Cotton's Week: March 20, 2008

Cotton's Week: March 20, 2008

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Proposal Would Allocate $10 Billion

House and Senate Agriculture Committee leaders reached a tentative agreement on a proposal to allocate an additional $10 billion to various programs. The proposal stemmed from an earlier agreement to re-start farm bill negotiations which have been deadlocked over jurisdictional disputes and budget offsets.

The leaders also agreed that if  agreement on an allocation plan could be reached, staff would work through Easter Recess (March 17-31) to narrow differences between House and Senate bills, paving way for a formal meeting of the Conference Committee when Congress returns the week of March 31. This could allow Congress to complete work prior to expiration of farm bill extension on April 19.

Reactions to the initial allocation proposal, which was reviewed with Conferees on March 17, were not favorable. Sen. Baucus (D-MT) and Grassley (R-IA) pronounced the plan “dead on arrival” in the Senate. The Finance Committee leaders expressed grave disappointment that the $5.1 billion fund created for a permanent disaster program, which was folded into the Senate farm bill, was essentially eliminated in the March 17 proposal.

Agriculture Secretary Ed Schafer, in comments to reporters, repeated earlier warnings that the President would veto legislation that raises taxes or lacks sufficient reform. He also explained that while the President indicated he would support an extension of current law if progress on an acceptable bill is not made by April 19, the Administration clearly prefers new legislation provided it meets their criteria.

An NCC Action Alert called on NCC leaders to urge industry members to contact Congressional Members during the Easter recess and request prompt action on new legislation. Contact information for Representatives and Senators can be found on the NCC web site under the section “Find your Congressional Contacts” or they can be reached by calling the Capitol Switchboard (202-224-3121). Contact by phone is recommended to the Member or the agricultural legislative assistant in either their State/District or Washington, DC office.

In the Action Alert, NCC President/CEO Mark Lange said, “Many Members and staff lack a sense of urgency because of relatively high prices for many commodities. The House and Senate farm bills contain acceptable and reconcilable provisions for sound agricultural policy. In addition, those who continue to call for reform of agricultural programs should be reminded of the significant reform in payment eligibility and limitation provisions incorporated in both bills.”



Forum to Address Market Volatility

The Commodity Futures Trading Commission (CFTC) has announced that it will hold a public meeting on April 22 in Washington to “discuss recent events affecting the agriculture markets – including the lack of convergence between the futures and cash prices, higher margin requirements and the impact on market participants, and the role of speculators and commodity index traders.”

The forum will begin at 9 am and will include representatives from USDA and stakeholders in agricultural markets such as producers, traders and exchanges.

“These historic market conditions, particularly in wheat and cotton, require the CFTC to hear firsthand from participants to ensure that the exchanges are functioning properly to discover prices and manage risk,” CFTC Acting Chairman Walt Lukken said.

NCC President/CEO Mark Lange wrote Lukken and ICE Futures CEO Thomas Farley on March 11 expressing serious concerns about the recent events in which the Number 2 contract failed to adequately provide orderly price discovery and hedging functions.

The American Cotton Shippers Assoc. and AMCOT wrote ICE expressing similar concerns and urged ICE to work to immediately return the contract to – “a viable, healthy, efficient and orderly contract which attracted traders from throughout the world.”



CCC to Implement Denied Storage Credits Software

According to “Notice CN-1030,” the Commodity Credit Corp. (CCC) will deny storage credits for yard-stored upland cotton beginning March 25, ’08.

A software upgrade will allow CCC to calculate applicable denied storage credits for upland cotton loan collateral for loan repayments on that date. CN-1030 directs state or county offices to “use newsletters to remind upland cotton producers that yard-stored bales lose storage credits for yard-stored periods” and allows them to distribute an exhibit in the notice that provides general information about storage credit policy and calculations.

However, producers and others are reminded that “the increase in AWP level has effectively eliminated 2007‑crop loan collateral storage credit payments.”

The notice contains general provisions describing: 1) how to determine when payments begin (called the “CCC storage-start date”), 2) the loan notification date and 3) how to determine the 15-calendar-day grace period for loan bales that are yard-stored but moved inside. The notice also clarifies warehouse reporting requirements for yard storage of CCC cotton loan collateral.

The notice states that “…under CCC’s zero-tolerance policy about yard storage reporting, if loan bales are found to be yard-stored but not reported as yard-stored, the warehouse is subject to losing its approved status.”

The USDA Farm Services Agency notice CN-1030 is on the NCC’s web site at http://www.cotton.org/tech/flow/upload/CN-1030.pdf.



NASS Needs Census Forms

The deadline for farmers to turn in census forms has been extended until June 1, according to National Agricultural Statistics Service Deputy Administrator Carol House. She says the extension from Feb. 4 is because a large number of the census forms have not been returned.

"We are sending another form out there again with encouragement to fill it out," House said. "We'll give a little bit of time and then we're going to start calling people. Of course calling costs money, it's taxpayer dollars, so hopefully producers out there will go ahead and fill it out before we have to make a phone call."

Responding to the census – conducted every five years -- is required by law and the privacy of answers given is protected.

"If a producer is not filling it out because they have a question, they're not quite sure how to go about it, they're not sure whether they're required to fill it out or not, please call," House says. "We've received 130,000 calls since census forms were sent out."

A toll-free help line is available at (888) 424-7828. The census also can be submitted online at www.agcensus.usda.gov.



