Cotton's Week: April 21, 2006

Cotton's Week: April 21, 2006

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NCC Responds to Oxfam’s Latest Attacks on US Cotton

In its continuing campaign against the US cotton program, Oxfam America is sponsoring a speaking tour by W. African cotton producers at churches and universities in various US locations.

One such event recently was held on the campus of Virginia Tech U. In a letter to the organizers at Virginia Tech, NCC President/CEO Dr. Mark Lange staunchly defended the US cotton program by pointing out that “several independent analyses refute the claim that the US cotton program is the cause of economic difficulties faced by West African farmers.”

Lange also noted that an open discussion must acknowledge several key facts about conditions in W. Africa: 1) W. African producers receive less for their cotton than growers in other countries due to their internal marketing and distribution problems; 2) W. African producers have lost ground against their competitors as their yields have declined over time while yields in other cotton-producing countries have increased; 3) W. Africa continues to reject biotechnology in spite of a World Bank study concluding that developing country welfare would be enhanced far more from allowing the adoption of biotech cotton than by the removal of all cotton subsidies and tariffs; and 4) W. African countries have been unable to develop a viable textile industry due to China’s virtual monopolization of textile and apparel trade.

The letter concluded by acknowledging that W. African producers face real poverty and hardships, but reiterated that the US farm program is not to blame.



Schwab to be USTR Nominee

President Bush announced his intention to nominate Susan Schwab to be US Trade Representative (USTR) replacing Ambassador Rob Portman, who will be nominated to become director of the Office of Management and Budget.

Schwab currently serves as top deputy at USTR. Previously, she served as legislative director to former Sen. Danforth of Missouri, as chief agriculture negotiator at USTR and as director of corporate business development at Motorola, Inc. She became deputy USTR in Nov. ’05 after serving as dean of the Maryland School of Public Policy from ’95 to ’03 and as head of the University System of Maryland Foundation, the state public university’s fundraising arm from ’03-05. Both nominations require Senate confirmation.



Letter Calls for Timely Bale Moisture Rules

In response to the statements made by USDA Farm Service Agency (FSA) officials at recent industry meetings concerning the development of bale moisture rules, the NCC sent a letter to FSA stating that Commodity Credit Corp. (CCC) maintains “independent authority to carry out price support programs.” The letter was in response to CCC concerns about issuing regulations concerning loan eligibility for years beyond ’07, which is the last for which the current farm bill has authority.

The NCC letter also reminded USDA that the NCC’s bale moisture recommendations call for immediate steps to be taken for the upcoming crop and that a timeline would suggest that “these steps should be in place no later than early May in order to give the industry time to adjust to the new rules.”

The NCC letter is located in the members’ only area of the NCC web site at www.cotton.org/issues/members/2006/loanlet.cfm.



USDA Releases ’06 Loan Schedule

USDA has released the schedules of loan premiums and discounts for the ’06 upland and extra long staple (ELS) cotton crops. The ’06 loan schedule is applicable to CCC loan rates of 52.00 cents per pound (the same as ’05) for the base grade of upland cotton and 79.77 cents per pound (also unchanged) for ELS cotton.

Tables of upland and ELS cotton differentials and schedules of loan rates for individual qualities are available on the FSA Price Support Division web site: www.fsa.usda.gov/dafp/psd/loanrate.htm. Loan rates for the base grade of upland cotton at each approved warehouse location also may be found on the site.



Iowa Farmer Named to FSA Post

USDA Secretary Johanns has named Iowa farmer Glen Keppy to serve as associate administrator for the Farm Service Agency (FSA). In that post, Keppy will have responsibility for the oversight of FSA’s farm and farm loan programs and commodity operation activities.

Keppy is owner and operator of a diversified crop and livestock farm in eastern Iowa. He has served as president of the National Pork Producers Assoc. and held numerous other leadership positions in state and national organizations.



Advance Payment Rules Published

USDA published regulations April 10 necessary to implement the provisions of the Agricultural Reconciliation Act of 2005 regarding advance direct payments. The legislation, enacted Feb. 8, ’06, provides that the advance direct payment available for FY06 will be reduced from 50% to 40% and for FY07 from 50% to 22%.

Producers will continue to have an option to request an advance direct payment during any month from December through September of the applicable fiscal year. The total Direct Payment is not changed, just the percentage that can be made as an advance.

The direct payment rate for cotton is 6.67 cents per lb. For FY06 (Oct. 1, ’06-Sept. 30, ’07), producers who did not request an advance prior to Feb. 8 may request an advance of 40%. All eligible producers will receive the balance of their direct payment in October. For ’07, producers will be able to request an advance of 22% of the direct payment.



Classing Fees Schedule Proposed

USDA’s Agricultural Marketing Service (AMS) has published a proposed schedule of ’06 crop classing fees. The annual base fee is calculated in accordance with a formula included in the Uniform Cotton Classing Fees Act of 1987.

For the ’05 crop cotton, the fee was $1.85 per bale and AMS is proposing the same base fee for ’06 crop cotton. The fees, according to the formula, are established at a level sufficient to cover the costs of providing the classification services including administrative costs.

