Cotton's Week: July 27, 2007

Cotton's Week: July 27, 2007


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House Passes New Farm Legislation 231-191

NCC Chairman John Pucheu expressed appreciation to Agriculture Committee Chairman Collin Peterson (D-MN), General Farm Commodities subcommittee Chairman Bob Etheridge (D-NC) and Cotton-Belt members for their work in developing the provisions of the Farm, Nutrition, and Bioenergy Act of 2007, unanimously approved by the Committee and approved by the House of Representatives.  “We are pleased that the House approved a bill with commodity and cotton provisions very similar to the committee-passed bill and successfully rejected amendments which would have significantly changed those important provisions,” said Chairman Pucheu.

The new legislation continues the successful structure of the current farm program by continuing the three components of the safety net that have served U.S. agriculture well while being fiscally responsible. Many provisions sought by the NCC to reform and improve the cotton program are included in the legislation.

Consideration of the farm legislation began late Thursday following further negotiations with Democrats to secure support and an early morning decision of the Rules Committee.  Republicans raised serious concerns over use of savings created by ending a practice known as “earnings stripping” which allows foreign-owned companies operating in the U.S. to shift earnings to a country with lower tax rates thereby lowering their U.S. tax obligations.  Republicans and the White House complained this constitutes a tax increase.  Republicans were also angered by last minute additions of funds for international food aid and 1890s colleges.  In the first test, the rule governing floor debate was approved on a strict party-line vote of 222-202 with only 6 Democrats voting against the rule.  A defeat of the rule would have delayed consideration of the bill.  The rule allowed 31 amendments to be debated, including the Kind-Flake substitute proposal which would have radically altered the bill unanimously reported by the Committee.  On a bipartisan vote, the House emphatically rejected the Kind-Flake amendment by a vote of 117-330. 

On Friday, the House returned to consideration of the remaining amendments including one offered by Rep. Udall (D-CO) to reduce cotton’s direct payment to 6 cents and use the savings to increase enrollments in the Grasslands Reserve Program.  Fortunately, the Udall amendment was defeated, thanks in part to the efforts of Reps. Cramer (D-AL), Bonner (R-AL), Aderholt (R-AL), Emerson (R-MO), Berry (D-AR), Conaway (R-TX) and others who wrote a letter to their colleagues in opposition of any amendment that singles out cotton.  During the week, NCC leaders and senior staff including Pucheu, Jay Hardwick (ACP Chairman), Larry McClendon (NCC Vice Chairman), Jimmy Moody (TN), Gary Taylor (TN), Jimmy Dodson (TX), Andy Warlick (NC), Harding Stowe (NC), Malloy Evans (NC), Roger Chastain (SC), Woods Eastland (MS), Allen McLaurin (NC), Frank Rogers (SC) and Kevin Rogers (AZ) worked with the Committee and other farm organizations urging support for the Committee’s bill and defeat of the Kind-Flake amendment.

Senate Finance Committee Approves Currency Legislation

The Senate Finance Committee approved legislation to make it easier for the Administration to cite China and other countries for undervaluing their currencies to gain an unfair trade advantage.  The legislation provides that the Administration take action within 90 days if a country is found to have a “fundamentally misaligned” currency.  The Administration has indicated that they do not support action by the committee.

NCC Comments on PIPs

The EPA released an Advance Notice of Proposed Rulemaking regarding regulation of a plant-incorporated protectant (PIP) as a pesticide.

The changes are being considered to clarify differences between conventional pesticide regulations versus PIPs under the Federal Fungicide, Insecticide, and Rodenticide Act (FIFRA). Definitions within the context of FIFRA would require any producer of a pesticide to register the production site. However, with PIPs, the production is in the plant itself. Additional issues include labeling, record keeping, and inspection authority.

The NCC encouraged the agency to recognize the differences between production of conventional insecticides and production of PIPs. The NCC’s comments stated: 1) a PIP-producing facility should be defined as a physical establishment, such as a laboratory and greenhouse, where a plant is genetically altered and evaluated for intended use during the research and development phase; 2) the plant should be considered a ‘treated article” when a grower procures and plants a registered PIP; 3) recordkeeping and inspection should focus on laboratories and greenhouses with experimental PIPs that have not been approved for Experimental Use Permits (EUP); 4) PIP labeling that informs the user of a seed variety’s genetically modified trait(s) is adequate because the user is aware of the PIP being planted; 5) grower agreements with the registrant provide adequate information on resistance management and buffers; 6) the grower is legally bound to stipulations contained within the registrant and grower stewardship contract; and 7) requiring additional labeling would be redundant and duplicative to the stewardship agreement.

Mid-South to Host Southeast Peers

Cotton producers from the Southeast will travel to the Mid-South, visiting operations in Louisiana, Arkansas, and Mississippi, July 29-August 4 for the third tour of the 2007 Cotton Foundation Producer Information Exchange (P.I.E.) Program. The visiting producers will be exposed to the diverse and innovative practices of the hosting region, providing them with more competitive technology and farming methods.

This year, eleven cotton producers from the Southeastern region will join the tour. Participants include:  North Carolina producers David A. Baker, Rich Square; Noah B. Burgess, Conway; and Derick Tetterton, Pantego; Alabama producers Jeff Jones, New Market; Robert H. Nicholson Jr., Town Creek; and David Womack, Atmore.The tour also includes Georgia producers Jason Sauls, Shellman; and Jeremy Gay, Matthews; as well as Scott O'Neal, Bennettsville, SC; Alan J. Edwards, Jay, FL; and Jared Webb, Yale, VA.

