Cotton's Week: April 11, 2008

Cotton's Week: April 11, 2008

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House Farm Bill Conferees Named

House Agriculture Committee Chairman Collin Peterson announced the Representatives who were appointed by House Speaker Pelosi to participate in the conference committee that will negotiate the ’08 Farm Bill.

Cotton Belt members appointed to serve as House conferees are: Reps. Cardoza (D-CA), Etheridge (D-NC), Hayes (R-NC), Lucas (R-OK), McIntyre (D-NC), Moran (R-KS), Neugebauer (R-TX) and Scott (D-GA). Cotton Belt Senate conferees are: Chambliss (R-GA), Cochran (R-MS), Lincoln (D-AR) and Roberts (R-KS).

During the first formal meeting of Senate and House conferees, Chairman Peterson (D-MN) tabled a proposal that would spend $5.5 billion above the baseline. The House proposal did not include a permanent disaster program or a number of tax extenders, both of which are being championed by the Senate. The House proposal does include additional funding for nutrition and conservation programs.

During the Conference meeting, it became clear that the amount and allocation of additional above-baseline funding remains unsettled. The Members agreed to adjourn the meeting until early in the week of April 21 when it is expected that the Senate conferees will offer a counter proposal. It is anticipated that a Senate counter proposal would include more spending above the baseline as well as provisions for a permanent disaster program.

The key to reaching an agreement is likely to hinge on determining how to offset the new spending to comply with Congressional pay-as-you-go rules. Earlier, the House voted 400-11 to instruct its conferees to oppose any new spending that would require tax increases.



CFTC Forum Details Revealed

The Commodity Futures Trading Commission (CFTC) announced additional details regarding the upcoming forum on the agricultural markets. The roundtable is designed to gather information about whether the futures markets are properly performing their risk management and price discovery roles.

The agenda will include discussion of the following: Price Discovery in the Agriculture Futures Markets; Hedging in the Agricultural Futures Markets; and Margin Levels (Performance Bond) and Agricultural Credit.

The roundtable will consist of officials from the CFTC, USDA, Farm Credit Administration, Federal Reserve System and a broad spectrum of agricultural market participants. A complete participant list will be available before the forum.

The meeting is scheduled for 9:00 am on April 22 in the Commission’s hearing room, which is located on the ground floor of its headquarters at Three Lafayette Centre, 1155-21st Street, NW, Washington, DC 20581. The hearing room doors will be open at 8:30 am.

Due to space limitations, CFTC is strongly encouraging interested persons to watch a live web broadcast or join via toll-free conference call. Specific call-in information is available at the CFTC web site, www.cftc.gov.

Because opportunities for questions and answers during the day of the roundtable may be significantly limited, participants and members of the public may submit written questions for the official record up to two weeks following the roundtable.



Sales, Shipments Strong

Net export sales for the week ending April 3 were 507,200 bales (480-lb). This brings total ’07-08 sales to approximately 12.2 million bales. Total sales at the same point in the ’06-07 marketing year were slightly more than 10.2 million bales.

China remains the top customer with purchases of 3.5 million bales, or 29% of the total. Mexico follows with 1.8 million bales, while customers in Turkey have purchased 1.6 million bales of US cotton. Total new crop (’08-09) sales are 479,800 bales.

Shipments for the week were 308,500 bales, bringing total exports to date to 8.5 million bales, compared with the 6.2 million bales at the comparable point in the ’06-07 marketing year.



Colombia FTA Vote Delayed

In a largely party-line vote, the House amended its rules to postpone consideration of a free-trade agreement with Colombia.

Speaker Pelosi (D-CA) initiated the delay with a resolution to amend House rules that would force a vote on the agreement 90 days after the President sends the implementing legislation to Congress. The resolution suspends provisions of fast-track negotiating rules, which set timing and other requirements for votes. The Colombia deal was negotiated under the latest version of the fast-track authority which expired last year.

The law prohibits amendments to trade pacts negotiated by the Executive Branch and requires both chambers to act on a deal within 90 legislative days after implementing legislation is submitted. However, it specifies that the procedures and timetable are rules of the chambers, and it expressly recognizes “the constitutional right of either House to change the rules so far as relating to the procedures of that House at any time, in the same manner, and to the same extent as any other rule of that House.”

The Colombia deal would eliminate tariffs on more than 80% of Colombia-bound exports of industrial and consumer goods. Colombia, Bolivia, Ecuador and Peru now receive duty-free treatment on many US-bound exports under recently renewed trade preferences.


Licensed Warehouses Get ICE Approval

The Intercontinental Exchange approved four new licensed warehouses for the storage of certificated stocks for delivery against the cotton contracts. Two of the facilities are located in Memphis, TN, one is in Greenville, SC, and another is in New Orleans, LA.

There has not yet been any approval of West Texas or West Coast delivery points. It is believed these additions will increase the delivery capacity by approximately 201,750 bales. Total capacity of the tenderable warehouses is now estimated at approximately 2.567 million bales.



