Cotton's Week: March 28, 2008

Cotton's Week: March 28, 2008

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Terpstra Considered for USTR Post

President Bush announced his intention to nominate Ellen Terpstra to serve as chief agricultural negotiator in the Office of the US Trade Representative. Terpstra, if confirmed, would receive the rank of Ambassador.

She now serves as deputy under secretary of Farm and Foreign Agricultural Services at USDA. She also has served as the administrator of the Foreign Agricultural Service and earlier served as President/CEO of the USA Rice Federation.

According to the release issued by USTR, “as Chief Agricultural Negotiator, Ms. Terpstra will replace Dr. Richard Crowder and will be responsible for directing US agricultural negotiations. At the multilateral level, Ms. Terpstra will work closely with Dr. Joe Glauber, who will continue in his role as US Special Doha Envoy, to bring the Doha Round to a successful conclusion.”

NCC President/CEO Mark Lange said, “Ellen Terpstra has an outstanding record of service in the public and private sectors. She is well qualified to represent US agriculture interests in the Doha round.”

Lange also noted that Dr. Joe Glauber has done an outstanding job serving both as US envoy to the WTO and as USDA’s chief economist.

“We owe Joe a debt of gratitude for his extraordinary service in difficult and challenging circumstances and are pleased to note that Ambassador Schwab indicated Ms. Terpstra, if confirmed, will work closely with Dr. Glauber. U.S. agriculture certainly needs the continuity offered by continued involvement of Dr. Glauber in the WTO negotiations.”



Budget Resources Discussions Continue

House and Senate leaders from the Agriculture, Budget, Way & Means and Finance Committees continued to discuss allocations of budget resources that could pave the way for formal farm bill conference committee meetings when Congress returns from the Easter recess.

A plan released March 17 failed to achieve consensus primarily because Senators, who support inclusion of a permanent disaster program in the new farm law, expressed strong objections to the inadequate funding allocated to the program.

House and Senate leaders continued to negotiate and released a modified proposal that may serve as a basis for moving forward, although there is not a firm agreement on the allocations or sources of funding and offsets for the additional $10 billion over baseline.

The proposal, as currently constructed, would provide about $4.05 billion for a permanent disaster program compared to about $2.25 billion in the March 17 framework.

A new crop revenue option would be expected to contribute $400 million in savings; delays in implementation of some new programs until ’09 would save about $400 million; and crop insurance programs would be cut by $5.9 billion. The agreement also indicates that $730 million in savings over 10 years will come from commodities, crop insurance or permanent disaster, possibly by reducing direct payments 1-3% or making other adjustments to commodity programs.

Sens. Grassley (R-IA) and Dorgan (D-ND) have circulated a new proposal to tighten payment limitations and change eligibility requirements as a way to achieve savings (see related story).

Under the March 27 framework, conservation funding would increase by a net of $4 billion after applying an acreage limit on the Conservation Reserve Program to save $2.5 billion.  Nutrition programs would be increased by $9.5 billion, which is about midway between the increases provided in the House and Senate-passed farm bills. Specialty crops would receive about $1.3 billion through a variety of programs.

Negotiations on the budget allocations and sources of funds continue, and staff will continue to meet to review policy differences between the House and Senate bills in preparation for a formal conference meeting perhaps as early as the week of March 31.



New Payment Limit Plan Unveiled

Sens. Grassley and Dorgan circulated a “new” payment limit proposal developed by the Center for Rural Affairs.

In a letter to Senate Agriculture, Nutrition & Forestry Committee Chairman Harkin (D-IA) and USDA Deputy Secretary Conner, Sens. Grassley and Dorgan urged consideration of a new four point plan called “Dorgan-Grassley II.” They explained that a Congressional Budget Office preliminary score of this proposal shows savings of $1.2 billion over 10 years and they further explained that a revised version reportedly saves $2 billion.

The 4 point plan includes:  (1) adopting new actively engaged in farming requirements, including providing 1,000 hours annually or 50% of labor and management required by the enterprise; share-rent landlords would not have to meet labor and management requirements; management must be on-site; and, “most” stockholders must be actively engaged for a corporation to received benefits; (2) the direct payment would be cut by 50% if a landlord who fails adjusted gross income (AGI) test receives cash rent; (3) as prices rise above target price, AGI and limits on direct payment would be phased down; and (4) limitations on direct payments would not result in payments on less than 1,000 acres and every $1 of cotton, rice and peanut payments would be counted as 50 cents for the purpose of applying limits on counter-cyclical payments.



’08 PIE Tours Set

The NCC has scheduled dates and locations for the ’08 Cotton Foundation Producer Information Exchange (PIE) Program.

This season, cotton producers from the Mid-South will see operations in Arizona and California on June 22-27; Southwest producers will travel to North Carolina on July 20-25; Far Western producers will visit Arkansas, Mississippi and Tennessee on Aug. 10-15; and Southeastern producers will visit Texas on Aug. 17-22. The NCC’s Member Services staff, in conjunction with local producer associations, conducts the PIE program, including participant selection. The program also receives support from The Cotton Foundation via a grant from Bayer CropScience.

The PIE enables cotton producers to: 1) gain new perspectives in such fundamental practices as land preparation, planting, fertilization, pest control, irrigation and harvesting and 2) observe unique ways in which their peers are using new technology.

Now in its 20th year, PIE has an overall goal of helping its participants improve yields and fiber quality. After this year’s four tours, the program will have exposed more than 800 US cotton producers to innovative cotton production practices in regions different than their own.

