Cotton's Week: May 30, 2008

Cotton's Week: May 30, 2008

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NCC to Review Key Farm Law Provisions in Cotton Belt Meetings

NCC staff will review key provisions of the new Food, Conservation and Energy Act of 2008 in 45 informational meetings across the Cotton Belt during the weeks of June 16 and June 23. The meetings are being sponsored by the NCC and area interest organizations.

The presentations will be followed by a question and answer period, and are aimed at providing the best available information on the new farm bill.

"All NCC members should try to attend one of these meetings,” NCC Chairman Larry McClendon said. "I believe others involved in the cotton industry and agriculture also can benefit from attending these informational sessions."

The schedule of meetings, with all times local, follows:

Mid-South:

June 17 – Portageville, MO, Delta Center, 10 am; Jackson, TN, UT Ag Experiment Station, 10:30 am; Keiser, AR, Northeast Research & Extension Center, 2 pm;

June 18 – Memphis, TN, Agricenter, 10 am; Clarksdale, MS, Clarksdale City Auditorium, 3 pm; Alexandria, LA, LSUA, 3 pm;

June 19 – Rayville, LA, Civic Center, 10 am; Yazoo City, MS, Rick’s Memorial Library, 3 pm;

June 20 – Indianola, MS, Charles W. Capps, Jr. Technology Center, 10 am; Dumas, AR, Dumas Community Center, 3 pm.

Southeast:

June 17 – Franklin, VA, Paul Dee Camp Community College, 9 am; Jackson, NC, JW Faison Bldg, 2 pm;

June 18 – Washington, NC, Beaufort Co Ext Office, 9 am; Bennettsville, SC, McColl Gin, 4 pm;

June 19 – Santee, SC, Holiday Inn, 9 am; Statesboro, GA, Bulloch County Ag Center, 3 pm;

June 20 - Perry, GA, GA National Fair Grounds & Ag Center, 9 am; Tifton, GA, Rural Development Center; 2 pm;

June 23 – Belle Mina, AL, Tennessee Valley Research & Extension Substation, 9 am; Prattville, AL, Bass Pro Shops Outdoor World, 3 pm.

June 24 – Atmore, AL, Creek Family Restaurant, 10 am;

June 25 – Donalsonville, GA, Lions Hall, 10 am.

Southwest:

June 23 – Wellington, KS, Raymond Frye Complex, 8 am; Weslaco, TX, TAMU Citrus Center, 9 am; Robstown, TX, Nueces County Fair Grounds, 3 pm; Hugoton, KS, Memorial Hall, 4 pm;

June 24 – El Campo, TX, Civic Center, 9 am; Dumas, TX, Moore County Community Bldg, 10 am; Seagraves, TX, Community Bldg; 10 am; Victoria, TX, Howard Johnson Hotel, 3 pm; Plainview, TX, Ollie Liner Center, 3 pm; Midland, TX; Midland County Horseshoe, 3 pm;

June 25 – Uvalde, TX, Uvalde Quality Inn, 10 am; Lubbock, TX, Plains Cotton Cooperative Assn, 10 am; San Angelo, TX, Texas Agri-Life Research & Extension Center, 10 am; Lamesa, TX, Dawson County Community Center, 2 pm; Abilene, TX, Abilene Christian U., 3 pm;

June 26 – El Paso, TX, Wyndham Hotel, 10 am; Altus, OK, Oklahoma Cotton Cooperative Assn., 10 am.

Far West:

June 23 – Dos Palos, CA, DES Hall, 10 am; Coalinga, CA, Harris Ranch, 2:30 pm;

June 24 – Bakersfield, CA, Kern Ag Pavillion, 10 am; Yuma, AZ, Booth Equipment, 3 pm;

June 25 – Maricopa, AZ, Maricopa Ag Center, 10 am; Safford, AZ, Eastern Arizona College, 3 pm.



USDA Moves AWP Calculation to Far East Quotes

USDA has issued a final rule shifting the determination of the Adjusted World Price (AWP) to Far East (FE) quotes reported by Cotton Outlook.

The use of FE quotes better reflects cotton trade patterns and is necessitated by the pending elimination of North Europe quotes. Under the new regulations, the FE price reflects the average of the five lowest-priced growths quoted for M 13⁄32 inch cotton, CFR (cost and freight) Far East.

Cotton Outlook currently publishes a sufficient number of forward quotes, thus allowing the commencement of the six-week blending period of current and forward quotes.

The AWP announced on May 29 and in effect for May 30–June 5 reflects week one of the transition period with the blended FE price = [(2 x current FE price) + forward FE price]/3. The same formula holds for week two. For weeks three and four, the formula is the current quote plus the forward quote divided by two. For weeks five and six, the formula is the current quote plus two times the forward quote divided by three.

