Cotton's Week: May 18, 2007

Cotton's Week: May 18, 2007


™®Trademarks of Corteva Agriscience and its affiliated companies.
Budget Resolution Approved

The House (214-209) and the Senate (52-40) approved a $2.9 trillion FY08 budget resolution along a party-line vote.

Chairmen Spratt (D-SC) and Conrad (D-ND) announced the agreement, which includes increased funding for veteran’s health care, education and defense.

The resolution also includes a pay-go provision and projects a deficit of $252 billion in FY08 gradually improving to a $41 billion surplus in FY12. The pay-go rule in the Senate resolution matches the provision approved by the House earlier this year. Pay-go requires any increases in spending or reductions in taxes not specifically provided for in the resolution to be off-set or a two-thirds majority of members to waive.

The resolution establishes the agriculture budget at the CBO baseline and includes a reserve fund of up to $20 billion which can be used in writing the ’07 farm bill provided the additional spending is offset by spending reductions in other areas.

The resolution allows $180 billion in tax cuts to include an extension of the child tax credit and the 10% income tax bracket. It also allows for a one-year “patch” to temporarily halt the expansion of coverage of the Alternative Minimum Tax to an additional 20 million taxpayers.

All other tax cuts, including extension of provisions scheduled to expire in ’10, will require an offset. The resolutions are not binding and do not require Presidential signature. Completion of work on the budget clears the way for the annual appropriations measures to be considered.

Panels to Mark Up Farm Bill Provisions

House Agriculture Committee Chairman Peterson (D-MN) announced that the first subcommittee mark-ups of ’07 farm bill provisions would be May 22 and May 24.

On May 22, the Subcommittee on Conservation, Credit, Energy and Research will mark-up and on May 24, the Subcommittee on Livestock, Dairy and Poultry will consider provisions under their jurisdiction.

Other mark-ups, including the commodity titles, likely will be scheduled for the week of June 4 when Congress returns from the Memorial Day district work period. The work product of all subcommittees is expected to be considered by the full committee before July 4.

Chairman Peterson told the news media that the process will be “bipartisan, open and public” with the objective of developing a farm bill with “effective policies for supporting farm income, resource conservation, rural economic development, a healthy fruit and vegetable sector, feeding and nutrition programs, and energy independence.”

A preliminary discussion draft of the conservation title is available online at Additional drafts will be posted as available and all subcommittee sessions will be broadcast live at

China Delegation Visits Industry Leaders

A Chinese delegation traveling through the United States on a cotton buying mission has met with industry leaders, governors and other government officials in Austin, TX; Houston, TX; Jackson, MS; Columbia, SC; and Memphis, TN.

According to reports, the delegation will be responsible for buying some $400 million worth of cotton from various US origins. Most observers believe that these sales represent most if not all of the "sales to China" reported in USDA’s recent export sales reports, especially those that have been recorded following the issuance of the last round of tariff rate quotas.

The delegation, led by China’s Assistant Minister of Commerce Wang Chao, took part in a contract signing ceremony with several Memphis cotton buyers today at the Peabody Hotel in Memphis.

Prior to that ceremony, the delegation, which also had a goal of strengthening relationships with the US cotton industry, met with Allen Helms, immediate past NCC chairman; John Pucheu, current NCC chairman; Larry McClendon, NCC vice chairman; Michael Adams, Cotton Council International (CCI) president; and Mark Lange, NCC president/CEO.

As part of its support of the Chinese tour, the NCC invited the Congressional delegations for each state that the group visited. During the delegation’s Austin visit, Texas Governor Rick Perry declared May 11 as “2007 China Textiles Materials Trade and Cooperation Delegation Day.”

Key Congressional Members Visited

NCC Chairman John Pucheu and American Cotton Producer Chairman Jay Hardwick met with key USDA and Congressional leaders.

Pucheu, who on previous visits met with every Cotton Belt member of the General Farm Commodities subcommittee and most Cotton Belt members of the Agriculture Committee and Appropriations Committee, was joined by Hardwick in meetings with Agriculture Committee Chairman Peterson (D-MN) and General Farm Commodities Subcommittee Chairman Etheridge (D-NC) to discuss the current outlook for cotton and ongoing efforts by NCC leaders to develop a consensus recommendation on the cotton provisions to be included in new farm legislation.

They also conveyed NCC’s support for inclusion of a competitiveness provision to assist domestic textile manufacturers and opposition to modifications of existing payment limitation provisions which already adversely impact commercially viable operations.

During meetings with members and staff of the Ways and Means Committee, Pucheu and Hardwick conveyed industry support for Congressional approval of free trade agreements with Colombia, Peru and Panama; urged extension of the Andean agreement to avoid interruptions in trade; and expressed concern about China’s failure to provide consistent, predictable market access as provided under the WTO accession agreement.