Loan Cotton Transfer Guide Mailed

A fact sheet/guide mailed to selected cotton interests contains updates and clarifications for transferring Commodity Credit Corp. (CCC) loan cotton.

CCC is using the guide to encourage use of the web process -- as opposed to going to the county Farm Service Agency offices -- when redeeming cotton from the CCC loan. No major changes were made to the loan cotton transfer process. A link to the guide can be found at www.cotton.org/tech/flow/index.cfm.



’07-08 Stocks Highest Since ’66-67

In its April report, USDA gauged US ’07-08 cotton production at 19.40 million bales. The production increase is based on the Cotton Ginnings report released by the USDA’s National Agricultural Statistics Service. Mill use was raised 100,000 bales to 4.70 million bales due to higher than anticipated activity in recent months. Exports were unchanged at 14.50 million bales. The estimated total offtake now stands at 19.20 million bales which generates ending stocks of 9.70 million bales, the highest level since ’66-67. The estimated stocks-to-use ratio is 50.5%.

The USDA report raised world production for the ’07-08 marketing year 840,000 bales to 119.73 million bales. The production increase is seen mainly in India and the United States. World mill use was increased 490,000 bales to 124.94 million bales due to increases in Pakistan and the United States that offset slight reductions in several other countries. Consequently, world ending stocks are estimated to be 59.64 million bales for a stocks-to-use ratio of 47.7%.

For the ’08-09 crop year, USDA sees world production reaching 123.00 million bales. Mill use is set 129.50 million bales. World ending stocks are seen at 57.04 million bales for a stocks-to-use ratio of 44.0%.



Essay Application Deadline Near

Essays for the “Future of Delta Cotton Student Essay Contest” are being accepted through April 18, ’08 (11:59 pm CST).  The essay focus is on responsible stewardship to ensure the longevity and viability of Delta cotton production for future generations. Entry forms and contest details can be obtained at www.FutureOfDeltaCotton.com, and the completed entry forms and 750-1,000-word essays must be submitted at that site.

The contest, sponsored by Delta Farm Press and Syngenta Crop Protection, is open to all undergraduate and graduate students currently enrolled for the Spring ’08 semester at Louisiana State U., Mississippi State U., the U. of Arkansas and the U. of Tennessee.

Eight total prizes will be awarded, including two grand prizes of $2,500 and six honorary prizes of $1,000. The undergraduate essay and the graduate essay with the highest cumulative score will be awarded the grand prizes. Judging will take place May-July, and winners will be determined on or around July 31, ’08.

Contest judges are: Tom Barber, assistant professor of Cotton Agronomy, U. of Arkansas; Chad Steiner, cotton crop manager, Syngenta Crop Protection Inc.; Sandy Stewart, a Burch and D&PL associate professor and cotton specialist, Louisiana State U. AgCenter; Marjory Walker, director of Communication, Production and Audiovisual Services, NCC; Elton Robinson, editor, Delta Farm Press; and Darrin Dodds, Extension cotton specialist, Mississippi State U.



Gin School Registration Underway

Registration is underway for the ’08 Western Ginners School, which is being held at the USDA ginning laboratory in Las Cruces, NM, on May 13-15. Registration information can be found at http://ncga.cotton.org.

The school’s Continuing Education courses will feature: high speed roller ginning, PLC controllers and electrical components; harvesting equipment and ginning of modules produced by on-board moduling systems; and safety training.

Level I & II combined courses include: Purpose and Operating Principles of Individual, Gin Machines; Efficient Operation, Adjustment, and Maintenance of Gin Equipment; Pneumatics and Waste Collection; Electrical Systems; Hydraulic Systems; Gin Safety; Management Tips; and Roller Ginning.

Level III features: Review of Functions of a Ginning System; Electrical Systems; Air Systems in the Gin; Drying and Moisture Restoration Systems; Matching Machinery Capacities in the System; Seed Cotton Unloading Systems and Management of Seed Cotton Handling Systems; Bale Presses and Hydraulic Systems; Safety Programs and Labor Regulations; Cottonseed Handling Systems; and Roller Ginning.

 National Cotton Ginners Assoc. (NCGA) Executive Vice President Harrison Ashley said the Southwest School in Lubbock last week drew 140 participants. The third school will be held June 17-19 in Stoneville, MS.

School cooperators include NCC; NCGA and its member associations; USDA-ARS; USDA Extension Service; Cotton Incorporated; gin machinery/equipment manufacturers/suppliers; Cooperative State Research, Education and Extension Service; and select land grant universities.



Prices Effective April 11-17, '08

Adjusted World Price, SLM 11/16

60.46 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

1

Limited Global Import Quota (480-lb. bales)

409,987

ELS Payment Rate

6.69 cents

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

77.76 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

NA

Current US c.i.f. Northern Europe

78.45 cents

Forward US c.i.f. Northern Europe

NA

 
2007-08 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

56.16 cents

**

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

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