Cotton's Week: January 26, 2007

Cotton's Week: January 26, 2007

®PhytoGen and the PhytoGen Logo are trademarks of PhytoGen Seed Company, LLC. ®™DOW Diamond, Enlist, Enlist Duo and the Enlist logo are trademarks of The Dow Chemical Company (“Dow”) or E.I. du Pont de Nemours and Company (“DuPont”) or affiliated companies of Dow or DuPont. The Enlist weed control system is owned and developed by Dow AgroSciences LLC. Enlist Duo® and Enlist One herbicides are not yet registered for use in all states or counties. Contact your state pesticide regulatory agency to determine if a product is registered for sale or use in your area. Enlist Duo and Enlist One herbicides are the only 2,4-D product authorized for use with Enlist crops. Always read and follow label directions. PhytoGen Seed Company is a joint venture between Mycogen Corporation, an affiliate of Dow AgroSciences LLC, and the J.G. Boswell Company.
Renewable Fuels Initiative Announced

Agriculture Secretary Mike Johanns followed President Bush's State of the Union energy plan by announcing that the Administration's proposals for the ’07 farm bill will include $1.6 billion in funding for renewable energy. The money would go toward research and production, with a focus on cellulosic ethanol.

"It remains a priority across USDA to support the development of biofuels,” Johanns said. “We will continue to build on current programs and turn the corner on renewable energy. With biofuels coming to the forefront, American agriculture faces the greatest opportunity of a generation to lead a future in which we get our energy by the bushel and not by the barrel."

Johanns says he will provide more information about the funding proposal when he announces the Administration's full set of farm bill proposals.



Climate Change Explored By Senate

Discussion of draft legislation on greenhouse gas (GHG) emissions reduction is underway in the Senate.

Energy and manufacturing companies including DuPont, Caterpillar Inc. and General Electric have formed a coalition with several environmental organizations to urge Congress to pass legislation that would create a “cap-and-trade” system to reduce the nation’s greenhouse gas emissions.

Under this concept, a county, state or region would place a cap on total emissions and allocate credits to individual emitters who would then be allowed to buy or sell credits in a market to meet their targets. This would put a price tag on each unit of greenhouse gas released into the atmosphere.

Sens. Bingaman (D-NM) and Specter (R-PA) sent a discussion draft to Senate colleagues to encourage future legislation that would cap US emissions at ’07 levels by ’12, and eventually reduce emissions by 60-80% by ’50. Senate meetings on the discussion draft will begin Feb. 2. There is potential for other legislation by both the House and Senate as this is one of their priority issues.

President Bush touched on the issue in his State of the Union address by announcing that his administration aims to reduce US gasoline usage by 20% over the next 10 years through technological innovation, and renewable and alternative fuels.

Agriculture is affected by the GHG/climate change issue through nutrient management systems and conservation tillage which help increase soil organic carbon (C-sequestration) as well as through fuel use. Currently, California is the only cotton-producing state that is developing a climate change policy based, in part, on a cap-and-trade system. California agriculture will be affected by the regulations that are being developed in that state.

Farmers could provide GHG offsets by such methods as renewable energy and carbon sequestration where CO2 is removed from the atmosphere by vegetation and storage in biomass and soils.

In ’02, the President directed USDA to develop new accounting rules and guidelines for reporting greenhouse gas emissions. USDA worked with the Dept. of Energy, Dept. of Commerce and EPA to establish new accounting rules and guidelines for reporting GHG emissions in ’06.

Under the Environmental Quality Incentives Program (EQIP) program, for example, the Natural Resources Conservation Service delivers guidance to its state offices to reward and recognize actions that reduce greenhouse gas emissions within the EQIP ranking systems.


Electronic Markets Start Date Extended

IntercontinentalExchange (ICE), the leading electronic energy marketplace and soft commodities exchange, will extend the start date of side-by-side trading at its New York Board of Trade (NYBOT) subsidiary by one additional week. The new start date of Feb. 2 is designed to provide NYBOT participants and quote vendors with additional time to meet their connectivity, staffing and training needs. 

Side-by-side trading of the NYBOT’s benchmark agricultural commodities on ICE’s electronic trading platform will commence on Feb. 2, from 7:00 a.m. ET through 3:15 p.m. ET. These initial trading hours will be extended to 22 hours each trading day following the introductory phase of electronic trading in NYBOT’s markets.

The requests for electronic enrollment and training on the electronic markets has been stronger than expected with more than 1,000 new user identifications created to date. These user identifications represent new users on the ICE platform and enable electronic access to NYBOT’s soft commodity markets. Electronic trading in NYBOT markets is available to or via UK-based firms that are authorized by the Financial Services Authority in accordance with NYBOT’s status as an overseas person. In addition to the UK, NYBOT already has gained access in Australia, Germany, Japan and Switzerland. There are 36 overseas regulatory jurisdictions in which NYBOT has obtained or applied for permission to offer its markets. 

Prospective electronic traders should contact the NYBOT membership office for more information, or refer to the ICE website at www.theice.com/nybot_info. A set of FAQs and Webinars also are available on the ICE website. Training classes are being held at the NYBOT.

The NYBOT membership department is coordinating the enrollment of users for direct access through the WebICE trading screen or through any of the leading independent software vendors. Qualified algorithmic and proprietary traders with access to ICE and ICE Futures products will be able to access NYBOT products upon execution of an access agreement with NYBOT.


Module Can Help on Weed Resistance

The NCC is reminding cotton producers to visit its online Weed Resistance Learning Module to learn more about weed resistance management programs prior to planting.

