Cotton's Week: February 23, 2007

Cotton's Week: February 23, 2007


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Media Briefed on WTO Concern

NCC Chairman John Pucheu says an upcoming World Trade Organization cotton session coupled with other WTO activities “is an unfortunate turn of events that can severely undermine the credibility of the WTO dispute settlement process.”

WTO Director General Pascal Lamy has scheduled a “high profile session” on cotton in Geneva on March 15-16 within two weeks of oral arguments in the Brazil-US Cotton Compliance dispute. Pucheu says the US cotton industry is concerned that this session’s timing and the coverage of it can “create a bias in the Compliance Panel’s deliberations as well as the Doha Round trade negotiations that are underway.”

During a telephone briefing for news media, American Cotton Producers Chairman Jay Hardwick of Louisiana said, “We are concerned that these actions at this time are trying to produce an even more inequitable Doha Round Agreement for U.S. cotton – one that unfairly targets U.S. cotton producers and the U.S. cotton program.” 

Joining Hardwick on the call was Woody Anderson, a Texas producer who took issue with French President Chirac’s recent call for the US cotton program’s abolishment.

“When the President of France hypocritically blames African poverty on the U.S. cotton program, he blindly ignores decades of colonialism administered by France and a monopolistic economic structure in Africa established by French-parastatal corporations that profit from the plight of African agriculture,” Anderson stated. “This system deprives African farmers of choices and continues to ensure they receive only about 40 percent of actual world prices for their cotton.”

Woods Eastland, a Mississippi cooperative official, participated in the teleconference and said, “Despite the changes in the U.S. program that have caused lower U.S. exports and will contribute to lower U.S. production in 2007, world prices have not significantly rebounded. They have not rebounded because production in India and Brazil and China will supplant any shortfall by the United States and man-made fiber stands ready to fill any shortfall in natural fiber production. The U.S. has called for consultations with China under the auspices of the WTO on possible illegal subsidies on exports of Chinese manufactured products and the Chinese currency valuation problem still remains and must also be addressed.”

Cotton Council International Chairman David Burns, a North Carolina producer, told those on the call that the US cotton industry has supported the WTO Doha Agreement’s dual aim of liberalizing world trade and lowering trade distorting subsidies.

“The Administration tabled proposals to reduce U.S. subsidy ceilings by 60 percent and the U.S. cotton industry supported those cuts provided we would receive commensurate increases in market access,” Burns said. “U.S. cotton producers are asking for fair and unbiased treatment from the WTO. Instead, we are asked to contribute more and more while receiving no benefits in return. Instead, we are consistently seeing the Director General acquiesce in a plan to single out cotton for more unfavorable treatment and potentially to bias a WTO dispute settlement panel.”

Colombia, Peru FTAs Supported

As part of a coalition of 45 food and agriculture organizations representing the vast majority of US farmers, ranchers, food processors and exporters, the NCC joined on a letter to Congressional members urging their prompt consideration and passage of the free trade agreements recently concluded and signed with Colombia and Peru.

The letter stated that both of these FTAs provide important new market access benefits that will stimulate US exports, create US jobs and strengthen rural economies, and are widely viewed as being the best ever negotiated on behalf of US agriculture. Many US food and agricultural products will become eligible for duty-free treatment in these countries immediately upon entry into force of the agreements, and virtually all will receive duty-free treatment over specified phase-in periods. For example: under the Colombia Trade Promotion Agreement, US food and agricultural products that will receive immediate duty-free treatment include cotton, beef, wheat, soybeans, soybean meal, high-quality whey products, apples, pears, peaches, cherries and many processed food products. Products that will benefit from improved market access right away include corn, poultry, fruits and vegetables and dairy products. In addition, Colombia will eliminate its “price-band” system, which limits several agricultural imports. 

The letter pointed out that the United States also can expect to see improved prospects for a wide range of commodities and high-value US food products under the Peru Trade Promotion Agreement, including cotton, wheat, feed grains, oilseeds and products, rice, dairy products, meats, poultry, processed foods, pet foods, apples and other fruits, juices, distilled spirits and wine. More than 90% of current trade will become eligible for free access immediately and, as part of the Agreement, Peru will eliminate its “price-band” system, which limits imports of several commodities.

Both countries also have taken important steps to eliminate key sanitary and phytosanitary barriers to US exports, the letter said. The FTAs will correct an inequity that US exporters of farm products encounter in most markets around the world - US tariffs are much lower than those our products face in other countries. As a result of the Generalized System of Preferences and the Andean Trade Preference and Drug Eradication Act, 90% and 98% of products exported by Colombia and Peru, respectively, to the United States already enter duty free.

“We urge the Congress to provide to U.S. food and agriculture the same trade benefits it already has extended to farmers and ranchers in Colombia and Peru,” the letter stated. “The preferential trade deals are one-way trade deals that provide no direct benefits to our farmers and ranchers. The bilateral FTAs provide reciprocal trade benefits and generate U.S. exports, create U.S. jobs and enhance the economic well-being of U.S. farming communities.”

