Cotton's Week: December 30, 2004

Cotton's Week: December 30, 2004


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Ag Organizations Urge Senate Confirmation of Johanns

Agriculture organizations joined in urging the Senate to confirm President’s Bush’s nominee, Gov. Mike Johanns, as the next Secretary of Agriculture in a timely manner.

The NCC joined commodity, general farm organizations, livestock groups and specialty crop organizations in a letter to Majority Leader Frist (R-TN) and Minority Leader Reid (D-NV) urging prompt confirmation of Gov. Johanns. The letter also emphasized the view of the organizations that “a steady and consistent farm policy is an important element of our national security….a healthy US agriculture sector is vital to a strong national economy…”

A copy of the letter and signatories is available on the NCC’s website at

China Announces Apparel Exports Tariff Plans

China released details of the planned tariffs on some of their apparel exports. The tariffs are for 148 apparel items and are scheduled to be imposed beginning Jan. 1, ’05, simultaneous to the expiration of all textile and apparel quotas with WTO countries. The Chinese government announced it would be imposing these tariffs in an attempt to deter the expected massive increase in Chinese textile and apparel exports and therefore allay fears that its apparel exports will destroy other textile industries worldwide.

According to some reports, industry veterans have speculated that another reason for the planned tariffs was for the Chinese government to recoup some of the revenue it will lose when quota charges are dropped with the expiration of the quota system.

An analysis done by NCC’s Economic Services indicates that for the principal cotton products included in the group of 148, the scheduled tariffs represent only 1.2% of the unit value of these exports to the world and only 0.6% of the unit value of these exports to the United States. Tariffs of this size would not be expected to have much of an impact on curtailing the expected massive increase in Chinese textile and apparel exports once quotas are removed.

President Signs Conservation Tech Assistance, Specialty Crop Bills

President Bush signed into law HR 3242, the “Specialty Crops Competitiveness Act of 2004.” The legislation is designed to enhance the competitiveness of fruits, nuts, vegetables and nursery crops produced in the United States.

The legislation was introduced by Reps. Ose (R-CA) and Dooley (D-CA). The original version included far-reaching changes to current farm law by creating block grants to the states to be used for specialty crop research and market development. The grants were to be funded by the Commodity Credit Corp. (CCC). The original legislation also made changes to conservation and research programs to earmark funds for specialty crops.

The House Agriculture Committee marked-up and approved a modified version of the legislation, which authorizes, subject to annual appropriations, funds for specialty crop programs including research and market promotion. The legislation was approved by the House and Senate at the end of the 108th Congress using procedures, which allow expedited consideration of non-controversial legislation. During consideration of the legislation specialty crop interests essentially served notice that they intend to be active participants and will seek funds during the development of future farm legislation.

On Dec. 23 the President signed into law S2856, which limits the transfer of certain CCC funds between conservation programs for technical assistance for the programs. The legislation, authored by Sen. Cochran (R-MS), chairman of the Senate Agriculture Committee, clarifies that funds for technical assistance should be drawn from the relevant program rather than requiring some programs to provide funds for technical assistance for other programs. The legislation also was supported by Rep. Lucas (R-OK), chairman of the subcommittee on Conservation, Credit, Rural Development and Research.

Irrigation Water Claim Settled

The US government has settled to pay 4 California water districts more than $16 million for water diverted from irrigation due to adverse effects to endangered species found under the Endangered Species Act (ESA). The settlement follows a ’03 ruling in the US Federal Claims court that awarded $26 million due for a taking which limited the plaintiffs’ contractually conferred rights to water.

The case stems from consultations undertaken by the Interior Dept. with the water districts during the early ’90’s when an ongoing drought threatened water levels, and the habitat of several endangered fish. The water districts, which hold contracts to divert water supplies from the California Bay-Delta, filed for their 5th amendment right for compensation for the loss of revenue, which was ruled to be $14 million, with an additional $2.7 million in attorney fees.

The decision is an important development in the ongoing debate of a property owner’s rights when government limits agriculture and developmental activities in order to preserve endangered species. The case certainly will have an impact on other cases around the country, such as one in the Klamath Falls irrigation district, which is seeking $1 billion in compensation for a similar taking.

Environmental activists warn that this case could have a severe impact on government regulators and projects designed to protect endangered species, and had urged the Bush Administration to appeal, rather than settle, the case. Some local legislators urged for an appeal as well, concerned with the impact to the California water rights system, and legislation signed by the President to authorize the California Federal (CALFED) Bay-Delta Program to restore ecological health and improve water management for beneficial uses of the Bay-Delta System.

The NCC has worked to protect farmer and land owner rights.

Senate Approves Tariff Bill

The Senate approved a miscellaneous tariff bill, which includes provisions granting normal trade relations (NTR) status to Laos and repealing a provision of US trade law known as the 1916 Anti-Dumping Act, which has been ruled illegal by the WTO.

