Cotton's Week: August 31, 2007

Cotton's Week: August 31, 2007

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’07-08 Leadership Class Chosen

The 25th cotton leadership class has been chosen by the NCC’s Cotton Leadership Committee.

The class will begin its activities in the Mid-South on Sept. 10-14. On Sept. 11, they will visit the Memphis headquarters of the NCC for: 1) an orientation to US cotton’s central organization and overview of its policy development process and 2) training in presentations, business etiquette and media skills.

The following day, the group will visit Staplcotn and PYCO, Inc., in Greenwood, MS, before seeing cotton production/harvesting in that area. On Sept. 13, the class will visit another cotton operation and a gin before touring the USDA Agricultural Marketing Service office in Bartlett, TN, and Cargill Cotton Company in Memphis. They will conclude their session on the 14th with a visit to the Memphis offices of DuPont Crop Protection, which sponsors the program through a grant to The Cotton Foundation.   

The ’07-08 class includes:  Producers - Tim Mullek, Robertsdale, AL;  Nathan Reed, Marianna, AR; Kent Dunn, Moscow, KS; and Charlie Meyer, III, Hanford, CA; Ginners - Dwayne Alford, Yuco Gin, Inc. II, Yuma, AZ, and Gil Haskins, Worth Gin Co., Sylvester, GA; Warehouser - Hernand Koubratoff, Anderson Clayton, Fresno, CA; Merchant - Amy Ives, Cargill Cotton Company, Memphis, TN; Cottonseed - Kelly Jack, PYCO Industries, Inc., Lubbock, TX; and Marketing Cooperative - Carlos Garcia, Plains Cotton Coop Assoc., Lubbock.

The Cotton Leadership Program, which is coordinated by NCC’s Member Services, is intended to foster leadership skills in individuals who demonstrate the potential and desire to be industry leaders. Participants gain a thorough understanding of all industry segments and the common goals they share by participating in specialized training and personal interaction with industry leaders.



Crop Conditions Vary Across Regions

The latest weekly evaluation of the US cotton crop showed a slight decline in the overall condition of the crop relative to the previous week. USDA’s Crop Progress rates the cotton crop in 15 states by assigning percentages of the crop in the categories of Very Poor, Poor, Fair, Good and Excellent. As of August 26, 12% of the crop is rated Excellent with another 37% in the Good category. At the other extreme, 6 and 14% of the crop are rated as Very Poor and Poor, respectively.

Regionally, the Southeast crop shows the greatest stress due to drought conditions that have persisted for much of 2007. Alabama’s crop is now rated as 68% in the Very Poor and Poor categories with only 7% in the Good and Excellent categories. Below-average conditions are evident across the Southeast with the remaining states having between 20 and 40% of the crop rated as Very Poor or Poor.

Above-normal temperatures and limited rainfall during much of August has plagued the Mid-South crop. While irrigation has somewhat mitigated the impact of the 100+ degree weather, USDA’s ratings of the crops in Tennessee and Missouri show the most notable declines since the beginning of August. Both states now have between 30 and 35% of the crop rated either Very Poor or Poor.

The Southwest has generally received adequate to excessive rainfall in some cases. Overall, the crops in Kansas, Oklahoma and Texas are rated as average to above-average. The percentages of the crop in the Good and Excellent categories are: Kansas – 45 and 10%; Oklahoma – 66 and 6%; and Texas – 37 and 14%. In the West, the vast majority of the crop is rated in the Good and Excellent categories. Complete state level ratings can be found at  http://www.cotton.org/econ/cropinfo/progress.cfm.



USTR Seeks Comments on New WTO Dispute with Brazil

In a Federal Register notice released on Aug. 30, the Office of the United States Trade Representative (USTR) announced that Brazil has requested consultations with the U.S. regarding domestic support measures and export credit guarantees for agricultural products.

