Cotton's Week: December 10, 2004

Cotton's Week: December 10, 2004

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House Passes Tech Assistance Bill

The House passed a bill designed to clarify Congressional intent regarding technical assistance funding for conservation programs. Sen. Cochran (R-MS), chairman of the Senate Agriculture Committee, was the sponsor in the Senate, where it passed in October. Rep. Goodlatte (R-VA), chairman of the House Agriculture Committee, and Rep. Lucas (R-OK), chairman of the House Subcommittee on Conservation, Credit, Rural Development and Research, worked to get the bill passed by the House.

Congress increased the budget for conservation programs by nearly $2 billion per year in the ’02 farm law; however, there is a current shortfall in the conservation technical assistance budget at the Natural Resources Conservation Service. Currently, funding for technical assistance is pulled from the Environmental Quality Incentives Program, Farmland Protection Program, Grassland Reserve Program and Wildlife Habitat Incentives Program to fund technical assistance for other conservation programs.

The recently-passed bill states that funds for 1 conservation program cannot be spent on another program’s technical assistance. It also would allow the Commodity Credit Corp. to provide funds needed for technical assistance, as the ’02 farm law stipulated.



West African Meeting Re-Scheduled

A December meeting aimed at furthering cooperative ties between the US and West African C-4 countries has been pushed back until Jan. 11-13. The conference of USDA and NCC officials with the C-4 ministers had originally been planned for Dec. 14-16 in Bamako, Mali. All conference planners mutually agreed on the new date and stated that the later date would result in a more productive meeting and provide more time to prepare the necessary documents.

USDA Undersecretary J.B. Penn will head the US delegation and NCC American Cotton Producers Chairman John Pucheu of Tranquility, CA, will be the US cotton industry representative.

USDA and NCC are planning the forum as a follow-up to earlier efforts to establish cooperative ties with the C-4 countries. In October, a technical team of government and cotton industry advisors toured several C-4 countries to assess needs and identify both short and long-term opportunities for cooperative efforts and assistance. The tour was preceded by a ministerial conference in Burkina Faso, June 20-24, attended by NCC Chairman Woody Anderson. In addition, a number of ambassadors and ministers from the C-4 countries participated in US cotton industry orientation sessions and a US Cotton Belt tour July 19-26.

At their upcoming January conference in Mali, USDA and NCC officials will present a number of near term projects intended to address many of the opportunities identified earlier by the technical team.



NCC Submits CRP Comments

NCC submitted comments to USDA regarding the future of the Conservation Reserve Program (CRP). On Aug. 4, President Bush directed USDA to offer early re-enrollment and contract extensions to CRP participants in advance of a larger than normal number of expiring contracts in coming years. NCC noted in its comments that between Sept. 30, ’07, and ’10, CRP contracts for more than 28.7 million acres are scheduled to expire.

USDA requested comments about how to manage the large acreage set to expire from CRP, how to manage future CRP sign-ups and acreage and generally how the program should operate in the future. NCC reiterated the importance of continuous sign-up along with incentive payments and commented on the management of future contract expirations.



NCC Hears Quota Concerns

NCC President Mark Lange, accompanied by Cotton Council International Assistant Executive Director David Collins, met with a group of officials representing 5 least developed countries to share views on trade opportunities between the US and these countries in the post-Agreement on Textiles and Clothing environment. Represented at the meeting at the Embassy of Bangladesh in Washington, DC, were Bangladesh, East Timor, Cambodia, Laos and Yemen.

Concern was expressed over the impact of the quota system’s elimination and what these countries perceive as a reduced opportunity to sell into the US market. The group expressed a desire for continued dialogue and efforts to pursue mutually beneficial opportunities.



Commodity Roundtable Sets ’05 Agenda

NCC President Mark Lange attended a Washington meeting of the Commodity Roundtable, where economists from the House Agriculture Committee outlined the September ‘04 Congressional Budget Office baseline, related that to the current budget situation and anticipated priorities of the new Congress.

The group also reviewed the ’05 legislative calendar and discussed a renewed coalition effort to communicate the importance of agriculture to the economy and the need for stable and predictable farm policy.



6th US/Andean Trade Talk Round Ends

Negotiators from the US, Colombia, Peru and Ecuador (Bolivia, is thus far participating as an observer) characterize the recently completed 6th round of negotiations in Tucson, AZ, as the most productive thus far. However, the range of unresolved issues prompted negotiators to add a round of talks to the one already planned for January. The revised schedule calls for a week of talks in Colombia beginning Jan. 31, to be followed by an 8th round about mid-March in the US.

The goal is to wrap up an agreement in early ’05, according to Regina Vargo, the US lead negotiator. Agriculture and intellectual property rights reportedly are among the more contentious outstanding provisions to be negotiated.  In a prepared statement, Vargo reported progress in market access provisions, which are divided into 3 areas:  agricultural products, textiles and industrial goods.

Responding to a question about whether TPLs would be an issue in a US/Andean pact, Vargo said, “Almost everybody starts out asking for TPLs, but they are sensitive in the United States, and we are very careful in how we approach them.” She noted that, “One of the things, though, that I think distinguishes the Andean region is that they are fabric producers themselves … so it is perhaps somewhat less of a concern to them than to some other countries we may be in discussion with.”



