Cotton's Week: June 30, 2006

Cotton's Week: June 30, 2006

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WTO Ministers Continue Doha Negotiations

NCC Chairman Allen Helms and President/CEO Mark Lange went to Geneva for the latest round of WTO negotiations.

Trade ministers from key countries have convened for further negotiations designed to narrow differences and form the basis for an agreement. USTR Ambassador Susan Schwab heads the US delegation in talks scheduled to run through July 2. The ministers are working from draft texts tabled by the negotiating chairs earlier this month. At the outset of the meetings, WTO Director General Pascal Lamy stressed the importance of this week’s meetings if an agreement is to be finalized this year.

Chairman Helms continues to convey the US cotton industry’s concerns regarding the current state of negotiations.

“Any agreement must achieve significant and commercially meaningful increases in market access in both developed and developing country markets,” Helms said. He also reiterated that US agriculture is not prepared to accept even greater cuts in domestic support than those contained in the US proposal.


USDA Sees Acreage Increase

In its June acreage report, USDA estimates ’06-07 US cotton plantings at 15.28 million acres, up 7.2% from last year. Upland planted area is seen to have increased 6.9% to 14.94 million acres with estimated ELS area up 24.3% to 336,000 acres.

On a regional basis, upland area in the Southeast is seen up about 300,000 acres (10.7%) to 3.36 million acres. Increases are indicated for Florida (22.1%) followed by Georgia(14.8%) and South Carolina(12.8%). Planted acres are expected to increase to 4.21 million (up 6.5%) in the Mid-South, with all states increasing plantings except Mississippi, which is unchanged from the previous year at 1.21 million acres. The region’s largest acreage gains are expected in Missouri, Arkansas and Tennessee, which are up 10.2%, 9.5% and 9.4%, respectively.

In the Southwest, estimated upland area is up 8.3% to 6.8 million acres, with growers in Texas having planted 6.40 million acres, up 7.6% from ’05-06. Kansas has the largest percentage increase (35.1%), to a total of 100,000 acres. Estimated upland area in the Westis down 19.0% to a total of 580,000 acres. Producers in California are seen decreasing plantings by 27.9% to 310,000 acres, while New Mexico and Arizona plantings are expected to decline 10.7% and 4.3%, respectively.

USDA estimates ELS plantings of 336,000 acres, up 24.3% from ’05-06. The largest percentage increase is in Arizona,where estimated planted acres are up 70.7% to 7,000. Planted acres also are up in California (26.1%), New Mexico (13.0%) and Texas (4.8%).

2006 U.S. Cotton Acreage

 

2005
Actual
(Thou.)
1/

2006
Estimated
 (Thou.)
1/

Percent
Change

SOUTHEAST

3,030 

3,355 

10.7% 

   Alabama

550 

570 

3.6% 

   Florida

86 

105 

22.1% 

   Georgia

1,220 

1,400 

14.8% 

   N. Carolina

815 

880 

8.0% 

   S. Carolina

266 

300 

12.8% 

   Virginia

93 

100 

7.5% 

MID-SOUTH

3,950 

4,205 

6.5% 

   Arkansas

1,050 

1,150 

9.5% 

   Louisiana

610 

660 

8.2% 

   Mississippi

1,210 

1,210 

0.0% 

   Missouri

440 

485 

10.2% 

   Tennessee

640 

700 

9.4% 

SOUTHWEST

6,279 

6,800 

8.3% 

   Kansas

74 

100 

35.1% 

   Oklahoma

255 

300 

17.6% 

   Texas

5,950 

6,400 

7.6% 

WEST

716 

580 

-19.0% 

   Arizona

230 

220 

-4.3% 

   California

430 

310 

-27.9% 

   New Mexico

56 

50 

-10.7% 

TOTAL UPLAND

13,975 

14,940 

6.9% 

TOTAL ELS

270 

336 

24.3% 

   Arizona

70.7% 

   California

230 

290 

26.1% 

   New Mexico

12 

13 

13.0% 

   Texas

25 

26 

4.8% 

ALL COTTON

14,245 

15,276 

7.2% 

1/ USDA-NASS





Coley Testifies at Senate Farm Bill Hearing

C.B. “Chuck” Coley, a Vienna, GA, cotton producer, told members of the Senate Agriculture, Nutrition & Forestry Committee at their hearing in Albany, GA, that the current farm law continues to provide a stable and effective national farm policy and that “the U.S. cotton industry is prepared to continue to work with all interests to develop and support continuation of a balanced and effective policy for all of U.S. agriculture.”

Coley, who is vice chairman of the NCC’s American Cotton Producers, testified that, “The combination of direct and counter-cyclical payments provide an effective means of income support, especially when prices are low, without distorting planting decisions. The direct payment provides financial stability required by our lenders and suppliers. I would caution that those who promote replacement of the counter-cyclical payment with higher direct payments risk taking the land out of producers’ hands so it is important to continue to maintain a balance.

“It is also important to recognize the differences in regional impacts that can occur due to program changes. In the Southeast, payment yields for direct payments are lower than other regions, so a rebalancing toward direct payments would be a competitive disadvantage for the Southeast.”

Coley also noted the NCC’s strong support of continuing the marketing loan.

“The marketing loan responds to low prices, it does not cause low prices,” he stated. “It is effective because it triggers – when necessary – regardless of the cause of low prices. It ensures that U.S. cotton farmers are not residual suppliers in world markets because they are unable to compete with the treasuries of foreign governments. It is also critical that all production remain eligible for the marketing loan. Arbitrary limits signal our competitors that we are willing to be competitive on only a portion of our production. This is an invitation for competitors to increase production.”