The tool, available at http://www.cotton.org/tech/pest/wrm, provides growers with a comprehensive resource on how to manage weed resistance. It is sponsored by The Cotton Foundation with financial support from Monsanto, Syngenta and Dow AgroSciences.

“Weeds don’t take a day off,” said Mike Tate, chairman of the NCC’s Environmental Task Force and a Huntsville, AL, cotton producer. “It is important for growers to have a management practice in place for their farm. When you’re getting ready to plant is a good time to review your plan for the upcoming year to ensure you get a quality field of cotton that is free of weeds.”

Tate said producers have around-the-clock access to the module whenever they have questions about their current weed program or are looking to develop a weed resistance management program. Producers also are able to explore the course at their own pace.

Dr. Ginger Light, author of the course and a researcher at Texas Tech U., said planting season is one time when the grower can ensure the crop gets a healthy start without weeds, particularly herbicide-resistant ones, getting in the way.

“It is always best to eliminate early flushes of weeds with tillage or a non-selective herbicide that is not part of the in-season herbicide program,” Light said. “Beyond that, make sure you plant under good conditions that promote the competitiveness of the cotton versus the weeds. A good fertility program, proper spacing and clean, certified seed are very important to getting a quality cotton crop to come up.”

The NCC’s Weed Resistance Learning Module also provides general resource information on cotton herbicides and a list of contacts in each state for producers who have questions on management practices, including planting.


US Mills See Success at Colombiatex

The largest textile mills from North and South America participated at the annual Colombiatex trade show in Medellín, Colombia – one of the most important textile shows in Latin America.

Included at the event were nine US mills that are COTTON USA Sourcing Program participants – Buhler Quality Yarns Corp, Clovertex, Frontier Spinning Mills, Gentry, Hamrick Mills, Parkdale, Ramtex, Swift Spinning and Tuscarora Yarns Inc. – which participated within CCI’s COTTON USA pavilion. Each company displayed product samples and had representatives present to expand their market share in this important region. Hanesbrands Inc. also attended this year’s event.

In addition to the information available at the COTTON USA pavilion, Cotton Incorporated representatives distributed important fashion forecasts and presented new fabric developments. Specialized technologies such as Wicking Windows, Natural Stretch, Tough Cotton and Storm Denim were showcased within Cotton Incorporated’s display.


Nov. Mill Cotton Consumption Hiked

According to the Commerce Dept., the November (four-week month) estimate of domestic mill use of cotton was raised by 3.6 million pounds to 178.0 million pounds. That puts the revised seasonally adjusted annualized rate of consumption for November at 4.96 million bales (480-lb), but still lower than last year’s November annualized rate of 5.74 million bales.

December (five-week month) total cotton consumption in domestic mills was 184.3 million pounds for a seasonally adjusted annualized rate of 4.75 million bales. Last year’s December annualized rate was 5.53 million bales.

Using the latest Commerce figures, calendar ’06 mill use is estimated to be 2.63 billion pounds or 5.48 million bales. This is lower than calendar year ’05’s use of 6.32 million bales.

Based on Commerce estimates from Aug. 1-Dec. 30, ’06, projected total pounds consumed during crop year ’06-07 would be 2.4 billion pounds or 4.90 million bales.  USDA’s latest estimate of ’06-07 crop year mill use is 5.00 million bales.

Preliminary January domestic mill use of cotton and revised December figures will be released by Commerce on Feb. 22.


Sales Strong, Shipments Steady

Net export sales for the week ending Jan. 18 were 261,700 bales (480-lb). This brings total ’06-07 sales to approximately 6.8 million. Total sales at the same point in the ’05-06 marketing year were approximately 11.3 million bales. Total new crop (’07-08) sales are 287,900 bales.

Shipments for the week were 177,400 bales, bringing total exports to date to 3.6 million bales, compared with the 5.5 million at the comparable point in the ’05-06 marketing year.

To date, Mexico remains the top export customer for US cotton, accounting for 23% of total exports. Recent purchases by China have pushed them into second place at 18%, just ahead of Turkey, with 17%.

Currently, total commitments of upland cotton are only 43% of the USDA’s estimated exports of 15.7 million bales. Weekly exports will have to increase sharply between February and July to reach USDA’s current target.


Step 3 Import Quota Announced

Competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending Jan. 25. When the Friday through Thursday weekly average US northern Europe price exceeds the northern Europe price ("A" Index) by more than 1.25 cents per pound for any four consecutive weeks, a special Step 3 import quota is triggered.

The quota is for 97,616 bales (480lb), equal to one week of upland cotton mill use based on the seasonally adjusted data for the period Aug.-Oct. ’06, the most recent three months for which data are available. The quota will be established as of Feb. 1 and applies to upland cotton purchased no later than May 1 and entered into the US no later than July 30.

Currently, there are three import quotas opened in the total amount of 292,847 bales.


Prices Effective Jan. 26-Feb. 1, '07

Adjusted World Price, SLM 11/16

44.07 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

7.93 cents

Import Quotas Open

 3

Step 3 Quotas (480-lb. bales)

292,847

ELS Payment Rate

0.00 cents

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

60.17 cents

Forward 3135 c.i.f. Northern Europe

 NA

Coarse Count c.i.f. Northern Europe

 NA

Current US c.i.f. Northern Europe

62.85 cents

Forward US c.i.f. Northern Europe

NA

 
2006-07 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-November)

46.41 cents

**

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

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