CSP Sign-Up Announced

Agriculture Secretary Schafer announced a sign-up for the Conservation Security Program (CSP) that will be available starting on April 18 to approximately 64,000 potentially eligible farms and ranches in 51 watersheds covering more than 23.7 million acres.

The CSP sign-up is open in the 51 watersheds from April 18 to May 16. The sign-up announcement and specific program requirements are being published in the Federal Register.

CSP is a voluntary conservation program that supports ongoing stewardship of private, agricultural working lands and rewards those producers who are meeting the highest standards of conservation and environmental management on their operations.

Payments can include three components: 1) an annual stewardship component for the base level of conservation treatment 2) an annual component for maintenance of existing conservation practices, and 3) an enhancement component for exceptional conservation effort. Enhancement activities could include limited pesticide applications, renewable energy generation and widening existing riparian forest buffers for restoring critical stream habitat.

To apply for CSP, the Natural Resources Conservation Service (NRCS) asks potential participants to complete a CSP self-assessment workbook available on the Internet or from local NRCS offices to find out if their operation meets the requirements of the program and qualifies for program participation. The self-assessment process is completed using a self-screening questionnaire for each land use to be enrolled. When this process is completed, the producer submits the CSP workbook to the local NRCS office during the sign-up period and meets with NRCS personnel to go over any additional needed documentation. NRCS will then determine if eligibility requirements are met and provide options for the producer's decision on enrollment category placement.

Additional information on CSP, including eligible watersheds and a CSP self-assessment workbook, is available at http://www.nrcs.usda.gov/programs/csp.



UN Recognizing Natural Fibers

Cotton and all natural fibers will be celebrated around the globe following a declaration by the United Nations General Assembly proclaiming ’09 as the International Year of Natural Fibers (IYNF). The main intent of IYNF is to raise the profile of natural fibers, including cotton, and emphasize their value to consumers and to society, while helping to sustain farmer income.

Cotton Council International (CCI) President Robert S. Weil, II, applauded the declaration and its related promotions that will highlight the importance of natural fibers in the global economy.

“Natural fibers, including cotton and U.S. cotton, are key economic contributors worldwide,” Weil said. “The IYNF is a prime opportunity to bring attention to natural fibers and further stimulate consumer demand. CCI and its COTTON USA program have for more than half a century promoted the benefits of natural fibers, cotton generally and U.S. cotton specifically. CCI supports this effort and the well-deserved attention it brings to the importance of all natural fibers, and especially cotton, globally.”

Cotton — a renewable, biodegradable and sustainable resource — is the largest natural fiber in the global fiber, textile and apparel economy, now representing roughly 90% of all natural fibers consumed. Cotton represents hundreds of billions of dollars of economic activity and employs hundreds of millions of people from field to fabric.



BMP Workshops Prove Popular

Best Management Practices workshops were conducted by the NCC in the lower and upper Mid-South locations of Vicksburg and Tunica, MS.

 More than 80 attendees of the two workshops were able to actively participate in discussions lead by University Extension experts ranging from variety selection, arthropod management, weed resistance and nematodes.  Continuing education credits were offered to attendees who represented Alabama, Mississippi, Louisiana, Arkansas, Tennessee and Missouri.

Two more workshops will be held in Texas at the Moore County Community Bldg. in Dumas on April 1 (9 am - 4:30 pm) and at the Reece Technology Ctr. in Lubbock on April 2 (8:30 am - 4:30 pm). Lunch will be provided the workshops, which are being supported by Bayer CropScience. 

“The First Forty Days, ” early season BMPs -- with in-depth discussion of variety selection and arthropod/weed/nematode management -- will be featured. Texas AgriLife Extension Service specialists, Texas AgriLife Research and Texas Tech U. scientists also will cover “Fruiting to Finish, ” BMPs including fertility, irrigation management and fiber quality -- particularly as quality is affected by harvest practices, i.e. stripper versus picker harvesting.

Continuing education units will be offered to attendees.

More information and early reservations can be obtained by contacting Bill Robertson at BMP@cotton.org. Early reservations are encouraged. To reserve a seat, each attendee must RSVP by emailing their name, email address, phone number and workshop location they will be attending.



Sales, Shipments Steady

Net export sales for the week ending March 13 were 205,000 bales (480-lb). This brings total ’07-08 sales to slightly more than 10.9 million. Total sales at the same point in the ’06-07 marketing year were approximately 9.0 million bales. Total new crop (’08-09) sales are 465,600 bales.

Shipments for the week were 265,000 bales, bringing total exports to date to 7.7 million bales, compared with the 5.4 million bales at the comparable point in the ’06-07 marketing year.





Prices Effective March 21-27, '08*

Adjusted World Price, SLM 11/16

61.73 cents

**

Coarse Count Adjustment

0.00 cents


Marketing Loan Gain Value

0.00 cents


Import Quotas Open

1


Limited Global Import Quota                                                                                

409,987


ELS Payment Rate

8.49 cents


*AWP and ELS Payment rates are estimates at press time. Official rates will be released March 20, '08 at 5 pm EST.
*
*No Adjustment Made Under Step I



 

Five-Day Average

 

Current 3135 c.i.f. Northern Europe

79.01 cents


Forward 3135 c.i.f. Northern Europe

NA


Coarse Count c.i.f. Northern Europe

NA


Current US c.i.f. Northern Europe

81.95 cents


Forward US c.i.f. Northern Europe

NA


 

2007-08 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (August-January)

55.14 cents

***

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

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