He stated that sound farm policy is of little value to the cotton industry if arbitrary, unworkable limitations are placed on benefits.

“We believe limitations should be eliminated,” Coley said, “but at the very least any limitations in future law should not be more restrictive or disruptive than those in current law.”

Regarding the WTO, Coley said the US cotton industry is increasingly concerned that the Doha negotiations are turning against US agriculture in general and against US cotton in particular.

“They want more U.S. concessions while refusing to provide adequate market access,” he stated.  “Worse, China, the largest cotton market in the world, wants to be exempt from any further market access commitments. If other countries cannot match the U.S. level of ambition for market access, we should either withdraw or reduce our offer on domestic support. I also want to emphasize that an agreement that singles out U.S. cotton for additional inequitable treatment will not be accepted by U.S. cotton producers.”


Moorhead Selected for Ag Post

President Bush has selected Hunter Moorhead to be the next special assistant to the President for Agriculture and Food-Related Issues. He replaces Mike Sommers, who returned to the office of House Majority Leader Boehner (R-OH) as the Leader’s policy director.

Since early ’03, Moorhead worked on the Senate Agriculture Appropriations Subcommittee, chaired by Sen. Bennett (R-UT), and dealt with an assortment of budget issues related to the food and agricultural industry.

Prior to that, Moorhead worked for Sen. Cochran (R-MS), where he focused on agriculture policy, agriculture appropriations and Interior appropriations. He also has worked for then House Agriculture Committee Chairman Combest (R-TX) as staff director of the Subcommittee on Specialty Crops and Foreign Agricultural Programs and for Rep. Parker (R-MS) handling agricultural, transportation and commerce issues. Moorhead has an agricultural economics degree from Mississippi State U.


’06-07 General Projects Approved

The Cotton Foundation trustees approved 26 general cotton research and education projects for ’06-07. The projects, which are supported by $370,252 from member dues, were approved earlier by the Foundation’s Research Screening Committee, chaired by Trent Haggard of Case IH.

Led by Foundation President Craig Shook, the trustees approved projects that include ongoing research and education activities and new investigations aimed at meeting both the US cotton industry’s short and long term needs.

The ongoing projects cover efforts ranging from air quality and emissions studies to improving cotton quality and cotton processing. New projects range from managing glyphosate-resistant Palmer amaranth and surveying for resistance levels in tarnished plant bug populations to supporting a US cotton leadership orientation in China and determining the cotton genetic/variety influence on the comfort of cotton fabrics.

General project activity will be among topics discussed at the Joint Meeting of the NCC’s American Cotton Producers and the ’07 Cotton Foundation Annual Meeting, set for Aug. 2-3 at the Hyatt Regency in San Antonio, TX.


Western Producers to Host Southeast Peers

Southeastern cotton producers will visit operations in Arizona and California on July 9-14 during the first tour of the ’06 Cotton Foundation Producer Information Exchange (PIE) Program.

The Program enables valuable communication between cotton producers and helps them gain new perspectives in land preparation, planting, fertilization, pest control, irrigation and harvesting. The PIE program is supported by a grant from Bayer CropScience and is coordinated by the NCC’s Member Services staff in cooperation with local producer associations in each region.

The Far West tour participants include: Todd Boyd, Pinetown, NC; Kent Smith, Rocky Mount, NC; Edwin Smoak, Orangeburg, SC; John Watts, Mayesville, SC; Wes Woodward, Darlington, SC; Daverl Lamon, Trinity, AL; James Randall Vaden, Florence, AL; Robert Merritt, Wray, GA; Robert Davison, Thomasville, GA; Joey Doyle, Emporia, VA; and Brett Ward, Walnut Hill, FL.

From July 9-11, the Southeastern producers will tour farms in Arizona’s PinalCounty, visit the U. of Arizona Maricopa Ag Center and view Arizona’s water distribution operations and the USDAAridLandsResearchCenter. On July 12-13, the group will be in California’s San Joaquin Valley where they will visit the Errotabere Ranch, Gilkey Enterprises and other local farms and tour Bayer CropScience’s research facility in Fresno.

After this year’s four tours, the Program will have exchanged more than 750 individual US cotton producers.


Sales, Shipments Stay Strong

Net export sales for the week ending June 22 were 262,700 bales (480-lb). This brings total ’05-06 sales to about 18.0 million. Total sales at the same point in the ’04-05 marketing year were slightly more than 15.3 million bales. Total new crop (’06-07) sales are 655,200 bales.

For ’05-06, China remains the largest customer with purchases of 9.2 million bales, or 51% of the total. Turkey is second with 1.9 million bales followed by Mexico at 1.7 million bales. 

Shipments for the week were 379,200 bales, bringing total exports to date to 14.8 million bales, compared with the 11.5 million bales at the comparable point in the ’04-05 marketing year. With about five weeks remaining in the marketing year, weekly shipments must average roughly 364,000 bales to reach the USDA projection of 16.8 million bales.



Prices Effective June 30-July 6, 2006

Adjusted World Price, SLM 11/16

43.15 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.09 cents

Marketing Loan Gain Value

8.85 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

54.86 cents

Forward 3135 c.i.f. Northern Europe

58.71 cents

Coarse Count c.i.f. Northern Europe

52.27 cents

Current US c.i.f. Northern Europe

56.95 cents

Forward US c.i.f. Northern Europe

62.95 cents

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

  47.77 cents

**

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

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