Cotton's Week: January 25, 2008

Cotton's Week: January 25, 2008

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Schafer Confirmation Hearing Held

The Senate Agriculture Committee held a confirmation hearing for former North Dakota Governor Edward T. Schafer, who has been nominated to serve as the next Secretary of Agriculture.

Based on Committee members’ comments, Schafer likely is to be confirmed by the Senate without delay. In fact, Sens. Conrad (D-ND) and Chambliss (R-GA) raised the possibility of Committee action following the hearing but Senate rules require time for written responses to questions. There has been interest in confirming Schafer so he could be sworn-in before the State of the Union speech on Monday.

During the hearing, Schafer was careful to avoid in-depth discussion of farm policy and said, if confirmed, he looked forward to working with the Administration and the Congress. He acknowledged that while serving as Governor of North Dakota he supported ad hoc disaster assistance and he seemed to signal support for direct payments and crop insurance. On trade he said his first act as Secretary would be to visit Japan and Korea to press for reopening those markets to US beef.

During the round of questions, Sen. Chambliss reminded Schafer that the calculation of an accurate AWP for cotton is critically important and urged him to make clear his intention to make a smooth transition to Far East quotes, since Cotlook has announced its intention to discontinue Northern Europe quotes.

Sen. Conrad made news by announcing that he is working with the Finance Committee to identify “new, noncontroversial” revenue measures to offset the cost of new farm law. If he is successful, it would remove a major roadblock since the Administration, through Acting-Secretary Conner, repeatedly has threatened to veto legislation if it includes provisions that increase taxes.

During the hearing, several members expressed frustration with the Administration’s repeated veto threats and seeming unwillingness to negotiate. Schafer indicated if confirmed he would look forward to discussions with Congress and that the President does want to sign a new farm bill.

House Agriculture Committee Chairman Peterson (D-MN) also has expressed frustration with the Administration’s constant veto threats and indicated if negotiations break down, he would recommend Congress proceed in writing a bill and sending it to the President. If vetoed, Peterson suggested the Department should be prepared to implement the provisions of permanent law since he does not plan to seek passage of an extension of current law beyond March 15.


Sen. Dole Urges Andean Extension

Sen. Dole (R-NC) is urging an extension of the Andean Trade Preference Act (APTA), which is scheduled to expire on Feb. 29, ’08.

The ATPA provides preferential access to the US market for apparel products assembled in Colombia, Peru, Ecuador and Bolivia provided they contain US or local components.

Although Congress has approved the Peru Free Trade Agreement (FTA), it is doubtful it can be fully implemented by the end of February. Congress has not set a schedule to consider the Colombia FTA.

If the ATPA expires, there will be significant disruption of trade as the uncertainty will discourage companies from sourcing Andean apparel products. In turn, this will cause a decline in US exports of cotton, yarn and fabrics.

From ’03 to ’06, exports of US yarn and fabric increased by 40%.

The NCC has contacted Cotton Belt Senators asking them to join Sen. Dole in urging prompt passage of an extension of the ATPA for a sufficient time to ensure that businesses can continue to source apparel from the region with confidence so qualifying products will receive duty-free treatment until such time as the FTAs can be passed and implemented.


Disaster Applications Being Taken

USDA announced that eligible farmers and ranchers who suffered livestock, livestock feed and crop losses that occurred before Dec. 31, ’07, can apply to receive disaster payments beginning Jan. 25.

On Dec. 26, ’07, President Bush signed the Consolidated Appropriations Act, ’08 (’08 Act). That legislation amends certain sections of the US Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, ’07, which allows agricultural producers who suffered losses for crops planted before Feb. 28, ’07, or eligible livestock or livestock feed losses between Jan. 1, ’05, and Feb. 28, ’07, to apply for disaster payments under the Crop Disaster Program (CDP), Livestock Compensation Program (LCP) and Livestock Indemnity Program (LIP).

The ’08 Act extends CDP, LCP and LIP payments to eligible farmers and ranchers who suffered ’07 crop, livestock and livestock feed losses throughout the ’07 crop year before Dec. 31, ’07.

The Farm Service Agency (FSA) is now accepting applications and making payments for quantity losses before Dec. 31, ’07, under CDP. FSA currently is issuing LCP and LIP payments for losses up to Feb. 28, ’07, and soon will issue payments for losses incurred during the remainder of ’07.

FSA will conduct sign-up and begin making payments for quality losses under CDP this spring. More information about CDP, LCP and LIP is available online at: http://disaster.fsa.usda.gov.



Lange Addresses Agribusiness Group

In remarks to the 1st Annual Meeting of the Southwest Council of Agribusiness in Lubbock, TX, NCC President/CEO Mark Lange cited overall strength in commodity prices and a tightening supply and demand picture as primary reasons for the increase in cotton prices.

He noted that many parts of the Cotton Belt enjoyed record yields in ’07 coupled with the higher prices. However, he noted the impact that increased input costs are having on the agricultural economy and expressed concern about the macroeconomic situation and potential impacts on demand.

