Cotton's Week: March 9, 2007

Cotton's Week: March 9, 2007

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Trade Policy Focus Offered

Andy Warlick, president/CEO of Parkdale Mills and a director of NCC and the National Council of Textile Organizations, testified before the Senate Finance Committee concerning the need for US trade policy to focus on keeping jobs in the United States.

Warlick urged the Committee to reform US trade policy in a way that makes it attractive for manufacturers to invest in the United States and keep jobs, as opposed to sending overseas that investment and the jobs it supports.

Specifically, Warlick noted that the recent Haiti trade preferences legislation contained significant loopholes that probably will cost US jobs – loopholes that could have been corrected if the US textile industry had been consulted. He discussed China’s dominant role in world trade of apparel products, stating that through “a complex web of subsidies including currency manipulation, export tax rebates, non-performing loans, and subsidized transportation and utility rates,” Chinese apparel manufacturers are able to undercut world prices of textiles and apparel.

Warlick emphasized that by including exemptions to strict rules of origin in some free trade agreements, the Unite ds States has opened itself up to tariff-free competition from Chinese made textiles and apparel that take advantage of these loopholes. He reiterated support for the Colombia and Peru free trade agreements because they contain no loopholes for Asian products and have strong customs enforcement mechanisms. He called on Congress to ensure there is no loss in trade benefits in the transition from the Andean Trade Promotion Act to the new free trade agreements. He also stated that a Korea free trade agreement should contain strict rules of origin, provide for a 10-year phase-out period for textile and apparel tariffs, and contain a strong and effective safeguard provision.

Warlick said textile industry support for an extension of Trade Promotion Authority is conditioned on the inclusion of appropriate textile-specific negotiating objectives regarding the Doha Round of trade negotiations.



CRP Contract Intention Results Announced

Agriculture Secretary Mike Johanns announced the results of the recent opportunity given to Conservation Reserve Program (CRP) participants to re-enroll or extend the contractsthat will expire between ’07 and ’10.

Last year, USDA conducted public comment periods as well as listening sessions, in which NCC participated, to determine how to develop a process for extension and re-enrollment of future CRP contracts that were expiring. An estimated 23.9 million of 28 million acres of eligible CRP contracts are expected to be re-enrolled. An estimated 4.1 million acres in CRP contracts will exit CRP between ’07 and ’10.

The Farm Service Agency (FSA) contacted more than 317,000 CRP participants to determine their interest in continuing in CRP. FSA, which implements CRP on behalf of the Commodity Credit Corp. (CCC), divided the group into ’07 expirations and ’08-10 expirations. The ’07 expirations included 15.7 million eligible acres and the ’08-10 expirations included 12.1 million eligible acres.

Last spring, FSA asked CRP participants with contracts set to expire in ’07 to confirm their interest in re-enrolling or extending their contracts. A recent review of the data shows landowners decided to extend or re-enroll 13.1 million acres in CRP contracts thus far. Before approving re-enrolled or extended contracts, FSA must ensure that the required cover is maintained and that other contract provisions are met. In addition, participants must demonstrate they meet eligibility requirements for the new enrollment period. In the case of re-enrollments, updated rental rates will apply.

Last summer, CRP participants with CCC contracts expiring in ’08-10 were asked to express their interest in re-enrolling or extending. To date, these contract holders with 10.1 million acres of the 12.1 million acres set to expire have indicated an interest in re-enrolling or extending their contracts. The ’08-10 acres do not represent final approval to stay in the program, but rather an interest by the landowner to stay in the program. 

USDA does not plan to conduct a general CRP sign-up for FY07 or FY08. However, continuous sign-up of high-priority buffers, wetlands and other initiatives, as well as the Conservation Reserve Enhancement Program, will continue.

A list of questions and answers regarding CRP contract re-enrollments and extensions can be found at http://www.cotton.org/issues/index.cfm under Farm Bill Information.


Carbofuran Availability Requested

The NCC, National Potato Council, National Corn Growers Assoc. and the National Sunflower Assoc. met with EPA to convey the need for carbofuran (active ingredient in Furadan insecticide) to remain available to producers of their respective crops. Since EPA’s Aug. ’06 announcement of a proposal to cancel the carbofuran registration for the majority of its uses, cancellation opponents have urged EPA to reconsider its position and review all available studies. 

In July of last year, NCC sent EPA a letter supporting continued product use, emphasizing the insecticide’s effectiveness on cotton aphids when used under Section 18 emergency exemptions. (See 10/6/06 Cotton’s Week.) Furadan manufacturer FMC is submitting additional economic benefits and efficacy studies to the agency to address EPA’s actions surrounding the proposed cancellation. A registration status decision is not yet final.


Panel Discusses Federal Research Funding

USDA’s National Agricultural Research, Extension, Education, and Economics (NAREEE) Advisory Board discussed research funding in USDA’s Farm Bill proposal; alternative proposals for funding and restructuring of federal research, extension and education; and food safety. Chuck Coley, a Vienna, GA, cotton producer, who was appointed to the NAREEE Board by Secretary Johanns in ’06, participated in the Washington, DC meeting.

The board meets periodically to advise the secretary, land-grant colleges and universities on national priorities/policies for food and agricultural research, education programs, extension outreach, and economic research programs. In addition to providing policy guidance to USDA, board members meet with Congress, hold stakeholder listening sessions, review competitive-grant programs and conduct an annual review of USDA research and education activities for relevance to national priorities and funding adequacy.