Gary Gaar, US sales manager, Bayer BioScience, said,P.I.E. participants are leaders in the cotton industry, and we’re glad to sponsor this program, as well as strengthen our ongoing partnership with cotton growers and the National Cotton Council. The information growers receive from these tours helps them enhance their own farming operations and build long-term friendships."



Aflatoxin Research Funding Urged

During a recent meeting of the Multicrop Aflatoxin Liaison Group in New Orleans, LA, to review priority aflatoxin research needs, the NCC urged the USDA to continue support for research directed toward production, utilization, long term benefits, effects of cultural practices, and effects of environment on biological control of aflatoxin.

The NCC emphasized the value of research conducted thus far which has identified and demonstrated the benefits of atoxigenic strains of the fungus that produces aflatoxin. The NCC urged the USDA-ARS to continue the research to determine the best methods for producing the atoxigenic strains, techniques to apply the strain to the field and field factors that may influence the utility of the atoxigenic strain.



Bt Only For Juárez Valley Hot Spot

NCC received encouraging news from USDA representatives who say cotton growers in a “hot pink bollworm area” in northern Mexico’s Juárez Valley agreed with Comité Estatal to plant only Bt cotton.

That area in Chihuahua, Mexico, which borders El Paso along the Rio Grande River, was considered to be a “hot spot” for pink bollworms in Mexico’s Pink Bollworm Eradication (PBW) Program in ’07.

Bt cotton has proven to be a valuable component of the US and Mexico Pink Bollworm Eradication program and its planting in the Juárez Valley is expected to greatly enhance pink bollworm eradication efforts. A successful PBW eradication in Mexico is needed to protect the success of the US PBW Eradication Program.



Cotton Mill Use Declines

According to the Commerce Dept., February (four-week month) total cotton consumption in domestic mills was 176.2 million pounds for a seasonally adjusted annualized rate of 4.71 million bales (480-lb). Last year’s February annualized rate was 4.81 million bales.

The January (five-week month) estimate of domestic mill use of cotton was unchanged from the previous month at 210.3 million pounds. Due to a change in the seasonal adjustment factor, the revised seasonally adjusted annualized rate of consumption for January is 4.70 million bales. This is lower than last year’s January annualized rate of 4.97 million bales.

Based on Commerce estimates from Aug. 1, ’07-March 1, ’08, projected total pounds consumed during crop year ’07-08 would be 2.3 billion or 4.74 million bales. USDA’s latest estimate of ’07-08 crop year mill use is 4.6 million bales.

Preliminary March domestic mill cotton use and revised February figures will be released by Commerce on April 24.



Sales Surge, Shipments Steady

Net export sales for the week ending March 20 were 465,400 bales (480-lb). This brings total ’07-08 sales to approximately 11.4 million bales. Total sales at the same point in the ’06-07 marketing year were approximately 9.5 million bales. Total new crop (’08-09) sales are 479,000 bales.

Shipments for the week were 225,000 bales, bringing total exports to date to 8.0 million bales, compared with the 5.6 million bales at the comparable point in the ’06-07 marketing year.



Standards Panel Members Named

Agriculture Secretary Ed Schafer announced the appointment of 24 members and 11 alternate members to the Advisory Committee on Universal Cotton Standards.

The members represent merchants, manufacturers, ginners and producers and will serve for the two-year period of the Committee’s charter, which was re-established in ’07. The Committee will review the Universal American Upland Cotton Standards and make recommendations to the Agriculture Secretary concerning establishment and revision of Universal Cotton Standards.

The appointed merchant members are: T. Jordan Lea, Greenville, SC; Bobby Walton, Memphis; TN; Manfred Schiefer, Lubbock, TX; Craig R. Stevens, Fresno, CA; Frederick W. Barrier, Greenwood, MS; and Lonnie D. Winters, Lubbock, TX.

The appointed manufacturer members are: William E. Bowen, Jr., Inman, SC; John B. Cleveland, II, Easley, SC; David T. Koon, Columbus, GA; Eugene C. Frye, Gastonia, NC; G. Michael Beeker, Sanford, NC;  and Billy R. Henderson, Williamston, SC.

The appointed ginner members are: Kirk D. Gilkey, Corcoran, CA; Chris W. Breedlove, Olton, TX; W. Sledge Taylor, III, Como, MS; and Van F. Murphy, Quitman, GA.

The appointed producer members are: C. Heath Watson, Mayesville, SC; David M. Dunlow, Gaston, NC; Thad R. Freeland, Tillar, AR; Ben L. Lamensdorf, Cary, MS; Craig D. Shook, Corpus Christi, TX; Jackie L. Burris, Wellman, TX; Donald J. Cameron, Helm, CA; and Diann D. Prechel Shearer, Coolidge, AZ.

Merchant alternates are: Claud A. Acker, Bakersfield, CA; Richard L. Clarke, Cordova, TN; and John D. Mitchell, Cordova, TN. Manufacturer alternates are: Trey Hodges, Columbus, GA; and H. Malloy Evans, Sanford, NC. Ginner alternates are: Charles C. Owen, Sr., Pima, AZ; and Robert W. Greene, Courtland, AL. Producer alternates are: R. Taylor Slade, Williamston, NC; William A. Guthrie, Jr., Newellton, LA; Robert D. Robbins, Altus, OK; and Alisa Ogden, Loving, NM.





Prices Effective March 28-April 3, '08

Adjusted World Price, SLM 11/16

60.47 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

1

Step 3 Quotas (480-lb. bales)

409,987

ELS Payment Rate

7.56 cents

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

77.77 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

NA

Current US c.i.f. Northern Europe

80.17 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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