Cotton's Week: February 24, 2006

Cotton's Week: February 24, 2006


USTR Recommends CAFTA Implementation in El Salvador

US Trade Representative Rob Portman has recommended that President Bush issue a proclamation to implement the Central America - Dominican Republic Free Trade Agreement (CAFTA-DR) for El Salvador as of March 1, ’06.

El Salvador is the first country to receive this recommendation from USTR and was the first to ratify in Dec. ’04. Nicaragua was the most recent, in Sept. ’05. Costa Rica has not yet ratified the agreement.

"We have worked closely with El Salvador over the past several months to ensure its legislative and regulatory regime reflects the obligations and responsibilities set forth in the CAFTA-DR agreement," Portman says. "We have engaged in this effort as true partners, and I appreciate all of the hard work the government of El Salvador has undertaken to help us reach this historic milestone.

Portman says USTR hopes and expects that it will be able to bring additional CAFTA-DR partners into the agreement soon. The US, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras , and Nicaragua signed the CAFTA-DR in August ’04. Implementing legislation for the CAFTA-DR passed the Senate in June ’05 and the House of Representatives in July ’05 and was signed by the President in Aug. ’05.

The NCC is seeking assistance from Ambassador Portman and Commerce Secretary Carlos Gutierrez (see Feb. 17 Cotton’s Week) in resolving several possible unintended consequences created by the so-called “rolling” implementation of the CAFTA-DR. A NCC letter to them conveyed a concern that if a rolling implementation does not fully reflect and accommodate the range of regional partnerships and trade patterns that presently exist, US textile and apparel companies could face millions of dollars in excess duties and lost export sales.

Colombia FTA Nearing Completion

The US and Colombia are close to a free trade agreement after nearly two years of talks.

"We believe we are very close to finalizing an agreement," USTR Rob Portman said. "I am hopeful we can finalize an agreement and move (pacts with) Peru, Colombia and Ecuador together" through the congressional approval process. He said the two sides were still discussing how far to open markets in a number of sensitive farm sectors, as well as food safety, and animal and plant health rules that both sides complain often become technical barriers to trade. However, he added that, "I believe we'll be able to close the gap."

The US launched trade negotiations in May ’04 with Colombia, Peru and Ecuador in the hopes of sending an Andean free trade agreement to Congress by early ’05.

Peru finally finished negotiations in November, but Colombia and Ecuador have been unable to close mainly because of difficult agricultural issues. Talks between Ecuador and the United States are expected to resume in March.

Thomas Appointed to USDA Post

Agriculture Secretary Mike Johanns announced the appointment of Peter J. Thomas as USDA's deputy assistant secretary for Administration.

Thomas also has been designated as acting assistant secretary for Administration while the President's nomination of Boyd Rutherford awaits Senate confirmation. In July ’04, Thomas was appointed to serve as the administrator of USDA's Rural Development Business and Cooperative programs. In this capacity, Thomas was responsible for overseeing the national, state and field offices' implementation of grants and loans and managed a loan guarantee portfolio of more than $5 billion.

"Peter Thomas' service at USDA has been marked by a keen understanding and effective administration of our programs," Johanns said. "I look forward to working with him in his new capacity and welcome his enthusiasm and commitment."

Textile Enforcement Efforts Applauded by NCTO

The National Council of Textile Organizations (NCTO) applauded recent announcements regarding increased seizures and new textile enforcement personnel hires by US Customs and Border Protection (CBP) to crack down on textile fraud and transshipment.

CBP recently announced that thanks to ongoing support from Congress, 45 additional personnel have been hired to bolster US textile law enforcement efforts. CBP has further reported that during the month of February almost $7 million in illegal textile products have been seized and denied entry into US commerce. This announcement comes on the heels of an earlier announcement that more than $10 million in mislabeled textile products had been seized over the past four months.

According to the CBP, during the month of February the agency has made a series of 39 seizures including illegal transshipments and misdescription of merchandise to avoid quotas.

Janet Labuda, director of the Textile Enforcement and Operations Division says that CBP will "use all available means - trade pattern analysis, on-site verifications, review of production records, audits, and laboratory analysis, to continue to vigorously enforce our trade laws and ensure that appropriate revenue is collected."

Grants, Loans Available for Energy Projects

Agriculture Secretary Johanns announced the availability of $176.5 million in loan guarantees and almost $11.4 million in grants to support investments in renewable energy and energy efficiency improvements by agricultural producers and small businesses.

Under the Renewable Energy and Energy Efficiency loan and grant program, the maximum amount of a loan guarantee made to a borrower is $10 million.

For renewable energy systems, the minimum grant request is $2,500 and the maximum is $500,000.

For energy efficiency improvements, the minimum grant request is $1,500 and the maximum is $250,000.

