Cotton's Week: August 3, 2007

Cotton's Week: August 3, 2007

phytogen

House Passes FY08 Ag Appropriations
The House approved the FY08 Agricultural Appropriations measure in spite of Republican protests and a walkout.

Republicans strongly objected to the procedures employed by House leaders to limit amendments and debate on the measure. Earlier, Republicans stalled debate on the measure to protest the way another measure was brought to the floor. The vote on final passage was 237-18 with more than half of Republicans not voting or voting present.

The FY08 appropriations measure (HR 3161) provides $91.5 billion for agriculture programs (commodity, conservation, nutrition, rural development, etc.) and administration. It also funds the Food & Drug Administration (FDA) and Commodity Futures Trading Commission.

The bill provides $993 million (1%) more than the President proposed and has drawn a veto threat. It bars FDA from blocking implementation of prescription drugs by individuals, a provision included in past years and dropped in conference, and includes the same compromise language of the House-passed farm bill that requires country-of-origin labeling of meat and meat products by September ’08.

The legislation provides the Commodity Credit Corp. (CCC) with $13 billion for commodity programs. As a result of higher prices, the funding required by CCC was $10 billion or 77% below FY07. The bill increases funding for conservation by $980 million or 13% and increases funding for rural development by 14%. The legislation provides $36.269 million to USDA’s Animal & Plant Health Inspection Service for boll weevil and pink bollworm eradication programs. The funds are combined in a new “cotton pests” account.

The Senate Appropriations Committee has completed work on its version of the FY08 agriculture appropriations measure, but no date has been set for floor consideration.


NCC Opposes Inspection Fee Hike

The NCC will be submitting comments to USDA-APHIS stating that the industry cannot support the agency’s request to amend the user fee regulations by increasing fees charged for export certification of plants and plant products. The American Cotton Shippers Assoc. and other cotton interest organizations and individual firms also have filed similar comments ahead of the Aug. 13 deadline. 

The NCC’s comments state that while there is a need to provide adequate funding for export certification programs, NCC policy generally opposes user fees because the costs are passed back through the marketing chain and borne by producers. The comments note that export certification user fees act as self-imposed trade barriers (de facto export taxes) that may harm cotton and other agricultural commodities in the highly competitive export market.

The NCC also pointed out that other countries certify plants and plant products for export at nominal fees or, in some cases, at no charge.

The NCC said it understands that inspecting articles of commerce are necessary steps in the export certificate issuance process; but USDA-APHIS PPQ should consider lowering the user fee for cotton because cotton’s self inspection programs - such as the APHIS cotton warehouse National Cotton Compliance Agreement -- reduce costs associated with administering the program. The warehouse compliance program is an example of the industry bearing the cost of the inspection but being charged the same fee for phytosanitary certificates as commodities that bear none of the costs associated with export certification.

The comments also point out that the use of electronic documents by APHIS through their Phytosanitary Certificate Issuance and Tracking System would generate additional cost savings.


Multiple Disaster Declarations Issued

In recent weeks, USDA has issued disaster declarations for a number of counties in states across the Cotton Belt. In many parts of the Mid-South and Southeast, Secretarial declarations have been made in response to extreme drought conditions. Designations in the Southwest generally have been the result of excessive rainfall.

USDA’s disaster declarations make all qualified farm operators in the designated areas eligible for low interest emergency loans from USDA's Farm Service Agency (FSA), provided eligibility requirements are met. Farmers in eligible counties have eight months from the date of the declaration to apply for loans to help cover part of their actual losses.

FSA has a variety of programs, in addition to the emergency loan program, to help eligible farmers recover from adversity. A detailed listing of eligible counties can be found at http://www.fsa.usda.gov/ or https://www.disasterhelp.gov/suite/.


Two CFTC Members Confirmed

The Senate confirmed two new members of the Commodity Futures Trading Commission (CFTC).

Confirmed were Bart Chilton, former legislative director for the National Farmers Union, top staffer for former Majority Leader Daschle and chief of staff to former Secretary of Agriculture Dan Glickman; and Jill Sommers, former staffer for Sen. Dole.

Once Chilton and Sommers are sworn-in, the CFTC will have four Commissioners. The agency has been operating under acting Chairman Walt Lukken.


North Dakota Visit Completes First Year’s Exchange

A group of eight Sunbelt growers will see agricultural production/processing and agribusiness operations in North Dakota during Aug. 6-10 as part of the National Cotton Council’s Multi-Commodity Education Program (MCEP).

The exchange between commodity producer leaders in the Sunbelt and the Midwest/Far West regions is designed to provide the program’s participants with: 1) a better understanding of production issues/concerns faced by their peers in another geographic region and 2) an opportunity to observe agronomic practices, technology utilization, cropping patterns, marketing plans and operational structure. The program is supported by The Cotton Foundation with grants from Deere & Company and Monsanto.