In its request for consultations, Brazil alleges that the United States has provided total support to domestic producers in excess of commitments with respect to the Aggregate Measurement of Support (AMS) allowed under the current WTO agreement. Specifically, Brazil’s complaints focus on the years 1999, 2000, 2001, 2002, 2004, and 2005. In addition,

Brazil alleges that export credit guarantees under the GSM–102 program and the Supplier Credit Guarantee Program, in respect of all agricultural products, constitute prohibited export subsidies. Brazil’s formal request may be found at http://www.wto.org contained in a document designated as WT/DS365/1.

The new dispute is not specific to cotton, but covers all commodities in aggregate. The compliance phase of the cotton dispute with Brazil is ongoing. 

USTR is inviting interested parties to submit written comments addressing the issues raised by Brazil. Comments should be submitted on or before Sept. 14 either (i) electronically, to FR0705@ustr.eop.gov, with ‘‘Agricultural Subsidies (Brazil) (DS365)’’ in the subject line, or (ii) by fax, to Sandy McKinzy at (202) 395–3640.



EPA Seeks Changes to Worker Protection Standards (WPS)

The Environmental Protection Agency (EPA) released numerous proposition papers earlier this year, identifying Worker Protection Standards issues it believes should be revised as the agency considers issuing a notice of proposed rulemaking.  Although not officially published, the papers were distributed to stake holders requesting comments. The NCC has cooperated with other agricultural groups as part of the Pesticide Policy Coalition (PPC) to identify concerns for agriculture.

 NCC’s Worker Protection Standards Workgroup, chaired by CA producer Cannon Michael, reviewed the position papers and carefully addressed each issue proposal in separate letters to EPA, dated Jun. 15 and Aug. 18.

 The NCC comments addressed a wide range of topics including: increased frequency of worker training, a requirement for certification of general use pesticides including competency examination, and a requirement for fields to be posted every 100 feet around the perimeter of the field with a skull and cross bone sign containing a record of pesticides applied in the past 30 days. 

EPA will review comments from stakeholders in preparation for a notice of proposed rule making which is expected to be published in the fall of 2008.  The NCC Worker Protection Standards Workgroup will be closely monitoring EPA’s activity on these issues in the coming months up to and including any proposed rulemaking.



WTO Probes Chinese Industry Subsidies

The World Trade Organization opened a formal investigation into allegations by the U.S. and Mexico that China is providing illegal subsidies for a range of industries.

The North American countries accuse Beijing of using WTO-prohibited tax breaks to encourage Chinese companies to boost exports, while imposing tax and tariff penalties to limit purchases of foreign products in China.

Juan Millan, a U.S. trade lawyer, told the WTO's dispute body last month that “China is providing numerous subsidies that appear to be prohibited under WTO rules.”  He added that China also offers “tax refunds, reductions and exemptions that discriminate against imported products or that subsidize China's exports.”

Beijing, meanwhile, blocked a separate probe of its rules for protecting intellectual property rights. But the move will probably only delay the creation of a panel until the next meeting of the WTO's dispute body in September, when Washington can bring up the issue again.

Under WTO rules, a second request for an investigative panel is automatically granted.



Sales, Shipments Stay Strong

Net export sales for the week ending Aug. 23 were 490,600 bales (480-lb). This brings total ’07-08 sales to slightly more than 4.6 million. Total sales at the same point in the ’06-07 marketing year were approximately 2.2 million bales. Total new crop (’08-09) sales are 140,500 bales.

For ’07-08, China has purchased 1.3 million bales, or 29% of the total. Mexico accounts for 21% of sales with 990,000 bales. Turkey, Indonesia and Thailand complete the top-5 international buyers of U.S. cotton.

Shipments for the week were 332,600 bales, bringing total exports to date to 1.1 million bales, compared with the 708,800 bales at the comparable point in the ’06-07 marketing year.



Prices Effective Aug. 31 - Sept. 6, '07

Adjusted World Price, SLM 11/16

48.88 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

3.12 cents

Import Quotas Open

 NA

Step 3 Quotas (480-lb. bales)

 NA

ELS Payment Rate

0.00 cents

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

65.44 cents

Forward 3135 c.i.f. Northern Europe

 NA

Coarse Count c.i.f. Northern Europe

 NA

Current US c.i.f. Northern Europe

64.38 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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