Cotton's Week: November 17, 2006

Cotton's Week: November 17, 2006


Senate Begins Debate on FY07 Agricultural Appropriations

The Senate began debate on the FY07 agricultural appropriations measure. In an agreement reached with Sen. Conrad (D-ND), the Senate will vote on his amendment which would modify the disaster assistance provision currently included in the measure as reported by the Committee on June 22.

The Committee’s disaster package would provide disaster assistance for yield and quality losses associated with `05 crops and would authorize USDA to make a 30% Supplemental Direct Payment to all eligible producers who received a Direct Payment in `05.

Sen. Conrad is proposing to modify the existing language by dropping the supplemental Direct Payment and adding a provision that would make disaster assistance available for yield and quality losses for the `06 crop in addition to the `05 crop. Conrad’s proposal would establish the loss threshold at 35% and a payment rate of 50% of the established price. Quality losses, along with livestock indemnity payments, and dairy, lamb and sugar losses also are covered in the amendment.

When the Senate returns Dec. 5, the first vote is expected to be on a motion to waive a budget point of order, which will require 60 votes. It is unclear whether the agriculture appropriations bill, which has not been considered by the House, will be considered as separate legislation or will be rolled into an omnibus bill with other appropriations measures.

If the Senate continues debate on the appropriations bill, Sen. McCain (R-AZ) may offer an amendment to delete all disaster assistance from the bill. Consequently, the agriculture community will have to work to ensure a majority of the Senate oppose efforts to delete disaster assistance, whether it is the original version or the Conrad substitute.

USDA Releases Annual Performance Accountability Report

USDA recently released its annual Performance Accountability Report that evaluates how the Department performed in its administration of various programs.

As part of the report and in compliance with ’02 Improper Payments Information Act, notations of approximately $2.9 billion of improper payments out of approximately $26 billion in various Farm Service Agency (FSA) programs were outlined. However, the report noted that approximately $2.7 billion (93%) was due to incomplete paperwork by applicants rather than incorrect disbursement amounts. The remaining $200 million of incorrect disbursements represents only one percent of the total payments of $26 billion. The improper payments will be resolved on a case-by-case basis.   

FSA Administrator Teresa Lasseter announced that FSA was taking immediate steps to ensure program application and supplementary records for all FSA programs were completed.  Specifically, growers should ensure that ’06 and ’07- crop information is current and complete for  “Person Determination” forms CCC 502, 501A, 503A and FSA-211; “Actively Engaged Determination” forms CCC-501-B and FSA-211; “Certification forms AD-1026 and FSA-211; “Adjusted Gross Income Certification” forms CCC 526 and FSA 211; “Cash Rent Tenant Determination forms CCC 503 A; and “Gross Revenue for NAP” CCC form 441 and FSA-211.

’06-crop marketing loan applications and ’07-crop direct and counter-cyclical advance payments could be delayed until all application and supplementary forms are complete. Growers are urged to contact their local FSA offices to avoid any program benefit delays.

WRP Appraisal Correction Urged

The NCC co-signed a letter urging Senators to include language in the Agriculture Appropriations Bill to correct a problem associated with the appraisal process for the Wetland Reserve Program (WRP). The coalition’s letter included many in the sportsmen and conservation community, as well as other commodities. The letter emphasizes the importance of WRP.

For the past 15 years, the WRP has paid program participants easement payments that are based on the agricultural value of the land.

The Office of Inspector General (OIG) conducted a review and concluded that the Natural Resources Conservation Service (NRCS) was not doing the valuation properly.

NRCS now has changed the appraisal to one that determines a highest and best use value. There are many problems associated with this new method, which have made WRP an unviable option for landowners in many states.

The Senate is expected to continue debate on the Agriculture Appropriations bill when it returns after the Thanksgiving recess.

Congressional Leadership Elected

Both parties in the House and Senate met this week to elect their leadership for the 110th Congress.

In the Senate, Harry Reid (D-NV) will be the Majority Leader with Dick Durbin (D-IL) filling his party’s position of Majority Whip. Mitch McConnell (R-KY) will be the Republican Leader and Trent Lott (R-MS) was elected to Minority Whip.

On the House side, the Democratic Caucus elected Nancy Pelosi (D-CA) as Speaker of the House and Steny Hoyer (D-MD) as the Majority Leader. The Republican caucus elected John Boehner (R-OH) as Minority Leader and Roy Blunt (R-MO) as Minority Whip. 

Also, Majority Leader Reid announced the anticipated committee assignments for the Democratic Caucus. New members added to the Senate Agriculture Committee include Sens. Brown (D-OH), Casey (D-PA) and Klobuchar (D-MN).

Keenum Nominated For Key Post

President Bush announced his intention to nominate Dr. Mark Keenum to be undersecretary of agriculture for farm and foreign agriculture services.