The NCC member Sunbelt participants and the regional interest organizations they represent include:  Donny Lassiter, Conway, NC (North Carolina Cotton Producers); Ronald Lee, Bronwood, GA (Southern Cotton Growers Assoc.); John Willis, Brownsville, TN (American Agriculture Movement of Tennessee); Lawrence Long, Indianola, MS (Delta Council); Bryan Patterson, Amherst, TX (Plains Cotton Growers Assoc.); Stuart Posey, Roby, TX (Rolling Plains Cotton Growers Assoc.); Mark McKean, Riverdale, CA (California Cotton Growers Assoc.); and Paco Ollerton, Casa Grande, AZ (Arizona Cotton Growers Assoc.). Among crops that the participants raise, besides cotton, are corn, soybeans, wheat, grain sorghum, sunflowers, hay, tomatoes, onions, garlic and watermelons.

The MCEP was launched last October when producers from the Midwest/Far West traveled to North Carolina to observe cotton production/processing and other agricultural operations. That itinerary was developed by NCC staff in cooperation with local organizations and leaders and the trip was coordinated by NCC’s Member Services.

The upcoming North Dakota tour was arranged by the North Dakota Grain Growers Assoc.

The Sunbelt participants will get to see production of various commodities, including wheat, barley, corn, sunflowers, canola, potatoes, sugar beets, soybeans and edible beans.

They will start their tour on Aug. 6 in Fargo with an orientation to Midwest agriculture followed by tours of a farm in Valley City and Busch Agricultural Resources in Moorhead, MN. The next day back in North Dakota, the group will visit a farm in the Jamestown area and the John Deere Air Seeder Plant in Valley City, and then tour a farm, Extension plots and the Mapleton Winery in Casselton.

On Aug. 8th, the group will see a canola/sunflower processing plant in West Fargo as well as corn production and milling in the Grand Forks area. The next day includes tours of a sugar beet farm/plant in the Grand Forks area and a canola field plot in Minot. The week’s activities conclude on Aug. 10 with a visit to the Blue Flint Ethanol Plant in Falkirk.

“The Multi-Commodity Exchange Program is increasing the awareness among participants regarding the many challenges facing farmers in this nation, and it is creating strong and lasting relationships between producer leaders of American agriculture,” NCC President/CEO Mark Lange said. “The North Carolina exchange last October was very successful and we believe our Sunbelt growers will also find the program provided by North Dakota Grain Growers Association highly productive and one that will further build on grower interaction.”


Chinese Journalists Tour Cotton Belt

Chinese journalists recently completed an educational tour of the US Cotton Belt accompanied by Cotton Council International (CCI) and Cotton Incorporated staff.

Five journalists representing China’s key media learned about the US cotton industry as part of the “Cotton-Beyond Your Imagination™” campaign.The group visited Texas cotton fields; USDA’s classing and grading office in Bartlett, TN; Cotton Incorporated’s world headquarters in Cary, NC; and Cotton Incorporated’s consumer marketing headquarters and fashion design studios in New York.

The journalists represented China Textile News, China’s largest textile trade paper; Modern Weekly, a national business/lifestyle magazine; Modern Times, a national TV program; and www.sina.com, the largest Chinese-language infotainment web portal.

CCI and Cotton Incorporated’s “Cotton-Beyond Your Imagination™” campaign aims to stimulate generic demand for cotton among Chinese consumers.


Shipments, New Crop Sales Strong

Net export sales for the week ending July 26, ’07 were 56,100 bales (480-lb). This brings total ’06-07 sales to approximately 14.7 million. Total sales at the same point in the ’05-06 marketing year were approximately 18.5 million bales. Total new crop (’07-08) sales are 1.6 million bales.

China remains the largest export customer with purchases of 4.6 million bales for ’06-07. Turkey and Mexico hold the second and third spots, respectively, with purchases of 2.4 and 1.7 million bales. Indonesia and Pakistan round out the list of the top five destinations.

Shipments for the week were 467,600 bales, bringing total exports to date to 12.7 million bales, compared with the 17.2 million at the comparable point in the ’05-06 marketing year. With five days of shipments yet to be reported for the ’06-07 marketing year, another 300,000 bales are needed to reach USDA’s current estimate of 13.0 million bales.


Prices Effective Aug. 3-9, '07

Adjusted World Price, SLM 11/16

54.46 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

2.59 cents

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

71.02 cents

Forward 3135 c.i.f. Northern Europe

 NA

Coarse Count c.i.f. Northern Europe

 NA

Current US c.i.f. Northern Europe

71.45 cents

Forward US c.i.f. Northern Europe

 NA

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

47.32 cents

**

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

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