Cotton's Week: October 14, 2005

Cotton's Week: October 14, 2005

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Reconciliation Mark-Up Set

The Senate Agriculture Committee has scheduled mark-up of the FY06 budget reconciliation measure for Oct. 19.     The resolution requires changes in legislation under the Committee’s jurisdiction that will, according to the Congressional Budget Office, result in savings of $173 million in FY06 and $3 billion during the 5-year period FY06-10.

Chairman Chambliss (R-GA) has constructed a proposal (see 10-7 Cotton’s Week) that would adjust legislation to reduce spending for nutrition, conservation, research and commodity programs. He also has proposed extending current farm law for the purpose of preserving the budget baseline, which is important when the committee begins writing the ’07 farm bill.

Some Senators have expressed concern about the package because of the changes in nutrition and conservation programs. Others are concerned that extending the dairy program for 2 years will require corresponding spending reductions in other programs. The Administration reportedly has objected strongly to inclusion of the provision to extend current law.

The House has extended the deadline for the Committee to report legislation to comply with the FY06 budget resolution. Reportedly, the House first will consider legislation the week of Oct. 17 to increase the spending reductions required by the current budget resolution.

Conservatives have expressed growing concern about deficit spending for disaster relief and House Republican leaders have proposed additional spending reductions, which would include across-the-board cuts to all programs. At this time, it is not known whether the additional cuts will include agriculture programs. The House Agriculture Committee is expected to mark-up its reconciliation bill the week of Oct. 24.



Doha Proposal Stirs Up WTO Negotiations

The US unveiled a new Doha Round agricultural proposal during an informal meeting involving 14 countries held in Zurich, Switzerland. Other minister-level meetings followed and ag meetings will continue the week of Oct. 17 in Geneva. The US proposal calls for aggressive cuts in trade distorting agricultural support and aggressive cuts in tariffs and other trade barriers. The proposal also contains a “stage 2” that goes beyond the parameters of recent discussions and proposes the complete elimination of the “remaining trade distorting policies in agriculture.” 

The US proposal called for trade-distorting agricultural support to be cut by 60% over an initial 5 year period, for export subsidies to be ended by ’10 and for the highest agricultural tariffs to be cut by 90%. Under the US proposal, the spending ceiling on trade-distorting subsidies for the US would be reduced from a current $19.1 billion to $7.6 billion.   The proposal contains other components dealing with product-specific ceilings, a re-defined blue-box category of support with a reduced ceiling of about $5.4 billion, and proposed reductions in the de minimis categories of support. The proposal also contained a provision protecting compliant programs from WTO litigation. Initial NCC estimates indicate this proposal would require significant changes in US domestic commodity programs. See summary of proposal at USTR's web site, www.ustr.gov.

NCC Chairman Woods Eastland commented that, “The scope of the U.S. domestic support proposal would likely bring comprehensive change for most developed countries, including U.S. agriculture. There must be corresponding gains in market access, particularly changes in market access to China. The troubling aspect for the U.S. cotton industry is that China - the world’s largest cotton market - continues to seek special treatment in the WTO so it can avoid market access concessions.” Eastland emphasized that any agreement must provide Congress an opportunity to maintain a program that provides an effective safety net for US producers. See full statement on NCC’s web site, www.cotton.org.



Reactions Vary on US Proposal

While most US agricultural organizations commended USTR Robert Portman for tabling a new, aggressive US proposal for WTO negotiations, certain developing countries, such as India and others, responded that the US proposal for a 60% reduction in trade-distorting domestic support was not enough to justify the significant market access demands of the United States.

Within two days after the US proposal was released, the G-20 group of countries (which includes India and Brazil) released its own proposal that called for greater decreases in trade-distorting support for the developed countries (70% for the US) and significantly less ambition with respect to market access for both developed and developing countries.


CITA Announces Safeguard Decisions

The Committee for the Implementation of Textile Agreements (CITA) announced on Oct. 5

that safeguard requests for combed cotton yarn (category 301), cotton knit shirts (category 338/339), men's and boys' cotton and MMF woven shirts (category 340/640), cotton trousers (category 347/348), cotton and MMF brassieres (category 349/649), cotton and MMF underwear (category 352/652), other synthetic filament fabric (category 620), MMF knit shirts (category 638/639), and MMF trousers (category 647/648) were accepted for review. Previously, CITA established safeguards on these categories that extend through Dec. 31, ’05. If these new petitions are approved, the import limits imposed by these new safeguards petitions would expire at the end of ’06.

CITA also announced on Oct. 5 that it had accepted safeguard requests for cheesecloth, batistes, lawns/voiles (category 226), men's and boys' wool suits (category 443), polyester filament fabric, light-weight (category 619), and other men's and boys' MMF coats and women's and girls' MMF coats (category 634/635) for review. The acceptance of all of these petitions for review launched a 30-day period during which interested parties may submit comments on the request. Copies of the requests and the Federal Register notices can be found at http://otexa.ita.doc.gov/Safeguard05.htm.

On Sept. 30, CITA announced it was extending the period for making decisions on 4 pending textile safeguard cases. The period for making a decision on whether to request consultations with China regarding imports of cotton and MMF sweaters (categories 345/645/646), cotton and MMF dressing gowns and robes (categories 350/650), knit fabric (category 222), and men’s and boys’ wool trousers (category 447) has been extended until Nov. 30, ’05.

