Cotton's Week: May 19, 2006

Cotton's Week: May 19, 2006

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Helms Discusses Issues in DC

NCC Chairman Allen Helms conveyed industry policy positions during visits with Congressional members and Administration officials at USDA and the Dept. of State.

Helms also attended the 3rd annual meeting of the National Council of Textile Organizations (NCTO). He participated in NCTO’s cotton committee meeting, attended the trade and economic policy committee meeting, and the general business session. During the cotton committee meeting, NCTO members discussed the response by the American Cotton Producers (ACP) to a request from manufacturers to modify Step 3 because Step 2 expires Aug. 1. After a full review of an ACP proposal, NCTO cotton committee members expressed appreciation to ACP leaders for their response and cooperation. However, because there is only a year left under current law the NCTO panel decided to focus on efforts to develop a WTO-compliant mechanism to support domestic use that could be considered by Congress whenever a new farm law is debated.

During meetings at USDA, Helms was joined by Bobby Greene, chairman of the NCC’s Performance and Standards Task Force, to discuss cotton flow issues with Farm Services Agency Administrator Teresa Lasseter and her colleagues.

During a session with Deputy Under Secretary Floyd Gaibler and Foreign Agriculture Service officials, Helms emphasized the importance of US negotiators remaining steadfast in negotiations by continuing to insist that the EU and others make significantly improved offers of market access. It has been understood that the US proposal on reduced domestic support is contingent on substantial improvement in market access.

Helms also explained that the cotton industry appreciates the Administration’s continued support for single undertaking and opposition to “early harvest,” but that the combination of a very ambitious US proposal to reduce domestic supports and the continued efforts by some countries to press for even further reductions for cotton are cause for serious concern. He urged USDA officials to resist any further efforts to isolate cotton for separate treatment and to refrain from discussing cotton outside the context of all commodities during the coming weeks.

Most observers expect debate to intensify in June and July in an effort to develop modalities to jump start the WTO negotiations. Helms repeated the message to officials at the Dept. of State and to Congressional members.

During sessions with Congressional members, Helms expressed appreciation to the authors and co-sponsors of legislation to extend current farm law if there is no Doha agreement. He also conveyed support for pending ’05 crop disaster assistance and reminded members that there are already significant losses in ’06.



’06 DCP/CCP Signup Ends June 1

USDA’s Farm Services Agency (FSA) said producers have until June 1, ’06, to sign up for the ’06-crop Direct and Counter-cyclical Payment Program (DCP).

Producers can sign up by visiting a FSA office or by using the online DCP service at http://www.fsa.usda.gov/egov/edcp_default.htm but must have an active USDA eAuthentication Level 2 account to use the service. This requires filling out an online registration form at http://www.eauth.egov.usda.gov and visiting the local FSA office for identity verification. The online service allows producers to choose ’06 DCP payment options, assign crop shares, as well as sign and submit their contracts over the Internet.

FSA will accept late-filed DCP applications through Sept. 30, ’06, if accompanied by a $100 late fee, but after that date, producers will be unable to apply for ’06 DCP payments. Sign-up for the ’06 DCP began Oct. 1, ’05. The ’02 farm law requires that producers sign annual contracts through ’07 to participate in the DCP. Producers may choose not to participate in the DCP in any year.

More information on the DCP is available at local FSA offices and in the DCP fact sheet which is posted online at: http://www.fsa.usda.gov/pas/publications/facts/html/dcp06.htm.


US/Vietnam Reach Trade Accord

USTR announced that the US and Vietnam reached agreement “in principle” on May 13 on a bilateral accord that brings Vietnam closer to joining the World Trade Organization (WTO).  The two sides now must hammer out legal details.

US officials indicated the agreement could be signed during the Asia Pacific Economic Cooperation (APEC) meeting in Vietnam June 1-2. Vietnam wants to formally join the WTO before it hosts the November APEC leaders’ summit which President Bush is expected to attend.

If a bilateral agreement between the US and Vietnam is signed, Congress must then vote on extending permanent normal trade relations (PNTR) status to Vietnam as it must currently have its normal trade relations status reviewed and renewed annually. Congress is not required to approve the bilateral accession agreement so the vote on PNTR is the critical step in the process of Vietnam’s accession to the WTO. USTR officials, in announcing the accord, said they have regularly consulted with Congress and expect bipartisan support.

US textile industry organizations expressed opposition to the agreement, as currently constructed, because it does not include an adequate safeguard mechanism to replace current quotas. The industry has provided evidence that Vietnam heavily subsidizes its textile industry and believes import restrictions must remain in place until the subsidies are eliminated. While the accord includes a safeguard provision, which could be imposed if the subsidies aren’t eliminated within one year, the industry believes the safeguard is inadequate and that Vietnam will be able to continue its subsidies while dramatically increasing exports of subsidized products to the US. NCTO leaders approved a resolution opposing the agreement and announced they will work with Congress to modify the accord or work to defeat the PNTR.

According to USTR, Vietnam agreed immediately to reduce duties to 15% or less on 75% of US agricultural exports to Vietnam and to accept US inspections of beef, pork and poultry. Tariffs on cotton imports would be bound at zero. Vietnam imports have grown from 400,000 bales to 700,000 bales over the last six years. Its consumption has grown from 430,000 bales to 750,000 bales over the last six years.



Top Level USDA Posts Confirmed

The Senate has confirmed a number of nominees to top USDA posts, includingDr. Gale Buchanan as under secretary for Research, Education and Economics; Marc Kesselman as general counsel; and Linda Strachan as assistant secretary for Congressional Relations.