When the tour starts on July 30 in Louisiana, the group will tour farms in the Tensas Parish area. The next day the participants will tour the Cottonseed Extruder Plant at Hollybrook Cottonseed Processing, LLC with host Bobby Amacker. The group will then have an overview of the Pepper Processing Plant at Panola Pepper Company followed by farm tours with local producers that same day.

The tour will continue to Dumas, AR on August 1 to survey other resident farms and visit the Arkat Feed Mill and the USDA Classing Office.

The P.I.E. Program is facilitated by the National Cotton Council’s Member Services staff, in cooperation with local producer associations in the regions. The Program is supported by a grant from Bayer CropScience to the Cotton Foundation.

US Cotton Promoted at Colombia Event

US cotton received publicity at Colombiamoda in Medellín through CCI’s COTTON USA trade show booth, a VIP business center sponsored by the COTTON USA Sourcing Program and a fashion show. Participants included 6,679 national buyers and 1,493 international buyers from the United States, Europe, Latin America and Asia. Nearly 450 apparel companies from North and South America presented new clothing trends at the event.

CCI’s booth highlighted the benefits of US cotton while Cotton Incorporated representatives distributed fashion forecasts and presented new fabric developments. About 138 international and domestic companies conducted business appointments within the VIP center.

Concurrently with Colombiamoda, the COTTON USA Sourcing Program and five participating mills visited 36 Colombian companies. The visits enabled Colombian and US companies to take advantage of potential business opportunities available through the current ATPDEA and a future Colombian Free Trade Agreement. Participating US mills included: Clovertex, Hamrick Mills, Parkdale, Ramtex and Tuscarora Yarns.

WideStrike Natural Refuge Option Available

EPA has approved a natural refuge option for WideStrike found exclusively in PhytoGen brand cottonseed.

With this option, cotton producers in eligible areas won’t be required to plant a non-B.t. cotton refuge for PhytoGen brand cottonseed containing WideStrike since other crop and non-crop plants serve as a natural refuge. A non-B.t. cotton refuge will still be required as part of an Insect Resistance Management program for PhytoGen brand cottonseed containing WideStrike planted outside of eligible areas.

The natural refuge option is available in Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Maryland, Missouri, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas (excluding the following counties: Brewster, Crane, Crockett, Culberson, El Paso, Hudspeth, Jeff Davis, Loving, Pecos, Presidio, Reeves, Terrell, Val Verde, Ward and Winkler) and Virginia.

The EPA previously established prohibitions on the planting of B.t. cotton in the Texas Panhandle counties of Carson, Dallam, Hansford, Hartley, Hutchinson, Lipscomb, Moore, Ochiltree, Roberts and Sherman as well as south of Highway 60 in Florida. These restrictions still apply with the approval of a natural refuge for PhytoGen brand cottonseed containing WideStrike.

Additionally, cotton producers who plant PhytoGen brand cottonseed containing WideStrike outside of regions eligible for the natural refuge option must continue to plant a non-Bt cotton refuge.

Mill Cotton Use Holds Steady

According to the Commerce Department, June (5-week month) total cotton consumption in domestic mills was 238.3 million pounds for a seasonally adjusted annualized rate of 4.95 million 480-pound bales. Last year’s June annualized rate was 5.57 million bales. The May (4-week month) estimate of domestic mill use of cotton was lowered by 1.7 million pounds to 185.26 million. The revised seasonally adjusted annualized rate of consumption for May is 4.92 million 480-pound bales. This is lower than last year’s May annualized rate of 5.56 million bales.

Based on Commerce estimates from August 1, 2006, through June 30, 2007, projected total pounds consumed during crop year 2006-07 would be 2.38 billion pounds or 4.95 million 480-pound bales.  USDA’s latest estimate of 2006-07 crop year mill use is 4.90 million 480-pound bales.

Preliminary July domestic mill use of cotton and revised June figures will be released by the Department of Commerce on August 23, 2007.

Export Sales for Week Ending July 19

Net export sales for the week ending July 19, 2007 were 24,100 bales (480-lb.). This brings total ‘06-07 sales to slightly over 14.6 million. Total sales at the same point in the ‘05-06 marketing year were approximately 18.4 million bales. Total new crop (‘07-08) sales are 1.3 million bales (480-lb.). Shipments for the week were 469,600 bales, bringing total exports to date to 12.2 million bales, compared with the 16.5 million bales at the comparable point in the ‘05-06 marketing year.

With less than one month remaining in the marketing year, weekly shipments must average roughly 457,000 bales to reach the USDA projection of 13.0 million bales.

Price Effective July 27-July 31, '07
Adjusted World Price, SLM 11/16

54.10 cents


Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

3.39 cents

Price Effective Aug 1-Aug 2, '07    
Adjusted World Price, SLM 11/16 53.95 cents  *
Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value 0.00 cents  
Import Quotas Open  NA  
Step 3 Quotas (480-lb. bales)  NA  
ELS Payment Rate 3.39 cents  
*No Adjustment Made Under Step I
Five-Day Average
Current 3135 c.i.f. Northern Europe

68.64 cents

Forward 3135 c.i.f. Northern Europe

70.51 cents

Coarse Count c.i.f. Northern Europe


Current US c.i.f. Northern Europe

67.30 cents

Forward US c.i.f. Northern Europe

71.05 cents

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

47.39 cents


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

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