Cotton's Week: July 8, 2005

Cotton's Week: July 8, 2005

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NCC Opposes Administration’s Step 2 Cotton Program Proposal

The NCC is opposing a plan submitted to Congress by USDA that calls for immediate elimination of the Step 2 cotton program. The proposed statutory changes announced by USDA are to comply with a recent WTO dispute decision.

Agriculture Secretary Mike Johanns said, "By implementing these proposed changes, we are being fully responsive to the WTO decision.” He said this step is essential for the United States “to continue to be a leader in the WTO Doha negotiations, which are crucial to U.S. market access and the long-term prosperity of U.S. farmers and ranchers.”

In a letter to Sen. Harkin (D-IA) and Sen. Chambliss (R-GA), chairman and ranking member, respectively, of the Agriculture, Forestry and Nutrition Committee, NCC Chairman Woods Eastland said the Step 2 program is an integral part of the overall cotton title in the Farm Security and Rural Investment Act of 2002 and was constructed to work in conjunction with the other parts of the cotton program.

“The approach suggested by the legislation would change the terms and conditions of the cotton program in the middle of the marketing season - something the National Cotton Council has always opposed. Sales of the 2005 crop have already begun in earnest. Cotton will begin to be harvested across the Cotton Belt well before this legislation is even considered by Congress. The approach suggested by the Administration would alter a fundamental piece of the sales and marketing structure for cotton in the United States in mid-stream, harming many U.S. cotton producers, merchants and textile manufacturers.”

Eastland urged in the letter that “Congress review options in this matter that are short of the immediate elimination of the Step 2 program. We further urge Congress to insist that it receive clear indications of Brazil’s intentions before making drastic changes to a U.S. commodity program. The National Cotton Council will continue to work with Congress and the Administration to construct a fair and appropriate response to this decision.”

USDA’s proposed statutory changes also would change the export credit guarantee programs by removing a one-percent cap on fees that can be charged under the export credit programs, and terminating the Intermediate Export Guarantee Program (GSM-103). For more information, visit the newsroom area of USDA’s web site, www.usda.gov.





NCC Members Offer Input at Farm Bill Forum

A large contingent of W. Tennessee cotton producers attended the kick-off of USDA's nationwide farm bill listening tour in Nashville, TN, that was attended by more than 400 stakeholders and hosted by Agriculture Secretary Mike Johanns.

Cotton producers offering comments to the Secretary were: John Willis, Brownsville; Harris Armour, Somerville; David Templeton, Brighton; John Butler, Dyersburg; and Jason Luckey, Humboldt.

In responding to the question, “How should farm policy be designed to maximize US competitiveness and our country’s ability to effectively compete in global markets, Armour told the Secretary that no changes should be made to the current farm bill until it expires in ’07.

“We don’t need to make changes in the current farm bill until we know the results of the WTO Doha Round negotiations and what concessions our trading partners are going to make in terms of market access,” Armour said. “Producers continue to need income support such as the marketing loan and counter-cyclical payments which decline as market opportunities are realized.”

Secretary Johanns responded by saying, “I fully anticipate that the life of this farm bill will be through 2007. I’d be surprised if that changed.”

Johanns said in a statement that, "The interest in the next farm bill shown here today has exceeded my expectations. The thoughtful discourse on the direction of future farm policy is very encouraging and I look forward to the same caliber of discussion at future Farm Bill Forums as we continue our nationwide tour."

The location of the next 3 USDA Farm Bill Forums are: July 26 – 12-3 p.m. (CST) North Dakota State Fair, Minot, ND;  Aug. 3 - 4-7 pm Minnesota Farm Fest, Redwood County, MN; and Aug. 4 – 11 am-2 pm,  Wisconsin State Fair, West Allis, WI. The public also is welcome to submit comments via the USDA Farm Bill Forums website at www.usda.gov/farmbill.





Sales, Shipments Remain Strong

Net export sales for the week ending June 30 were 329,800 bales (480-lb). This brings total ’04-05 sales to about 15.7 million. Total sales at the same point in the ’03-04 marketing year were about 14.7 million. Total new crop (’05-06) sales are 1.3 million bales.

Shipments for the week were 270,500 bales, bringing total exports to date to 11.9 million bales, compared with the 12.6 million at the comparable point in the ’03-04 marketing year.





Fire/Building Code Amendments Finalized

Amendments to NFPA fire and building codes for storage of baled cotton are now final.

At the recent National Fire Protection Assoc. (NFPA) annual meeting in Las Vegas, a new definition for "densely-packed baled cotton" was included in their fire (NFPA 1) and building (NFPA 5000) codes as well as their life-safety code (NFPA 101). This means that densely-packed baled cotton (compressed to greater than 22 lbs/ft3) is not classified as a combustible fiber or a hazardous material that has special, severe restrictions.

The fire and building codes [either NFPA or the International Code Council (ICC)] that are used in all states had been combined and amended in ’00 and inadvertently required costly and unnecessary changes to cotton bale storage. Also, the non-mandatory guidance for storage of baled cotton that was in Annex D of NFPA 230 is now in Annex L of NFPA 1. Annex L is an updated but similar version of the former Annex D of NFPA 230. By including the new definition of densely-packed baled cotton, cotton bale storage standards will continue to be similar to current practices.