Darryl Earnest, deputy administrator of the AMS Cotton Division, reviewed the proposed fee for the ’06 crop with the members of the NCC’s American Cotton Producers at their recent meeting in Little Rock. Comments may be submitted to Darryl Earnest, Deputy Administrator, Cotton Program, AMS, USDA, STOP 0224, 1400 Independence Ave., SW, Washington, DC  20250. Comments may be submitted electronically to cottoncomments@usda.gov. Comments must be received by May 5.



Section 18 Requests for Reflex Reviewed

NCC submitted a letter to EPA in November ’05 urging EPA to complete work on full registration for use of Reflex (fomesafen) on cotton in anticipation that the product would be urgently needed during ’06 planting to combat glyphosate-resistant pigweed. EPA has not made a decision on the cotton registration for Reflex, but has published an intention to make a decision on full registration of Reflex on cotton in the April-June quarter.

In early ’06 Georgia, South Carolina and North Carolina agriculture officials submitted Section 18 Emergency Exemption packages to the EPA, which would enable cotton growers in those states to use Reflex (fomesafen) on glyphosate-resistant pigweed if EPA had not approved the full registration for Reflex on cotton. According to weed scientists Drs. Stanley Culpepper (UGA) and Alan York (NCSU), and Chris Main (Clemson) who have been closely monitoring Palmer amaranth resistance, Reflex is the only effective alternative herbicide available.

During a conference call and meeting arranged by the NCC, EPA Office of Pesticide Programs’ biologists and staff were urged by weed scientists, the Georgia Cotton Commission, the North Carolina Cotton Producers Assoc. and state regulatory officials from the three states to grant the emergency exemption immediately based on product performance and potential economic loss. EPA stated that it would take a few more days to complete its assessment but committed to make a decision on the Section 18 Emergency Exemption requests by April 21. 

Following the meeting, Georgia and North Carolina Depts. of Agriculture officials determined that with planting well underway there was sufficient urgency to declare a Crisis Exemption under Section 18 provisions. This action by the state authorities allows Reflex to be available immediately to Georgia and North Carolina growers from April 20-July 1, ’06. South Carolina officials, in consultation with EPA and growers, are reportedly considering taking similar action if EPA approval of the Section 18 emergency exemption request is further delayed.



Phytosanitary Sessions Offered

USDA’s Animal & Plant Health Inspection Service (APHIS) is inviting interested cotton industry members to attend Phytosanitary Certificate Issuance and Tracking (PCIT) web training sessions.

The sessions are geared to exporters of cotton and cottonseed who trade with importing countries that require APHIS issued phytosanitary certificates (PPQ FORM 577s). Specifically, the training sessions' target audience is the person in the organization in charge of submitting the required “Application for Inspection and Certification of Domestic Plants and Plant Products for Export” (PPQ Form 572), the first step in the process of obtaining phytosanitary certificates.

The PCIT program will allow exporters to apply for phytosanitary certificates online. The session will provide a basic introduction to: registering organizations (companies), creating and submitting applications, and template features. Additional information on the training sessions is in the NCC web site’s Safety and Security technical section at www.cotton.org/tech/safety/pcit.cfm.



CCI Hires China/Hong Kong Director

Cotton Council International (CCI) has appointed Karin Malmstrom as its new director for China and Hong Kong.She replaces Jeff Coey, who is departing to work in the cotton trade. Ms. Malmstrom will manage CCI’s trade and consumer programming in the region, as well as CCI’s offices in Hong Kong and Shanghai and the organization’s representation throughout China.

“Karin is an accomplished sinologist with over 25 years of China-related experience and I am confident that she will add the right mix of leadership skills and marketing and communication background to CCI’s experienced China team,” said Allen Terhaar, CCI’s executive director.

A long-time active member of the American Chamber of Commerce in China, Ms. Malmstrom joins CCI from Malmstrom Associates Orient, a business, marketing and communication consultancy. Fluent in Mandarin, she has worked in a variety of fields in China including the auto, steel and travel industries; metals and minerals trading; technology transfer; education; and communications. Immediately prior to establishing Malmstrom Associates Orient, she was director of Corporate Communications for DaimlerChrysler China, based in Beijing.


Sales Steady, Shipments Stay Strong

Net export sales for the week ending April 13 were 192,900 bales (480-lb). This brings total ’05-06 sales to about 15.6 million. Total sales at the same point in the ’04-05 marketing year were almost 12.6 million bales. Total new crop (’06-07) sales are 464,600 bales.

Shipments for the week were 402,600 bales, bringing total exports to date to 10.6 million bales, compared with the 8.5 million bales at the comparable point in the ’04-05 marketing year. With about four months remaining in the marketing year, weekly shipments must average roughly 412,900 bales to reach the USDA projection of 17.0 million bales.


Prices Effective April 21-27, 2006

Adjusted World Price, SLM 11/16

42.04 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

 2.88 cents

Marketing Loan Gain Value

9.96 cents

Import Quotas Open

 1

Step 3 Quotas (480-lb. bales)

 113,839

ELS Payment Rate

0.00 cents

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

57.45 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

55.36 cents

Current US c.i.f. Northern Europe

60.33 cents

Forward US c.i.f. Northern Europe

No Quote

 
2005-06 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

47.51 cents

**

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

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