USDA Farm Programs Post Filled

USDA's Farm  Service Agency (FSA) Administrator Teresa C. Lasseter announced the appointment of Larry J. Adams as assistant deputy administrator for farm programs.

"Larry Adams knows how to administer farm programs efficiently and effectively," Lasseter said. "He brings a wealth of experience and insight from the state level to FSA's national office and I'm glad to welcome him as a part of our management team."

Adams will support the operations and management of FSA's farm programs office. He will help administer price support, conservation and environmental and disaster assistance programs.

Prior to this appointment, Adams, who grew up on a 500-acre farm in Marion County, Ohio, was state executive director for the Ohio Farm Service Agency. Since ’01 he's been the administrator of FSA commodity, conservation and farm loan programs for Ohio farmers.

GMO Insect Research Urged

The NCC submitted a letter of support urging USDA’s Animal & Plant Health Inspection Service (APHIS) to proceed with the development of an Environmental Impact Statement (EIS) relative to the proposed use of genetically engineered insects, including pink bollworm, in ongoing pest control programs.

The letter also commended APHIS for the cautious stepwise approach the agency has employed during the progression of this technology.

The US cotton industry supported the development of this concept since its early stages when cotton producers provided about $1.5 million in funding. The development could have a tremendous impact on eradication efforts, particularly in the Pink Bollworm Eradication Program, which integrates multiple techniques to disrupt the pest’s biology, including planting of Bt cottons, use of pheromones for mating disruption and release of sterile males with a marker for identification. The males are sterilized by irradiation and released from aircraft over infested cotton production areas based on moth trap data. The number of sterile males must be much larger than the number of fertile males in order to out-compete for fertile female mates and render the female eggs sterile.

The use of GM insects with marker genes (green florescent protein gene) could provide great advantages in evaluating pink bollworm populations during eradication. Insects that are genetically modified for sterility could reduce or replace the need for irradiation of release moths and provide moths that are more fit and capable of out-competing for mates. The use of these techniques in combating an introduced pest species could advance future capabilities of “sterile insect techniques” programs and reduce economic drain resulting from these non-native pests.

Flowers Named to Biotech Panel

Bowen Flowers, a Clarksdale, MS, producer/ginner, was selected by USDA to serve on the Secretary of Agriculture’s Advisory Committee on Biotechnology and 21st Century Agriculture. Created by Secretary Johanns in ’03, the Committee is represented by academia, farming, industry and public interest groups to provide guidance to the Secretary on policies and priorities for agricultural biotechnology. 

Flowers currently serves on the Delta Council, the American Cotton Producers, and the NCC’s board. He also is commissioner of the Coahoma County Soil and Water Conservation District, and a member of the NCC’s Environmental Task Force, which advises the NCC on a broad range of crop protection and biotechnology issues. 

The Advisory Committee will convene in March to continue dialogue on USDA’s biotechnology agenda.

Sales Surge, Shipments Steady

Net export sales for the week ending Feb. 15 were 412,700 bales (480-lb). This brings total ’06-07 sales to slightly more than 8.0 million. Total sales at the same point in the ’05-06 marketing year were approximately 13.0 million bales. Total new crop (’07-08) sales are 338,500 bales.

Shipments for the week were 239,300 bales, bringing total exports to date to 4.4 million bales, compared with the 6.9 million at the comparable point in the ’05-06 marketing year.

Domestic Mill Cotton Use Slides

According to the Commerce Dept., January (five-week month) total cotton consumption in domestic mills was 179.9 million pounds for a seasonally adjusted annualized rate of 4.88 million bales (480-lb). Last year’s January annualized rate was 6.25 million bales.

The December (five-week month) estimate of domestic mill use of cotton was raised by 152,000 pounds to 184.4 million. The revised seasonally adjusted annualized rate of consumption for Dec. ’06 is 4.73 million bales. This is lower than the Dec. ’05 annualized rate of 5.53 million bales.

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

Based on Commerce estimates from Aug. 1, ’06-Jan. 27, ’07, 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 5.0 million bales.

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

Step 3 Import Quota Announced

Competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending Feb. 22. 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 (480 lb), 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 March 1 and applies to upland cotton purchased no later than May 29 and entered into the United States no later than Aug. 27.

Currently, there are seven import quotas opened in the total amount of 683,310 bales.

Prices Effective Feb. 23-March 1, '07

Adjusted World Price, SLM 11/16

 42.70 cents


Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

9.30 cents

Import Quotas Open


Step 3 Quotas as of 2/22 (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

58.80 cents

Forward 3135 c.i.f. Northern Europe


Coarse Count c.i.f. Northern Europe


Current US c.i.f. Northern Europe

60.35 cents

Forward US c.i.f. Northern Europe


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

47.35 cents


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

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