In related news, the latest round of talks with the Chinese aimed at reaching a comprehensive agreement on textiles ended in Beijing with no agreement reached. According to a statement by USTR, the US and China could not come to an agreement that meets the needs of the US manufacturers and retailers, and there are no indications whether another round of talks has been scheduled.



USDA Pegs ’05 Crop at 22.7 Million Bales

USDA’s October report puts the ’05-06 US crop at 22.72 million bales, up 440,000 bales from the September report. US mill use was raised 200,000 bales to 6.00 million and exports increased 700,000 bales to 16.00 million bales, resulting in total offtake for ’05-06 of 22.00 million bales. Ending stocks for ’05-06 are projected to be 6.40 million bales for an ending stocks-to-use ratio of 29.1%.

The report sees ’05-06 upland production at 22.0 million bales and ELS production at 704,000 bales. Harvested area was estimated at 13.7 million acres, implying non-harvested area of 511,000 acres based on USDA’s acreage number. The national average yield per harvested acre was estimated to be 797 pounds, 79 pounds above the 5-year average.

For the ’04-05 crop year, the report projects cotton production at 23.25 million bales. Projected mill use was raised 220,000 bales to 6.48 million, based on the latest estimate from the Census Bureau, while exports were increased 110,000 bales to 14.41 million. As a result, projected total offtake increased 320,000 bales to 20.88 million. This generates an ending stocks value of 5.65 million bales. The estimated stocks-to-use ratio is 27.1%.

State-level crop estimates are available at http://risk.cotton.org/ayp05.htm.



USDA Report Trims World Production

For the ’05-06 marketing year, USDA’s October report projects world production of 111.44 million bales, down 90,000 bales from the September report. World mill use was raised 730,000 bales from the September report to a projected 112.93 million bales. Consequently, world ending stocks on July 31, ’06 are projected to be 50.98 million bales, for a stocks-to-use ratio of 45.1%.

In the report, ’04-05 world production estimates were raised 200,000 bales to 120.43 million bales. The beginning stocks estimate increased 440,000 bales to 40.62 million resulting in a world supply of 161.05 million bales. Estimated world mill use increased 600,000 bales to 108.75 million. The estimated world ending stocks for ’04-05 is now pegged at 50.98 million bales. This has a corresponding stocks-to-use ratio of 46.9%.



Congressional Staff Tour Cotton Industry

Congressional staff observed cotton production, processing and research and visited with industry leaders as part of the ’05 Congressional Staff Education/Orientation Program funded by The Cotton Foundation through a grant from Monsanto.

Staff representing various Cotton Belt Representatives and Senators as well as the House Ag Committee began their tour in North Carolina where they visited Cotton Incorporated headquarters in Cary and R. L. Stowe Mills in Belmont. In Mississippi, they toured Monsanto’s Leland Experiment Station and the USDA-ARS Gin Lab in Stoneville, where they also received an overview of USDA-ARS and Mississippi State U. cotton research. Their tour also included a visit to Cargill Cotton in Cordova, TN; the Crittenden Gin and Warehouse in Clarkedale, AR; the USDA Classing Office in Bartlett, TN; and NCC’s headquarters in Memphis.



NCC Supporting America’s Heartland TV Series

The NCC is continuing supportfor a weekly public television show that is celebrating the miracle of American agriculture and the farm/ranch families that help make it possible. America’s Heartland began airing this fall after being distributed to more than 300 US public television stations by America’s Public Television, the single largest provider of programming to public television stations.

The television series is being produced by KVIE, the public television affiliate in Sacramento, Calif., with the series’ two flagship supporters – the Monsanto Company and the American Farm Bureau Federation. Additional production and promotion assistance is being provided by NCC, American Soybean Assoc., National Corn Growers Assoc., United Soybean Board and US Grains Council.

“We are proud to collaborate with other U.S. agriculture groups to raise awareness of the significant contribution that agriculture makes to the quality of American living,” NCC Chairman Woods Eastland said.

The program’s first season is projected to be available in markets totaling more than 60% of the nation’s viewers – about 100 stations reaching more than 71 million households. The magazine-style, half-hour program profiles the people, places and products of US agriculture.



Shipments Steady, Sales Lag

Net export sales for the week ending Oct. 6, ’05 were 43,300 bales (480-lb). This brings total ’05-06 sales to about 6.7 million. Total sales at the same point in the ’04-05 marketing year were slightly more than 6.0 million bales. Total new crop (’06-07) sales are 136,300 bales.

Shipments for the week were 150,300 bales, bringing total exports to date to 2.4 million bales, compared with the 1.3 million at the comparable point in the ’04-05 marketing year.



Prices Effective October 14-20, 2005

Adjusted World Price, SLM 11/16

43.00 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

 4.42 cents

Marketing Loan Gain Value

 9.00 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

0

ELS Payment Rate

 0.00 cents

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

58.48 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

55.72 cents

Current US c.i.f. Northern Europe

62.90 cents

Forward US c.i.f. Northern Europe

No Quote

 
2004-05 Weighted Marketing-Year Average Farm Price  
 
Final Marketing-Year Average Price

41.60 cents

 


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