Lange also briefly reviewed the NCC’s farm bill position and indicated the industry’s hope that a final bill will stay between the parameters of the House and Senate versions and be completed in the coming weeks.

Sen. Conrad (D-ND) was scheduled to provide the meeting’s keynote address.



JCIBPC to Address COAs

The Joint Cotton Industry Bale Packaging Committee (JCIBPC), chaired by Curtis Stewart, a Dumas, AR ginner, will discuss formal adoption of a “certificate of analysis” (COA) requirement for packaging materials at its upcoming meeting on Feb. 27 at the Hilton Memphis Hotel.

A COA is a means by which the JCIBPC assures that packaging materials supplied by approved manufacturers conform to the mutually agreed-upon packaging specifications established between the JCIBPC, USDA and approved packaging material manufacturers.

Dale Thompson, the NCC’s manager, marketing and processing technology, said the JCIBPC agreed at its last meeting that beginning in ’07 on a voluntary basis, all approved manufacturers of bale packaging materials and importers of burlap should provide a COA to users of their packaging products when requested by users.

Among data required in the COA is the specific bag lot number, the clear identification of the JCIBPC bag code, the bale packaging material's date of manufacture, name/location of manufacturer’s facility that manufactured and/or fabricated the packaging product, the distributor’s name and contact information if different from that of the manufacturer, and tested properties and test methods as referenced in the “Specifications for Cotton Bale Packaging Materials.”

The COA program was put in place with the aim of encouraging manufacturers to adhere to the guidelines for approved materials, and to promote accountability and traceability,” Thompson said. “The JCIBPC will discuss whether to continue the voluntary program for another year or make it a part of the Committee’s bale packaging policy.”

Persons interested in attending the meeting may register on line by using the link on the right hand side of the Bale Packaging page, http://www.cotton.org/tech/bale/index.cfm.

For room reservations, contact the hotel at 901-684-6664 or 800-445-8667 and ask for the "National Cotton Council" group block. The reservation cut-off deadline is Feb. 10. For more information, contact Maxine Shepard or Dale Thompson at 901-274-9030.


Key British Retailer Sees US Cotton

The largest British retailer, Marks & Spencer’s (M&S), learned more about US cotton’s quality and the US cotton industry’s production, processing and marketing practices during a tour through the US Cotton Belt coordinated by Cotton Council International (CCI).

M&S received briefings by the NCC, CCI, Cotton Incorporated and the Delta Council. The tour also included visits with industry leadership and stops at Cotton Incorporated, USDA classing headquarters, Bayer CropScience and Monsanto seed breeding companies, the Burdette Gin, a USDA agricultural research station and  Staplcotn’s office.

M&S is reviewing its supplier base all the way to the fiber as part of its “Plan A” corporate initiative to source only quality merchandise from countries that support cotton produced in a responsible manner.


Mill Cotton Use Steady

According to the Commerce Dept., December (five-week month) total cotton consumption in domestic mills was 179.0 million pounds for a seasonally adjusted annualized rate of 4.70 million bales (480-lb). Last year’s December annualized rate was 4.73 million bales.

The November (four-week month) estimate of domestic mill use of cotton was lowered by 196,000 pounds to 170.9 million. The revised seasonally adjusted annualized rate of consumption for November is 4.79 million bales. This is lower than last year’s November annualized rate of 5.00 million bales.

Using the latest figures from the Commerce Dept., calendar ’07 mill use is estimated to be 2.32 billion pounds or 4.82 million bales. This is lower than calendar year ’06’s use of 5.46 million bales.

Preliminary January domestic mill use of cotton and revised December figures will be released by Commerce on Feb. 28.


Sales Slip, Shipments Steady

Net export sales for the week ending Jan. 17 were 145,200 bales (480-lb). This brings total ’07-08 sales to approximately 9.0 million bales. Total sales at the same point in the ’06-07 marketing year were approximately 6.8 million bales. With purchases of 2.2 million bales, China accounts for 24% of total export sales. Recent purchases by Mexico pushed their year-to-date total to 1.6 million bales, or 18% of all export sales. Business with mills in Turkey continues to move forward, with cumulative sales surpassing 1.3 million bales. Indonesia and Thailand complete the list of the top five export customers.

Total new crop (’08-09) sales are 238,200 bales with more than one-half of those sales being to mills in Mexico.

Shipments for the week were 193,900 bales, bringing total exports to date to 5.8 million bales, compared with the 3.6 million bales at the comparable point in the ’06-07 marketing year.


Prices Effective: Jan. 25-31, '08

Adjusted World Price, SLM 11/16

58.22 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

NA

Step 3 Quotas as of 1/24 (480-lb. bales)

 NA

ELS Payment Rate

10.39 cents

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

74.74 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

NA

Current US c.i.f. Northern Europe

76.00 cents

Forward US c.i.f. Northern Europe

NA

 
'07-08 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-November)

51.53 cents

**

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

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