Cotton's Week: October 12, 2007

Cotton's Week: October 12, 2007

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Commodities Convey Doha Concerns

The NCC joined with several commodity organizations, representing America’s farmers and ranchers, on a letter to President Bush conveying deep concern with the status and direction of the Doha round of WTO agricultural negotiations. The letter cites the groups’ desire to correct the severe imbalance reflected in the current agriculture text between sharp reductions and limitations on domestic support for US agriculture and undefined or far weaker commitments on market access.

The letter, which is on the NCC’s web site at http://www.cotton.org/issues/members/2007/wto-letter.cfm, noted those concerns also were made clear in a June 1, ’06 letter to President Bush, where it was stated that “the level of ambition in cutting trade distorting domestic support must be commensurate with the level of ambition in obtaining access to both developed and developing country markets.” It said then that the current text for the agriculture negotiations proposes to further reduce US domestic support well below the US offer of October ’05, while the ranges for overall tariff cuts are set lower than those proposed by the United States.

The letter co-signers also included the: American Farm Bureau Federation, American Soybean Assoc., National Milk Producers Federation, American Sugar Alliance, National Sorghum Producers, National Association of Wheat Growers, USA Dry Pea & Lentil Council, National Barley Growers Assoc., USA Rice Federation, National Corn Growers Assoc., and US Canola Assoc.



No-Match Rule Blocked Indefinitely

A federal court in San Francisco indefinitely blocked the implementation of the Dept. of Homeland Security’s (DHS) no-match rule. As with a previous ruling from the same court, this ruling provides employers with more time to prepare for complying with the rule should the Ninth Circuit Court of Appeals reverse the court’s decision or should the court itself, after further proceedings, revise its preliminary analysis.

DHS issued its “no-match” rule on Aug. 15, ’07. Two weeks later, a group of labor organizations challenged the rule and the court temporarily delayed the rule’s effective date.

In this week’s ruling, the court agreed with some of the arguments against the rule and agreed with some of the arguments in support of the rule. In particular, the court found that DHS had not followed the correct procedure for promulgating the rule and had overstepped its authority in making statements about discrimination provisions in immigration law. The court, however, agreed that DHS had authority under the law to impose the rule so long as it went about issuing it correctly.

DHS may appeal the court’s ruling when it formally enters its order or may continue to litigate before the lower court. DHS also may attempt to correct the procedural problems that led the court to rule against it in the first place.

Meanwhile, employers are advised to should continue preparing for rule compliance. The court’s ruling does not permanently prevent the no-match rule from taking effect and may simply have given DHS a chance to correct its earlier mistakes.

If DHS is successful, it may take the position that employers have had sufficient time to comply with the rule and then begin to vigorously enforce the rules.

In particular, employers should ensure that their I-9 procedures comply with the law and are being properly implemented, and continue to respond to no-match letters received from the Social Security Administration (SSA) consistent with the guidance they receive from SSA about responding to such letters.

By preparing to comply even with the status of the rule uncertain, employers will show that they take this obligation seriously and will be ready to comply immediately if DHS ultimately succeeds in the litigation.


USDA Increases Cotton Crop

In its October crop report, USDA estimated a ’07-08 US cotton crop of 18.2 million bales with a national average yield per harvested acre of 826 pounds, 45 pounds above the five-year average. If realized, the yield would be the third largest on record.

Upland production was estimated at 17.4 million bales and extra-long staple (ELS) production at 776,000 bales. Harvested area was estimated 10.3 million acres implying a non-harvested area of 300,000 acres based on USDA’s acreage report. The resulting abandonment rate is roughly 2.80%.

On a regional basis, the Southeast crop is estimated at 2.98 million bales, based on harvested acres of 2.21 million and a regional average yield of 647 pounds, 58 pounds below the region’s five-year average.

In the Mid-South, expected production is 5.38 million bales. Harvested area is estimated to be 2.71 million acres and the expected yield 952 pounds per harvested acre.

The Southwest upland crop is an estimated 7.82 million bales. Expected harvested area is 4.91 million acres and the regional average yield is 764 pounds per harvested acre.

Upland production in the West is an estimated 1.20 million bales with a harvested area of 416,000 acres and a regional average yield of 1,380 pounds per harvested acre, 40 pounds above their five-year average.

The ELS crop is an estimated 776,000 bales. Harvested area is pegged at 289,000 acres with an average yield of 1,288 pounds per harvested acre.

U.S. Cotton Crop, ’07-08

 

PLANTED

ACRES

Thou.

HARV.

ACRES

Thou.

YIELD PER

HARV.

ACRE

Lb.

5-YEAR

AVG.

YIELD

Lb.