The adoption of these amendments culminates many years of work by the NCC technical staff in cooperation with the cotton warehouse organizations, cotton ginner organizations and interested individuals that resulted in the removal of the flammable solid designation for densely-packed bale cotton for vessel shipment and all forms of shipment.

The same language and storage requirements for densely-packed baled cotton that are in the amended NFPA codes was approved in principle by ICC in committee meetings earlier this year and will be voted on formally at the ICC Annual meeting in September.

Barry Nevius, loss control specialist with Southeastern Cotton Ginners Assoc. said that "with the adoption of these codes, cotton warehouses will have reasonable and logical standards for new construction or occupancy changes. These improved codes will reduce costs associated with building and maintaining cotton warehouses. The adoption of consistent fire and building codes that look favorably on densely-packed baled cotton storage will certainly benefit all of the cotton industry."




Mid-South Producers in San Joaquin Valley for Initial ’05 PIE Tour

Cotton producers in the San Joaquin Valley will host cotton producers from the Mid-South July 16-20 on the first of 4 NCC/FMC Producer Information Exchange (P.I.E.) program tours this year.

The program’s overall aim is to help America’s cotton producers become more competitive by speeding up their adoption of proven and innovative technology and farming methods. The program is managed by the NCC’s Member Services staff and supported by a grant to The Cotton Foundation from FMC Corp.

Participants include:  ARKANSAS - Ed Clarke, Hughes; and Danny Wilson, McGehee; LOUISIANA – Jack Dailey, Extension; Ben Guthrie, Newellton; and Greg Roy, Lettsworth; MISSISSIPPI – Richard Melton, Tunica; and Mark Fratesi, George Vanlandingham and Ben Walker, III, all of Leland; MISSOURI – Lewis Rone, Portageville; and TENNESSEE – Michael Roane, Burlison.

Included in the tour will be visits to the California Cotton Growers Assoc. in Fresno, the Los Gatos Tomato Cannery in Huron, tours of individual cotton farms in Fresno and KingsCounties, and a discussion of irrigation issues on the Errotabere Ranch in Riverdale. They also will tour Gilkey Enterprises and the Trent Hair Farms in Corcoran; the Nichols Pistachio and Almond operation in Hanford; and the ButtonwillowLand and Cattle Company in Buttonwillow, where they also will meet with area cotton producers.





’06 Beltwide Cotton Conferences to Provide “Strategies for Success”

“Strategies for Success” will be the theme for the ’06 Beltwide Cotton Conferences, Jan. 3-6 at the San Antonio Rivercenter/Riverwalk hotels. The 3-day format, which proved popular for the ’05 conferences, will continue and feature the Production Conference and its special seminars and workshops along with the 12 cotton technical conferences and The Cotton Foundation’s technical exhibits.

The NCC also announced that the CDs of the ’05 Beltwide Cotton Conferences’ Proceedings are now being mailed. The Proceedings also can be found at www.cotton.org/beltwide/.




Sourcing Program Event Helps Foster US Yarn/Fabric Exports

A Cotton Council International (CCI) COTTON USA Sourcing Program hosted 60 textile and apparel manufacturing companies from 12 countries to Costa Rica to meet with US textile mills.

Some 1,000 individual meetings were arranged between buyers and sellers in the US-CBI-Andean textile apparel supply chain. The meetings helped develop business for increased US yarn and fabric exports to the CBI and Andean region, as retailers continue to look for quick response alternatives to Asian apparel suppliers.

 Theevent, which included seminars, private trade fairs and social events, also attracted Korean owners of large Central America/Caribbean (CBI) operations along with 10 US retailers and brands.

Meanwhile, 7 European buyers with a combined turnover of $860 million participated in the first CCI COTTON USA Home Textile Buyers Tour to Turkey. Preliminary results indicate that orders for US cotton-rich products valued at $2.43 million were placed during the tour.

The 4-day tour included:visits to eight Istanbul showrooms; a seminar with the Turkish Home Textile Trade Assoc.; a private trade show; and visits to production facilities. Buyers met one–on–one with Turkish companies to discuss particular sourcing requirements, production flexibility, new products, prices and delivery times.

In addition to the buyers who traveled from Europe as a part of the tour, buyers from the Istanbul offices of the US sourcing company AMC and Ikea joined the trade show.Also, 2 senior executives from Next UK’s Istanbul office joined the seminar on the competitiveness of the Turkish industry, and contributed to a lively discussion on future trends in sourcing.

Turkey currently ranks as US cotton’s 2nd largest customer, with ’05 marketing year purchases of 2.3 million bales of US cotton valued at $618 million.




Prices Effective July 8-14, 2005

Adjusted World Price, SLM 11/16

43.72 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

9.63 cents

Marketing Loan Gain Value

8.28 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

 0

ELS Payment Rate

 76.19 cents

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

 56.92 cents

Forward 3135 c.i.f. Northern Europe

58.68 cents

Coarse Count c.i.f. Northern Europe

57.78 cents

Current US c.i.f. Northern Europe

66.55 cents

Forward US c.i.f. Northern Europe

62.90 cents

 
2004-05 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-May)

42.80 cents

**

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



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