Dr. Keenum currently serves as chief of staff for Sen. Cochran (R-MS), a position he has held for the past 17 years. He received his bachelor’s degree, master’s degree and Ph.D. from Mississippi State U. Before going to Washington, Keenum was an assistant professor and economist in MSU’s Dept. of Agricultural Economics.

NCC Chairman Allen Helms said Dr. Keenum’s nomination to this important position at a critical time is good news for agriculture and related industries.

“Dr. Keenum is experienced, dedicated and a proven leader in the development and implementation of a wide range of agricultural policy,” Helms said. “He is clearly the right person at the right time and the agriculture community is fortunate that he is willing to continue in public service if confirmed by the Senate. We hope the Senate will expedite the confirmation process.”

Sourcing USA Summit Draws Huge Global Cotton Buying Contingent

One of the largest ever contingents of global cotton purchasing power convened in Scottsdale, AZ, to attend the ’06 Sourcing USA Summit.

The Cotton Council International coordinated event is being held under a theme of “Strengthening Enduring Partnerships.” It was organized to provide textile mill executives with management/trend information and networking opportunities that can drive their cotton businesses forward.

The Summit attracted some 190 international cotton buyers from 28 countries. Datacollected by the NCC on 72% of those buyers revealed that group’s total cotton consumption to be about 18.4 million bales.

“To put that into perspective, the cotton consumption of less than three-fourths of the expected Summit participants represents 6.2 million bales more than were   represented by all participants at CCI’s 2004 Summit,” said NCC Chairman Allen Helms. “This same group also consumes about 8.8 million bales of U.S. cotton – and are customers of some 55 percent of expected 2006 U.S. cotton exports.”

The data also shows that 28% (of the 72% of participants providing data) are vertically integrated organizations -- which spin, knit and/or weave and participate in apparel production and/or retail activities. Those 28% account for 92% of all the US cotton consumption represented at the Summit.

“This group of global cotton buyers represents a huge opportunity,” said CCI President David Burns, a Laurel Hill, NC, cotton producer. “The Summit provides a forum where we can detail U.S. cotton’s unique attributes and its superior technical services to these important international customers. U.S. cotton needs this exposure because our industry is exporting significantly more raw fiber than it did at the turn of the century.”

NCC economists report that the ’05-06 marketing year was the fifth consecutive marketing year of record high US raw cotton exports. Exports in ’05-06 increased by almost 25% over the ’04-05 volume.

The Summit was successful in offering the attendees help with textile market sourcing challenges. Presentations ranged from economics, innovation and consumer marketing to the challenges and opportunities facing the global cotton complex.

The overseas mill executives also visited US cotton farms, gins and other facilities as part of their Summit travel.

“These tours reinforce what the participants hear at the Summit and solidify relationships between U.S. industry members and the key customers they supply,” Burns noted.

Ag Product Promotion Funds Allocated

USDA’s Foreign Agricultural Service (FAS) announced FY06 allocations of $39 million to 56 US trade organizations to promote US agricultural products overseas.

The allocations will be administered under three FAS programs - the Foreign Market Development (FMD) cooperator program, the Technical Assistance for Specialty Crops program and the Quality Samples Program.

For FY06, Cotton Council International received $3,778,136 under the FMD Cooperator Program.

Under the FMD Cooperator program, USDA establishes a trade promotion partnership with nonprofit U.S. agricultural trade organizations. Program activities focus on reducing market impediments, improving the processing capabilities of importers, modifying restrictive regulatory codes and standards in foreign markets and identifying new markets or uses for US products. The 50-year-old program has supported market development activities in more than 100 countries worldwide.

"Developing overseas markets is critical to American agriculture," Agriculture Secretary Mike Johanns said. "These programs support U.S. producer associations so they can tap into market opportunities. Agricultural exports support not only the food and agriculture sectors, but the economy as a whole."

For more information on these programs, call the FAS Marketing Operations Staff at (202) 720-4327 or visit the FAS web site at

Sales, Shipments Steady

Net export sales for the week ending Nov. 9 were 182,700 bales (480-lb). This brings total ’06-07 sales to almost 4.6 million. Total sales at the same point in the ’05-06 marketing year were approximately 7.9 million bales. Total new crop (’07-08) sales are 181,500 bales.

Shipments for the week were 154,500 bales, bringing total exports to date to 1.9 million bales, compared with the 3.2 million at the comparable point in the ’05-06 marketing year.

Cotton’s Week will not be published on November 24 due to the Thanksgiving holidays.

Prices Effective November 17-23, '06

Adjusted World Price, SLM 11/16

42.54 cents


Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

 9.46 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

0.00 cents

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

58.64 cents

Forward 3135 c.i.f. Northern Europe


Coarse Count c.i.f. Northern Europe


Current US c.i.f. Northern Europe

58.80 cents

Forward US c.i.f. Northern Europe


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

45.93 cents


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