Rural development grants under the program will not exceed 25% of the eligible program costs and a combination of grants and guaranteed loans will not exceed 50%.

Applications for grants must be completed and submitted to the appropriate USDA Rural Development state office postmarked no later than May 12, ’06. Guaranteed loans will be awarded on a continuous basis. Applications are due to the national office for funding consideration by July 3, ’06. Additional information is available on the web at:

Nitrogen Fertilizer Tool Announced

Agriculture Secretary Mike Johanns announced the release of USDA's Energy Estimator for Nitrogen, a web-based awareness tool that farmers and ranchers can use to identify potential nitrogen cost savings associated with major crops and commercial nitrogen fertilizer applications.

USDA estimates that US agriculture could save up to $1.5 billion annually by improving nitrogen applications saying nitrogen fertilizer is one of the largest indirect uses of energy on an agricultural operation. Fertilizer accounts for 29% of agriculture's energy use, according to the agency’s research data.

Producers using the Energy Estimator for Nitrogen can select up to four crops from a list of commonly harvested crops in their state. Next, they enter the acres of each crop, pounds or units per acre used for each selected form of nitrogen fertilizer, and the nitrogen fertilizer price. Finally, producers select the nitrogen fertilizer application practices - the timing and placement of the fertilizer application and whether or not they used materials that reduce potential nutrient losses to the environment.

USDA intends for farmers and ranchers to use the Energy Estimator for Nitrogen for guidance rather than as a sole source for decision-making on nitrogen fertilizer application. Farmers and ranchers should take their nitrogen fertilizer estimates to their local USDA Service Center, Cooperative State Research Education and Extension Service (CSREES) office, or their crop consultant. The Energy Estimator for Nitrogen identifies a producer's local USDA Service Center and provides links to CSREES web sites.

Additional information about USDA's Energy Estimator for Nitrogen can be found at

This is the second tool USDA has developed as part of its overall energy strategy to mitigate the impacts of high energy costs and develop long-term solutions for agricultural producers. Last December, USDA released its first web-based tool - the "Energy Estimator for Tillage" - to help farmers and ranchers calculate diesel fuel use and costs associated with various tillage practices.

JCIBPC Meeting to Focus on Packaging Use, Test Programs

The Joint Cotton Industry Bale Packaging Committee (JCIBPC) meeting on March 1 at the Hilton Memphis will feature updates on packaging specifications, use and policy as well as a review of current experimental test programs, including several variations of woven polypropylene bags and plastic strapping. Requests have been made by several of these product manufacturers for product approval.

There is no registration fee and those who have not pre-registered may register onsite for the meeting. The JCIBPC will conduct its general session from 10 am-1:30 pm and its executive session from 1:30-4:30 pm.

January Mill Use Steady

According to the Commerce Dept., January (4-week month) total cotton consumption in domestic mills was 226.1 million pounds for a seasonally adjusted annualized rate of 6.24 million bales (480-lb). Last year’s January annualized rate was 6.37 million bales.

The December (5-week month) estimate of domestic mill use of cotton was raised by 2.97 million pounds to 218.5 million. The revised seasonally adjusted annualized rate of consumption for December is 5.51 million bales. This is lower than last year’s December annualized rate of 6.23 million.

Using the latest figures from Commerce, calendar ’05 mill use is estimated to be 2.92 billion pounds or 6.08 million bales - lower than calendar year ’04 use of 6.25 million bales.

Based on Commerce estimates from Aug. 1, ’05, through January 28, ’06, projected total pounds consumed during crop year ’05-06 would be 2.8 billion pounds or 5.89 million bales. USDA’s latest estimate of ’05-06 crop year mill use is 5.9 million bales. Preliminary February domestic mill use of cotton and revised January figures will be released by Commerce on March 23.

Shipments Strong, Sales Steady

Net export sales for the week ending Feb. 16, ’06 were 314,600 bales (480-lb). This brings total ’05-06 sales to about 13.0 million. Total sales at the same point in the ’04-05 marketing year were almost 11.0 million bales. Total new crop (’06-07) sales are 263,800 bales.

Shipments for the week were 414,600 bales, bringing total exports to date to 6.9 million bales, compared with the 5.5 million at the comparable point in the ’04-05 marketing year.

Prices Effective Feb. 24 - March 2, '06

Adjusted World Price, SLM 11/16

45.54 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

1.82 cents

Marketing Loan Gain Value

 6.46 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

12.64 cents

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

60.98 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

58.15 cents

Current US c.i.f. Northern Europe

62.80 cents

Forward US c.i.f. Northern Europe

No Quote

2005-06 Weighted Marketing-Year Average Farm Price  
Year-to-date (August-December)

46.95 cents


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

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