US Mill Cotton Use Estimate Raised

For the ’04-05 marketing year, USDA raised its US mill use estimate by 100,000 bales to 6.20 million and exports were left unchanged at 12.50 million bales resulting in total offtake for ’04-05 of 18.70 million. Ending stocks are projected to be 7.70 million bales for an ending stocks-to-use ratio of 41.2%.

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

Meanwhile, USDA’s ’04-05 marketing year projection shows record world production of 114.02 million bales, up 2.30 million bales. World mill use was raised 360,000 bales to a projected 103.29 million bales. Consequently, world ending stocks for ’04-05 are projected to be 46.53 million bales for a stocks-to-use ratio of 45.0%.



USDA Raises US Crop Projection

In its December crop report, USDA estimated a ’04-05 U.S. crop of 22.82 million bales. Upland production was estimated at 22.10 million and ELS production at 720,000. Yield is expected to average a record high 828 pounds per harvested acre, surpassing the previous record of 730 pounds set in ’03.

Record yields are expected in 9 of the 17 cotton producing states - Arkansas, California, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, Tennessee and Texas.

U.S. Cotton Crop, 2004-05

 

PLANTED
ACRES
Thou.

HARV.
ACRES
Thou.

YIELD PER
HARV.
ACRE
Lb.

5-YEAR
AVG.
YIELD
Lb.

480-POUND
BALES
Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

2,962  

2,907 

754  

626 

4,568  

   Alabama

550  

535 

754  

608 

840  

   Florida*

90  

88 

480  

532 

88  

   Georgia

1,290  

1,260 

686  

647 

1,800  

   North Carolina

730  

725 

874  

628 

1,320  

   South Carolina

220  

218 

815  

560 

370  

   Virginia

82  

81 

889  

692 

150  

MID-SOUTH

3,470  

3,425 

977  

748 

6,970  

   Arkansas

930  

920 

1,070  

809 

2,050  

   Louisiana

500  

490 

862  

699 

880  

   Mississippi

1,100   

1,090 

1,000  

754 

2,270  

   Missouri

390  

385 

997  

753 

800  

   Tennessee

550  

540 

862  

683 

970  

SOUTHWEST

6,210  

5,781 

666  

482 

8,022  

   Kansas*

100  

86 

737  

465 

132  

   Oklahoma

210  

195 

714  

532 

290  

   Texas

5,900  

5,500 

663  

480 

7,600  

WEST

866  

857 

1,420  

1,295 

2,535  

   Arizona

238  

236 

1,342  

1,277 

660  

   California

560  

557 

1,508  

1,352 

1,750  

   New Mexico

68  

64 

938  

785 

125  

TOTAL UPLAND

13,508  

12,970 

818  

657 

22,095  

TOTAL ELS

255  

253 

1,366  

1,206 

720  

   Arizona

3  

960  

894 

6  

   California

220  

219 

1,425  

1,255 

650  

   New Mexico

11  

11 

916  

893 

21  

   Texas

21  

20 

1,032  

928 

43  

ALL COTTON

13,763  

13,223 

828  

667 

22,815  

Source: USDA-NASS December Crop Production Report.
*NCC estimates for harvested acres and yield per harvested acre based on August Crop Production Report
.



AM Reservation Deadline Jan. 11

Jan. 11 is the deadline for making hotel reservations for the NCC’s ’05 Annual Meeting in Washington, DC, Jan. 27-31. The meeting’s policy development begins with the 6 program committee sessions on Saturday, Jan. 29 followed by Board review of the program committee recommendations the next day and consideration by all delegates as the first business item in the Jan. 31 general session. Also included in that session will be a ’04 NCC activities report from Chairman Woody Anderson and a keynote address by Sen. Thad Cochran..

Go to www.cotton.org/events/amreg to reserve rooms, register for the meeting and get general meeting information.



Summit Draws Key Mill Customers

The 2004 Sourcing USA Summit, held Nov. 18-21 in San Diego, attracted 450 top leaders from 29 countries including 200 international cotton buyers, representing 12.2 million bales of consumption and imports of 5 million bales of US cotton annually. A preliminary report from US exporters revealed that $51 million of US cotton (200,000 bales) was sold at the Summit. They expect to sell some $505 million (2 million bales) within 3 months of the event.

Cotton Council International President Robert Norris told attendees, “Because of the infrastructure and the technology advances in US cotton from production through delivery, customers can expect dependable supplies of quality US cotton at competitive prices at all times.”

The event was made possible with support from CCI, Cotton Incorporated, USDA, numerous US cotton industry companies and organizations, and various agribusiness firms.



Sales, Shipments Strong For Week

Net export sales for the week ending Dec. 2 were 391,300 bales (480-lb.), resulting in total ’04-05 sales of slightly more than 7.9 million. Sales at the same point in the ’03-04 marketing year were about 8.6 million bales. Total new crop (’05-06) sales are 233,100 bales.

Shipments for the week were 194,200 bales, bringing total exports to date to 2.5 million bales, below the 2.9 million bales at the comparable point in ‘03-04.



Prices Effective December 10-16, 2004

Adjusted World Price, SLM 1 1/16

33.42 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

3.67 cents

Marketing Loan Gain Value

18.58 cents

Import Quotas Open

 2

Step 3 Quotas (480-lb. bales)

245,504

ELS Payment Rate

39.89 cents

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

48.48 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

 46.87 cents

Current US c.i.f. Northern Europe

 52.15 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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