Baroody Gets CPSC Nomination

President Bush announced his intention to nominate Michael E. Baroody of Virginia to be chairman and member of the Consumer Product Safety Commission.

Baroody currently serves as executive vice president of the National Assoc. of Manufacturers (NAM). He had served as NAM’s senior vice president for Policy, Communications, and Public Affairs. Earlier in his career, he served as assistant secretary for Policy at the US Dept. of Labor and as deputy assistant to President Reagan.


David Johnson Named to USDA Post

Agriculture Secretary Johanns named David Johnson as a USDA Deputy Chief of Staff. Johnson worked for USDA in the ’90s in the Foreign Agricultural Service as the deputy director of legislative affairs. Most recently, he served as chief counsel to the Senate Committee on Agriculture, Nutrition and Forestry. He specialized in food, agricultural credit and environmental policy during his ’94-07 committee tenure.

The Indiana native holds a law degree from the U. of Chicago Law School and a bachelor's degree from Purdue U.



Ginner School Registration Open

Registration is open for ’07 Ginner Schools. Dates for the schools are: Southwest Ginners School, Lubbock, TX - April 9-11; Western Ginners School, Las Cruces, NM - May 15-17; and Stoneville Ginners School, Stoneville, MS - June 12-14. Registration information can be completed online at http://ncga.cotton.org.

National Cotton Ginners Assoc. (NCGA) Executive Vice President Harrison Ashley said each level of Ginner Schools coursework is built on the previous level of instruction, with Level I as the foundation. Thus, beginning students, regardless of gin experience, start with Level I.

Level I courses are: Introduction to Cotton Ginning and the Industry; Maintenance of Auxiliary Gin Components; Basic Hydraulics; Basic Gin Safety; Maintenance and Adjustments for Seed Cotton Cleaners, Gin Stands, and Lint Cleaners; Air Utilization and Drying; and Electricity in the Gin.

The Level II offerings include: Purpose and Operating Principles of Individual Gin Machines; Efficient Operation, Adjustment, and Maintenance of Gin Equipment; Pneumatics and Waste Collection; Electrical Systems; Hydraulic Systems; Gin Safety; Management Tips; and Roller Ginning (at the Western School only).

Level III features: Review of Functions of a Ginning System; Electrical Systems; Air Systems in the Gin; Drying and Moisture Restoration Systems; Matching Machinery Capacities in the System; Seed Cotton Unloading Systems and Management of Seed Cotton Handling Systems; Bale Presses and Hydraulic Systems; Safety Programs and Labor Regulations; Cottonseed Handling Systems; and Roller Ginning (at the Western School only).

In addition, all schools will feature continuing education courses on all three days and a one-day course for office workers and gin owners.

School cooperators include NCGA, USDA-ARS, NCGA member associations, NCC, Cotton Incorporated, gin machinery/equipment manufacturers/suppliers, Cooperative State Research, Education and Extension Service, and select land grant universities.


Improved US Offtake Seen in ’08

Projections released at this month’s Agricultural Outlook Forum by USDA put ’07-08 US cotton production at 20.00 million bales; mill use at 4.50 million bales and exports reaching 18.00 million bales. The estimated total offtake was seen at 22.50 million bales, resulting in ending stocks of 6.30 million bales.

In its March report, USDA gauged US ’06-07 cotton production at 21.73 million bales, left mill use unchanged at 5.00 million and lowered exports 500,000 bales to 14.00 million bales, reflecting continued sluggish US export sales and shipments and lower estimated imports by China. The estimated total offtake now stands at 19.00 million bales, generating ending stocks of 8.80 million bales, the largest since ’85-86. The estimated ending stocks-to-use ratio is 46.3%.

The March report sees world production for the ’06-07 marketing year at 116.75 million bales, up 190,000 bales from the February report. World mill use was raised 190,000 bales to 121.54 million. Consequently, world ending stocks are estimated to be 52.38 million bales for a stocks-to-use ratio of 43.1%.

USDA’s ’07-08 world projections, also released at the Agricultural Outlook Forum, estimated world production to reach 117.00 million bales with mill use at 125.00 million bales. This would result in world ending stocks of 48.88 million bales on July 31, ’08, and a stocks-to-use ratio of 39.1%.


Sales, Shipments Keep Pace

Net export sales for the week ending March 1 were 205,100 bales (480-lb). This brings total ’06-07 sales to slightly more than 8.4 million. Total sales at the same point in the ’05-06 marketing year were approximately 13.5 million bales. Total new crop (’07-08) sales are 451,400 bales.

Shipments for the week were 257,100 bales, bringing total exports to date to 4.9 million bales, compared with the 7.8 million bales at the comparable point in the ’05-06 marketing year.


Step 3 Import Quota Announced

Competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending March 8. 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 15 and applies to upland cotton purchased no later than June 12 and entered into the United States no later than Sept. 10.

Currently, there are nine import quotas opened in the total amount of 878,541 bales.


Prices Effective March 9-15, '07

Adjusted World Price, SLM 11/16

43.67 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

8.33 cents

Import Quotas 0pen

 9

Step 3 Quotas as of 3/8(480-lb. bales)

 878,541

ELS Payment Rate

0.00 cents

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

59.77 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

NA

Current US c.i.f. Northern Europe

61.70 cents

Forward US c.i.f. Northern Europe

 NA

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

47.81 cents

**

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

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