480-

POUND

BALES

Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

2,264  

2,214 

647  

705 

2,982  

   Alabama

400  

390 

492  

664 

400  

   Florida

84  

82 

644  

636 

110  

   Georgia

1,040  

1,010 

775  

734 

1,630  

   North Carolina

500  

495 

611  

695 

630  

   South Carolina

180  

178 

378  

679 

140  

   Virginia

60  

59 

586  

745 

72  

MID-SOUTH

2,740  

2,714 

952  

914 

5,380  

   Arkansas

860  

850 

1,045  

995 

1,850  

   Louisiana

330  

325 

990  

879 

670  

   Mississippi

660  

655 

953  

888 

1,300  

   Missouri

390  

389 

962  

925 

780  

   Tennessee

500  

495 

756  

853 

780  

SOUTHWEST

5,125  

4,910 

764  

628 

7,820  

   Kansas

50   

45 

533  

524 

50  

   Oklahoma

175  

165 

785  

639 

270  

   Texas

4,900  

4,700 

766  

630 

7,500  

WEST

425  

416 

1,380  

1,340 

1,196  

   Arizona

180  

178 

1,429  

1,357 

530  

   California

195  

194 

1,410  

1,381 

570  

   New Mexico

50  

44 

1,047  

897 

96  

TOTAL UPLAND

10,554  

10,254 

813  

772 

17,378  

TOTAL ELS

293  

289 

1,288  

1,239 

776  

   Arizona

3  

880  

931 

6  

   California

260  

257 

1,345  

1,296 

720  

   New Mexico

5  

768  

904 

8  

   Texas

25  

24 

840  

906 

42  

ALL COTTON

10,847  

10,543 

826  

781 

18,154  

Source: USDA-NASS October Crop Production Report.



USDA Sees Stocks Declining

USDA’s projections for ’07-08 US mill use and exports remain unchanged at 4.60 million bales and 16.70 million bales, respectively. The two categories generate a total ’07-08 offtake of 21.30 million bales. Ending stocks for ’07-08 are projected at 6.40 million bales for an ending stocks-to-use ratio of 30.0%.

For the ’06-07 crop year, USDA gauged US production at 21.59 million bales. Mill use was unchanged from the September report at 4.95 million bales. Exports also were unchanged from the September report at 13.00 million bales. Total offtake for the ’06-07 crop year is 17.95 million bales. This generates an ending stocks value of 9.48 million bales. The stocks-to-use ratio for the ’06-07 marketing year is 52.8%.

USDA’s October report has ’07-08 world production estimates raised 3.08 million bales from the September report to 120.26 million. World mill use was raised 1.72 million bales from the September report to a projected 129.50 million bales. Consequently, world ending stocks for ’07-08 are projected to be 55.01 million bales for a stocks-to-use ratio of 42.5%.

The significant increases in the ’07-08 production, consumption and stocks estimates mainly reflect revisions to the China balance sheet beginning in ’04-05 (see http://www.fas.usda.gov/psdonline/circulars/cotton.pdf for a detailed explanation). The revisions are based on a recent statement by China’s National Development and Reform Commission that the ’06 crop production was about 35.5 million bales, which is 9% above USDA’s September estimate.



America's Heartland Launches New Season

America's Heartland, the weekly public television series that celebrates the contributions of America's farmers and ranchers, launched its third season – and is featuring 22 new half-hour segments. By the middle of this season, America's Heartland will have profiled US agriculture in all 50 states.

The program is made possible with primary funding from Monsanto Company and the American Farm Bureau Federation. The series also receives support from the NCC, American Soybean Assoc., National Corn Growers Assoc., United Soybean Board, the National FFA Organization, the US Grains Council and National Assoc. of Wheat Growers.

Produced by KVIE, the public affiliate in Sacramento, CA, America's Heartland is available on many of the nation’s PBS stations and on RFD-TV, and each story is streamed to the program web site, www.americasheartland.org.  Last year, the show reached more than a million consumers.



Trading Lanes Shift a Concern

The AgTC/US Chamber of Commerce has requested additional input regarding the US agricultural transportation infrastructure and service needs.

The request follow’s a Sept. 21 Ag Trans Focus Group meeting at the NCC to explore the importance of transportation to agribusinesses and supply chains. In addition to other agricultural interest participants, the NCC’s merchant, cooperative and cottonseed segments were represented in the session.

Peter Friedmann, executive director of AgTC, noted that trade lane shifts for the consumer (container) inbound cargoes could greatly affect the availability of containers for agricultural commodity shipments. He stated that trade lane shifts away from the West Coast gateway ports will affect both domestic and international agricultural commodities distribution.

Based on these observations, NCC members are encouraged to share their agriculture transportation infrastructure and service concerns with NCC staff.

Congress and the President soon will prepare for the next bill which sets federal spending priorities for transportation infrastructure, including highway, port access, truck and rail.



Sales, Shipments Strengthen

Net export sales for the week ending Oct. 4 were 159,300 bales (480-lb). This brings total ’07-08 sales to slightly more than 5.6 million bales. Total sales at the same point in the ’06-07 marketing year were approximately 3.7 million bales. Total new crop (’08-09) sales are 155,300 bales.

Shipments for the week were 281,800 bales, bringing total exports to date to 2.8 million bales, compared with the 1.2 million bales at the comparable point in the ’06-07 marketing year.



Prices Effective Oct. 12-18, '07

Adjusted World Price, SLM 11/16

53.52 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

3.89 cents

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

70.04 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

67.65 cents

Current US c.i.f. Northern Europe

69.55 cents

Forward US c.i.f. Northern Europe

NA

 
2006-07 Weighted Marketing-Year Average Farm Price  
 
Final Marketing Year Average Price

46.50 cents

**


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