Cotton's Week: December 1, 2006

Cotton's Week: December 1, 2006

Trade, Tax Legislation on Congress’ Agenda

When Congress returns, trade and tax legislation could be considered during the remainder of the lame duck session.

Reports indicate an omnibus tax and trade package is being readied for consideration by the House as one of the last items of business for the 109th Congress. There is substantial uncertainty about the package’s contents as leaders work to develop provisions that would be supported by a majority of the House and Senate. The package’s “core” would consist of extensions for expiring tax cuts including the research and development tax credit; state sales tax deduction and tuition deduction.

Trade provisions could include an extension of provisions of the African Growth and Opportunity Act (AGOA), the Andean Trade Preference Act (ATPA) and the generalized system of preferences (GSP). Inclusion of a provision granting Permanent Normal Trade Relations to Vietnam is doubtful.

NCC has joined the National Council of Textile Organizations (NCTO) to express strong objections to possible inclusion of a provision to grant preferential access to Haitian products. The legislation would provide preferential access for Haitian products under a very loose rule-of-origin. NCTO and NCC have argued that the rule-of-origin is unenforceable according to customs and would result in transshipment of Chinese products displacing US exports and disrupting mutually beneficial trade with neighboring CAFTA countries. While there is recognition that Haiti has significant political and economic problems, the legislation as currently constructed would severely disrupt trade in the region.

In late September, a number of Cotton Belt members wrote House leaders urging them not to move Haitian legislation without further hearings and consultations. The industry has indicated a willingness to discuss alternative measures to assist Haiti. The trade and tax package is expected to be finalized by Dec. 5.

Senate to Take Up Ag Appropriations

When the Senate returns Dec. 5, under a previous agreement, the FY07 Agriculture Appropriations bill is the pending business, and there is an agreement to allow Sen. Conrad (D-ND) to offer an amendment related to disaster assistance.

Although Sen. Conrad’s amendment has not been filed officially and can be modified, it reportedly would modify the existing provision of the appropriations bill. The current appropriations bill offers disaster assistance for ’05 and a supplemental direct payment. Sen. Conrad’s amendment reportedly would provide disaster assistance for yield and quality losses associated with ’05 and ’06 crops and provide feed assistance and other measures but contains no supplemental direct payment.

If Sen. Conrad offers the amendment, Sen. Gregg (R-NH), chairman of the Budget Committee, has indicated he will object to its consideration because it exceeds the budget. If Sen. Gregg offers the “budget point of order,” 60 votes are required to waive the budget before the amendment can be adopted.

Sen. Lincoln (D-AR) and several of her colleagues have expressed concern regarding the lack of a supplemental direct payment in Sen. Conrad’s amendment. The supplemental direct payment, included in the appropriations measure, is important to farmers who do not meet the 35% yield loss required to qualify for assistance but nonetheless have significant financial losses due to the combination of skyrocketing input costs, yield losses and depressed prices. Discussions between Sen. Lincoln, Sen. Conrad and others likely will continue until the Senate resumes work on Dec. 5.

The Administration continues to object to the inclusion of supplemental direct payments, arguing that they are not targeted only to producers with disaster losses.

Procedurally, the Senate is not likely to finish work on the appropriations measure, and Congress is more likely to approve a Continuing Resolution (CR) to fund agencies and programs at current levels until the new Congress begins work in ’07. At that time, unfinished appropriations bills, including agriculture, could be reintroduced by the new Democratic leaders and work would resume or the CR could be extended for the balance of FY07. In that case, work would then begin on the FY08 budget and appropriations measure.

Sales Surge, Shipments Steady

Net export sales for the week ending Nov. 23 were 523,700 bales (480-lb) – a marketing-year high. This brings total ’06-07 sales to slightly more than 5.3 million. Total sales at the same point in the ’05-06 marketing year were approximately 8.6 million bales. Total new crop (’07-08) sales are 189,200 bales.

Shipments for the week were 169,200 bales, bringing total exports to date to 2.3 million bales, compared with the 3.5 million bales at the comparable point in the ’05-06 marketing year.

Timely Keenum Confirmation Urged

The NCC joined 75 other food and agriculture organizations on a letter sent to Senate Agriculture, Nutrition and Forestry Committee Chairman Chambliss (R-GA) and Ranking Member Harkin (D-IA) expressing support for President Bush’s nomination of Dr. Mark Keenum to serve as Under Secretary for Farm and Foreign Agricultural Services. The groups asked the Committee to schedule a hearing so the Senate can act expeditiously to confirm the nomination.

The letter stated the organizations’ belief that a timely confirmation is necessary as “efforts are underway to restart the Doha Round trade negotiations, the Administration is preparing a critical defense of U.S. farm programs before the World Trade Organization, and the Administration’s position on the next farm bill is being developed. It is important that the Under Secretary’s position be filled as soon as possible to ensure the Department of Agriculture is fully prepared to take on these and other challenges.”

The letter also noted Dr. Keenum is exceptionally well-qualified to serve in that position as he possesses extensive experience in the development and implementation of farm and trade policy acquired during his tenure as legislative assistant and chief of staff to Sen. Cochran (R-MS) during Sen. Cochran’s service as chairman of the Committee on Agriculture, Nutrition and Forestry and as Chairman of the Committee on Appropriations.