They also expressed deep reservations about the direction of the WTO Doha negotiations, which continue to include separate and discriminating treatment for cotton, and explained that the NCC will have difficulty supporting an extension of Trade Promotion Authority without significant modification and improvement in the way cotton is currently treated in the Framework and in the “Challenge” papers recently published by WTO Agriculture Committee Chair Crawford Falconer.

Immigration Compromise Reached

Senate negotiators reached a compromise on an immigration overhaul measure that includes border security provisions, a guest worker program and a path to citizenship for the estimated 12 million illegal immigrants already in the country. It would shift the current immigration system emphasis on family unification toward one based more on employment and other skills.

Part of the compromise is based on triggers that the Homeland Security secretary must certify have been completed. Among the triggers are the hiring of 18,000 new border patrol officers; construction of 200 miles of vehicle barriers and 370 miles of fencing; the cessation of “catch and release” and the implementation of “secure and effective” identification.

All employers would be required to electronically verify the identity and legal status of all new hires within 18 months of enactment or on the date the Homeland Security secretary certifies that the identification system is operational. They also would have to verify the status of all current employees within three years of enactment.

The bill would establish a new temporary worker program for future immigrants, broken into three categories:  non-seasonal (Y-1); seasonal (Y-2A and Y-2B); and spouses and minor children (Y-3). Seasonal workers would qualify for 10-month visas, although the terms of these visas still were being negotiated. There is an initial cap of 400,000 for the Y-1 visa program, with annual adjustments based on market fluctuations.

The compromise legislation has received criticism from both sides of the aisle in the Senate. Majority Leader Reid (D-NV) has indicated that the Senate will debate the immigration overhaul during the week of May 21. Leaders in the House of Representatives indicated their hope is to have an immigration bill passed by the August recess.

Pesticide Issues Reviewed

The EPA’s Federal Advisory Committee, known as the Pesticide Program Dialogue Committee (PPDC), met in Washington, DC, to review current issues pertaining to spray drift, worker safety, endangered species, product registration and other topics.

The PPDC offers a forum for a diverse group of stakeholders to provide feedback to the EPA’s pesticide office on how the agency regulates pesticide use, shapes policy, and implements programs. PPDC membership ranges from academics to public interest groups to commodity representatives.

Cannon Michael, a Los Banos, CA, cotton producer, serves on the PPDC as a representative of the NCC and the California Cotton Growers Assoc. He has been active in the PPDC Workgroup on Worker Safety which is responsible for generating and coordinating feedback on the agency’s current proposals to revise the Worker Protection Standard relating to agricultural pesticides.

Other presentations from EPA staff and stakeholder discussion focused on aspects of spray drift regulation, such as enforceability and the use of best available equipment to prevent drift. The agency also reported that a review of Temik aldicarb should be completed this year, but the deadline for a final decision on whether or not the insecticide will remain available to growers is yet to be announced. NCC continues its efforts to support aldicarb re-registration.

In response to ongoing litigation, the pesticide registration office also outlined the framework for factoring in Endangered Species Act regulations into the use of every agricultural chemical it reviews.

Cotton Transfer Fact Sheet Updates

An updated "Fees and Charges" fact sheet (including a new table) is now available on the USDA Farm Service Agency (FSA) web site. The document can be found by going to and selecting the News and Events tab at the top of the page, and going to “Find USDA Fact Sheets" at top right of page.

FSA issued new notices to county offices detailing cotton transfer procedures and more fully describing anticipated charges upon forfeiture. The new procedures help clarify the potential for transfers of cotton under loan to result in additional charges upon forfeiture of the cotton. (See 4/13 Cotton’s Week).

Earlier, the NCC developed a paper outlining/summarizing the impact of these changes, and it contains language that producers and merchants may wish to consider including in their option-to-purchase contracts that should help protect the parties from unforeseen charges. That paper is available online at

Sales, Shipments Steady

Net export sales for the week ending May 10 were 311,000 bales (480-lb). This brings total ’06-07 sales to approximately 12.9 million. Total sales at the same point in the ’05-06 marketing year were approximately 16.5 million bales. Total new crop (’07-08) sales are 746,500 bales.

Shipments for the week were 314,300 bales, bringing total exports to date to 7.9 million bales, compared with the 12.4 million at the comparable point in the ’05-06 marketing year. With a little less than three months remaining in the marketing year, weekly shipments must average roughly 463,000 bales to reach the USDA projection of 13.25 million bales.

Prices Effective: May 18-24, '07

Adjusted World Price, SLM 11/16

41.16 cents


Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

10.84 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

56.40 cents

Forward 3135 c.i.f. Northern Europe

59.92 cents

Coarse Count c.i.f. Northern Europe


Current US c.i.f. Northern Europe

54.95 cents

Forward US c.i.f. Northern Europe

59.90 cents

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

47.77 cents


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

Error in element (see logs)