineers and textile specialists will focus on a multitude of factors alleged to cause increase in short fiber, especially in prior years’ southern Georgia and Florida growths.

Though classing data gives reason to believe that the ’04 crop is significantly improved over recent years, the group’s plan is to develop consensus recommendations regarding agronomic, harvesting and processing decisions that ensure optimum fiber quality is produced and preserved during harvesting and processing.

The National Fire Protection Association’s (NFPA) Building Construction - Life Safety Technical Committee (on Industrial, Storage and Miscellaneous Occupancies) took action on code modifications that would remove cotton bales from its list of hazardous materials.

The action was taken based on NCC testimony before the committee which drew on NCC-sponsored research showing that densely-packed cotton should not be regulated as a hazardous material. The committee acted to "accept in principle" the removal of all references to "combustible fiber" from NFPA 5000 Building Code.

Full NFPA membership must ratify the committee action at their annual meeting next year in order for the change in code to be adopted.

The EPA’s Office of Research & Development (ORD) plans to conduct a study on pesticides’ effect on children in Duval County, FL. The study will evaluate household and domestic use pesticides in the home, and should not include agricultural use pesticides.

Participants will receive compensation in the form of money, clothing and electronic equipment. The study has drawn criticism from within the agency, concerned that poor and disadvantaged families will be exploited. The study is of interest to agriculture due to the agency’s position on the use of human subjects in pesticide evaluation.

EPA released a press statement in ’00 banning the use of such data until an adequate policy on human testing could be developed. A lawsuit filed by CropLife America delivered a ruling in May ’03 that changed the agency’s position to evaluate such data on a case by case basis. Such data are obtained by pesticide manufacturers from time to time, and are important in the re-registration of agricultural products such as Aldicarb. The NCC continues to urge issuance of guidance that allows for the testing of pesticides on human subjects, so long as the testing follows strict ethical guidelines.

The wastewater treatment industry is urging the EPA to increase its scrutiny of pesticides’ effects on aquatic life forms in its re-registration process. The industry is concerned that publicly-owned treatment works are unable to meet water quality standards under the Clean Water Act (CWA) due to weak pesticide regulations. Current rules allow for higher levels of pesticides in water that must be accounted for when applying for a National Discharge Elimination System Permit. The permit is required by the CWA to discharge into regulated waters.

The wastewater industry accuses the Office of Pesticide Programs (OPP) in the EPA of having standards that are only half of the strict standards under the CWA when evaluating pesticides’ impact on aquatic life forms. The wastewater industry wants OPP to work with the Office of Water during the re-registration process to account for this discrepancy between the standards. The industry has singled out more than 30 compounds to which it would like to see stricter standards applied, including the pesticide Carboryl (Sevin).

Sources in the crop protection and agriculture industries assert that the wastewater industry has an outdated technological infrastructure and is trying to shift some of its responsibilities onto other industries to prevent local politicians from having to increase their citizens’ tax burden to pay for necessary upgrades.

The NCC is seeking to prevent the regulation of pesticides by the CWA in any form and will continue to work with the EPA’s pesticide and water offices to ensure that undue regulation is not passed onto farmers and other industries.

Net export sales for the week ending Nov. 4, ’04 were 189,500 bales (480-lb.), resulting in total ’04-05 sales of almost 6.8 million. Total sales at the same point in the ’03-04 marketing year were about 7.2 million bales. Total new crop (’05-06) sales are 199,200 bales.

Shipments for the week were 144,200 bales, bringing total exports to date to 1.8 million bales, below the 2.1 million at the comparable point in the ’03-04 marketing year.