“During his distinguished service,” the letter stated, “Mark has gained a deep appreciation for the importance of working in a bipartisan manner to successfully achieve results for U.S. agriculture. Mark has been deeply involved in the development of the last three farm bills which occurred during periods when Republicans and Democrats alternately controlled the House and Senate as well as the White House. Throughout his distinguished career he has demonstrated an ability to work with diverse interests to develop and implement effective policies that address production agriculture, conservation, and trade policy.”

Quarantine Comment Period Extended

The comment period has been extended for an additional 30 days on USDA’s Animal and Plant Health Inspection Service’s (APHIS) proposal to establish boll weevil regulations restricting the interstate movement of regulated articles into or through commercial cotton-producing areas (see Nov. 3 Cotton’s Week). The 30-day extension will provide the industry an opportunity to examine the document more carefully and provide USDA with valuable, constructive comments.

To provide comments, send an original and three copies of postal mail or commercial delivery comments to Docket No. APHIS-2006-0002, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Rd., Unit 118, Riverdale, MD 20737-1238. Comments can be submitted via the Internet, by going to the Federal eRulemaking portal at, selecting  “Animal and Plant Health Inspection Service” from the agency drop-down menu; then clicking on “Submit.” In the Docket ID column, select APHIS-2006-0002 to submit or view public comments and to view supporting and related materials available electronically.

BWCC Online Registration Extended

The deadline for early online registration for the ’07 Beltwide Cotton Conferences, Jan. 9-12 in New Orleans has been extended until Dec. 8. Industry members and others are encouraged to register online and make housing arrangements at

A downloadable PDF version of the final ’07 Beltwide Cotton Conferences’ program was scheduled to be available at that site on Dec. 2.

Also available now is the BWCC Personal Scheduler - a tool that enables attendees to plan a customized schedule in order to maximize time at the Conferences. Unlike the printed program, this tool, which can be found at, includes both the title and descriptions of the presentations and allows browse/search using key words. It also allows the addition of notes and activities not in the program, such as the “BIO Focus on Compliance Workshop: COTTON” (see next story).

Bio Compliance Workshop Offered

The “BIO Focus on Compliance Workshop: COTTON” will be offered by the Biotechnology Industry Organization prior to the ’07 Beltwide Cotton Conferences. The session, which is not part of the conferences, will be held Tuesday, Jan. 9 from 1-5 pm at the New Orleans Marriott.

The workshop covers stewardship activities associated with the development of transgenics, and aims to promote consistent understanding and performance in meeting federal requirements for regulatory compliance of these products.

CEUs will be offered for the workshop, which costs $100. To register, go to

’07 NCC Annual Meeting Set

The NCC’s ’07 Annual Meeting will be held at the Hilton Austin in Austin, TX, Feb. 1-5, and the annual meeting information brochure is scheduled to be mailed to all attendees the week of Monday, Dec. 11.

Meanwhile, meeting registration and hotel reservations can be made online beginning Thursday, Dec. 7 by going to Rooms also may be reserved by calling the hotel directly at 1-800-236-1592. The cut-off date for getting the convention room rate is Monday, Jan. 15. Discounted air fare on American and Northwest airlines is available through Travelennium, and attendees may call Mary Saemenes there at 800-844-4924, ext. 318 for price quotes.

NCC Chairman Allen Helms will address the Feb. 5 general session along with Jeffrey Rosensweig, the director of Emory U.’s Global Perspectives Program and a frequent keynote speaker on topics related to global strategy/economic trends.

Among other important convention sessions will be the Feb. 2 American Cotton Producers meeting, where the NCC’s planting intentions survey results will be announced. On Feb. 3, the delegates will hear the NCC’s Economic Outlook and a Cotton Incorporated report from J. Berrye Worsham. The National Cotton Ginners Assoc. also will hold its annual meeting that afternoon.

The Saturday luncheon will feature Michael Gerson, a senior fellow at the Council on Foreign Relations and Newsweek magazine contributor. He will talk about the new political season and how more than the balance of political power is at issue in ’07.

Mill Cotton Use Slips

According to the Commerce Dept., October (4-week month) total cotton consumption in domestic mills was 194.8 million pounds for a seasonally adjusted annualized rate of 5.10 million bales (480-lb). Last year’s October annualized rate was estimated at 6.17 million bales.

The September (5-week month) estimate of domestic mill use of cotton was lowered 4.4 million pounds to 245.1 million. The revised seasonally adjusted annualized rate of consumption for September is 5.20 million 480-pound bales. This is lower than last year’s September annualized rate of 6.00 million bales.

Preliminary November domestic mill use of cotton and revised October figures will be released by Commerce on Dec. 21.

Prices Effective Dec. 1-7, '06

Adjusted World Price, SLM 11/16

43.09 cents


Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

8.91 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

59.19 cents

Forward 3135 c.i.f. Northern Europe


Coarse Count c.i.f. Northern Europe


Current US c.i.f. Northern Europe

60.05 cents

Forward US c.i.f. Northern Europe


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

45.98 cents


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

Error in element (see logs)