Gin Laboratory Focus of Media Briefing

A media briefing at the New Mexico Farm and Ranch Heritage Museum in Las Cruces, focused attention on the proposed closure of the Southwestern Cotton Ginning Research Laboratory in nearby Mesilla Park. Under the Bush Administration’s proposed FY07 budget, the NM laboratory and one in Lubbock would be eliminated (see Cotton’s Week, 4/13).

The proposed closing of the Mesilla Park facility is facing opposition from a variety of interests across the western cotton growing region. It is the only facility in the world conducting roller ginning research. Landmark breakthroughs resulting from work conducted there include the development of modern rotary-knife roller gins and new lint cleaners for upland cotton.

Participating in the briefing were: Erik Ness, New Mexico Farm Bureau; Gil Jones, Southwest Irrigated Growers Inc. (SWIG); Matthew Toste, Huron Ginning, Huron, CA; Russell Kuhnhenn, Paloma Ranch Gin, Buckeye, AZ; and area grower leaders Robert Sloan and Dino Cervantes.  Each speaker provided an individual perspective on the importance of the laboratory’s work.

Kuhnhenn, the current NCGA president, said, “The Southwestern Cotton Ginning Research Laboratory has played a key role in keeping our Western cotton growing region competitive. But beyond its impact on Western harvesting and ginning, this lab continues to partner with other research facilities to address processing issues that affect ginners across the Cotton Belt.

The NCC, NM Farm Bureau and SWIG coordinated the briefing.



Environmental Panel to Convene

The NCC’s Environmental Task Force will meet in Memphis on May 23-24 to discuss cotton biotechnology registration/communication and cotton pesticide registration and education projects. Biotechnology, weed resistance and sustainability of cotton production also are on the agenda.

The task force, chaired by Mike Tate, producer, Huntsville, AL, includes 10 producers from across the Cotton Belt. It meets annually with representatives from university agricultural extension, industry, crop protection and biotechnology providers, USDA and EPA to discuss industry issues.


’06 PIE Program Tours Set

The NCC has scheduled dates and locations for the ’06 Cotton Foundation Producer Information Exchange (PIE) Program.

Cotton producers from the Southeast will see operations in Arizona and California on July 9-14; Mid-South producers will travel to Texas on July 16-21; Southwest producers will tour Arkansas, Mississippi and Tennessee on Aug. 6-11; and Far West producers will visit North Carolina and Virginia on Aug. 13-18.

PIE participants gain new perspectives in land preparation, planting, fertilization, pest control, irrigation and harvesting – with the overall goal of improving yields and fiber quality.

Cotton Foundation President Craig Shook said upon completion of this year’s tours, the PIE will have exposed nearly 750 US cotton producers to innovative cotton production practices in regions different from their own.

“New technology is accelerating at a rapid pace but adapting these tools and techniques to specific farming operations is a challenge,” Shook said. “By enabling U.S. cotton producers to see proven technology and farming methods firsthand and hear about what doesn’t work, the PIE program is leading its participants to greater efficiency and profitability.” 

The NCC’s Member Services staff, in conjunction with local producer associations, conducts the program. The program also receives support from the Cotton Foundation via a grant from Bayer CropScience.

“We are really excited to support this unique educational opportunity for America’s cotton producers,” said Monty Christian, marketing director, FiberMax Seed, Bayer CropScience. “Being able to ask questions face-to-face with your peers about innovative farming techniques is an invaluable experience.”



Check Out “Beltwide” FAQ

The NCC has created a frequently asked questions page at http://www.cotton.org/beltwide/faqs.cfm as part of its Beltwide Cotton Conferences’ web site.

The page includes information on New Orleans’ progress toward regaining its place among world-class tourist destinations and its ability to host conventions, including the ’07 Beltwide Cotton Conferences, Jan. 9-12, at the New Orleans Marriott and Sheraton Hotels. For example, as of May 2, more than 2,630 restaurants had reopened and the city officially has been declared healthy and safe – with more police officers per capita than before Hurricane Katrina. Additional information can be found at the New Orleans Convention & Visitors Bureau site, http://www.neworleanscvb.com.

The NCC Beltwide site also includes an executive summary of the ’06 Beltwide Cotton Conferences’ post meeting survey. That survey revealed, for example, that 93% of respondents rated the ’06 Conferences  “excellent” or “good” while 69% indicated they plan to attend the ’07 Conferences.


Sales Steady, Shipments Strong

Net export sales for the week ending May 11 were 162,300 bales (480-lb). This brings total ’05-06 sales to about 16.5 million. Total sales at the same point in the ’04-05 marketing year were almost 14.0 million bales. Total new crop (’06-07) sales are 554,700 bales.

Shipments for the week were 485,200 bales, bringing total exports to date to 12.4 million bales, compared with the 9.8 million bales at the comparable point in the ’04-05 marketing year. With a little less than three months remaining in the marketing year, weekly shipments must average roughly 400,000 bales to reach the USDA projection of 17.0 million bales.



Prices Effective May 19-25

Adjusted World Price, SLM 11/16

41.86 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.61 cents

Marketing Loan Gain Value

10.14 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

55.69 cents

Forward 3135 c.i.f. Northern Europe

60.89 cents

Coarse Count c.i.f. Northern Europe

53.30 cents

Current US c.i.f. Northern Europe

58.30 cents

Forward US c.i.f. Northern Europe

65.00 cents

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

47.78 cents

**

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

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