The legislation was approved after the Senate included a resolution condemning the human rights abuses. NTR status will reduce tariffs on Laotian products exported to the US from an average of about 45% to about 2.5%.

Only 2 other countries currently do not have NTR status – Cuba and North Korea. The miscellaneous tariff bill, approved Nov. 19 on a 88-5 vote, was passed previously by the House on Oct. 8. The legislation, which normally is non-controversial, provides temporary duty-free status to numerous products not produced or manufactured in the US. The legislation was delayed almost 2 years over controversies not related to the primary issues in the legislation.

Biotech Food Safety Assessments Proposed

The Food and Drug Administration (FDA) published a proposed rulemaking establishing early food safety assessments (EFSA) for foods derived from new plant varieties. Such a rule has long been sought to help assuage fears of biotech contamination from experimental varieties that have not undergone a food safety review prior to obtaining regulatory approval.

Under the proposed rulemaking, a trait provider seeking an experimental use permit will have the FDA conduct an EFSA on a product while still in an experimental phase. Such safety assessments would allow researchers to be aware of safety precautions necessary in the conduct of field trials, and establish the level of caution necessary in company testing protocols. Such protocols have been sought in preparation of new biotechnologies which incorporate pharmaceutical or industrial compounds into the plant that are not intended for food use.

In the event of introduction of an experimental product being accidentally introduced into the food chain, an EFSA would become a critical component in determining the potential harm to consumers, and could either signal or prevent the initiation of costly food recalls.

Senate Confirms CFTC Nominees

The Senate confirmed Commodity Futures Trade Commission (CFTC) nominees as part of en masse agreement to clear more than 160 Administration nominations for various positions in government.

Michael Dunn, a current member of the Senate Agriculture Committee minority staff and a former under secretary of Agriculture for Marketing and Inspection Services in the Clinton Administration, and Fred Hatfield, chief of staff to Sen. Breaux (D-LA), were confirmed to fill vacancies. Dunn’s term will expire in June ’06 and Hatfield’s term will expire in April ’08. The Senate also approved acting CFTC Chairman Sharon Brown-Hruska to serve a 2nd term to expire in April ’06.

The confirmations of Dunn and Hatfield will balance the party affiliation of the 4 Commission members - Chairman Brown-Hruska and Commissioner Walt Luken are Republican appointees. There remains 1 vacancy to be filled by a Republican.

The legislation authorizing CFTC will expire Sept. 30, ’05 so Congress is expected to begin consideration of reauthorizing legislation early in ’05.

Henshaw to Resign as OSHA Administrator

John. L. Henshaw, head of the Occupational Safety and Health Administration (OSHA), plans to leave the agency at year’s end, the Labor Department announced. He has been assistant secretary of labor for occupational safety and health since early in the Bush Administration.

"As head of the Occupational Safety and Health Administration, John Henshaw has demonstrated outstanding leadership, great wisdom and sincere concern for the safety and health of America's workers," Labor Secretary Elaine L. Chao said. She credited Henshaw, who emphasized voluntary compliance with safety rules, with an overall decline in worker fatalities and a reduction in fatalities among Hispanic workers by 12% since ’01 beginning of his watch.

Mill Cotton Consumption Steady

According to the Commerce Department, November (4-week month) total cotton consumption in domestic mills was 230.7 million pounds for a seasonally adjusted annualized rate of 6.36 million (480-lb.) bales.

Last year’s November annualized rate was 6.32 million. The October (4-week month) estimate of domestic mill use of cotton was lowered by 1.4 million pounds to 241.3 million. The revised seasonally adjusted annualized rate of consumption for October is 6.25 million bales, slightly higher than last year’s October annualized rate of 6.20 million.

Preliminary December and revised November consumption estimates will be released by the Department of Commerce on Jan. 27.

Export Sales Strong, Shipments Steady

Net export sales for the week ending Dec. 23, ’04 were 277,800 bales (480-lb.), resulting in total ’04-05 sales of almost 8.7 million. Total sales at the same point in the ’03-04 marketing year were about 9.2 million bales. Total new crop (’05-06) sales are 297,700 bales.

Shipments for the week were 183,200 bales, bringing total exports to date to 3.1 million bales, moderately lower than the 3.6 million bales at the comparable point in the ’03-04 marketing year.

Prices Effective December 31, 2004 - January 6, 2005

Adjusted World Price, SLM 11/16

33.61 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

4.18 cents

Marketing Loan Gain Value

18.39 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate


*No Adjustment Made Under Step I
**Not Available At Time of Printing
Five-Day Average
Current 3135 c.i.f. Northern Europe

48.65 cents

Forward 3135 c.i.f. Northern Europe

 No quote

Coarse Count c.i.f. Northern Europe

46.83 cents

Current US c.i.f. Northern Europe

52.83 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