Although the exact timing of the USDA decision was not known, the move to the FE quotes was anticipated. Cotton Outlook has previously announced that the ‘07 marketing year would be the final crop for North Europe (NE) quotes and indicated that no forward NE quotes for the ’08 crop would be announced. After industry deliberations in early ’07, the NCC urged USDA to initiate a change to the FE quotes.

The Federal Register notice detailing USDA’s recent regulatory action can be accessed at the NCC web site, www.cotton.org, and specific values used to determine the current AWP can be found in the price box of Cotton’s Week.



Cotton Planting Progressing

As of May 25, USDA reports that cotton plantings stand at 71% complete -- compared to a five-year average of 73%. Significant progress was made since the May 18 report when only 49% of the crop was planted.

Excessively wet conditions in the Mid-South had slowed plantings well behind their normal pace. However, warmer, drier conditions in the past week allowed many growers to make noticeable gains in planted area. For example, growers in Tennessee advanced to 74% complete, up from just 24% as of May 18. Similar gains were reported in Mississippi with 77% of cotton acres planted, as compared to 37% a week earlier.

Plantings in the remainder of the Cotton Belt are largely on pace with five-year averages. Complete state-by-state progress can be found at http://www.cotton.org/econ/cropinfo/progress.cfm.



Hay/Forage Use for CRP Acres Relaxed

Agriculture Secretary Ed Schafer announced that USDA has authorized certain acreage enrolled under the Conservation Reserve Program (CRP) to be available for hay and forage after the primary nesting season ends for grass-nesting birds.

"This action will provide much needed feed and forage while maintaining the conservation benefits from the nation's premier conservation program," Schafer said.

More than 24 million acres of land enrolled in CRP will be eligible for this critical feed use program. USDA estimates that this program will make available up to 18 million tons of forage worth $1.2 billion. No rental payment reduction will be assessed on contracts being utilized for this critical use. However, a $75 fee will be charged to process the required contract modification.

Signup for interested CRP participants will begin June 2, ’08, at local Farm Service Agency offices. This modification for critical feed use is only for ’08. All forage use must be completed no later than Nov. 10, ’08.

Additional details including fact sheets, maps and statistics are available at http://www.fsa.usda.gov/conservation.



Turkish Risk Seminar Effective

A record number of 46 mill executives learned about risk management in cotton buying during COTTON USA’s second national seminar for the Turkish spinning industry. In addition, 33 US merchants and merchant agents attended.

The program in Cappadochia, Turkey, focused on factors that influence option pricing, hedging choices and option strategies for textile mills. The seminar also included mock trading using a live platform from ICE Futures U.S.

In addition to risk management information, Cotton Outlookeditor Ray Butler gave an update on world cotton production, trade and consumption.

CCI Executive Director Allen Terhaar provided an examination of cotton and environmental issues. Marsha Powell of CCI Turkey introduced a summary of COTTON USA’s recent Global Lifestyle Monitor results, which showed consumers’ shopping habits for Turkey in comparison to consumers in Germany, Italy and the United Kingdom.

Mill executives commented on the usefulness and timeliness of the information provided.

Many companies planned follow-up educational meetings for their own firms to gain even more knowledge on how to use risk management tools. In addition, several mill executives and agents confirmed they met new contacts during the seminar that will assist future cotton purchases.



Mills Responding to NCC Survey

A majority of domestic textile mills have responded to a NCC Bale Packaging Contamination Survey – which is part of an ongoing evaluation of US cotton quality.

The NCC is seeking additional insight on internal bale contamination, such as grease, plastic and other foreign fibers, as a way to help strengthen the bale packaging program and preserve US cotton’s image in the world marketplace. For example, the latest International Textile Manufacturers Federation study continues to rank US cotton as one of the world’s most contamination-free growths.

Mills are encouraged to participate in the survey by completing a questionnaire at http://www.cotton.org/survey/08keepitclean/. Survey results first will be reported at the NCC’s Mid-Year Board of Directors meeting on Aug. 20-22 in Memphis.

International mills will be surveyed later to gather their opinions of US cotton, including issues specific to bale packaging and internal bale contamination.



Sales Weak, Shipments Steady

Net export sales for the week ending May 22 were 113,900 bales (480-lb). This brings total ’07-08 sales to approximately 14.3 million bales. Total sales at the same point in the ’06-07 marketing year were roughly 13.6 million bales. Total new crop (’08-09) sales are 760,100 bales.

Shipments for the week were 278,600 bales, bringing total exports to date to 10.5 million bales, compared with the 8.7 million bales at the comparable point in the ’06-07 marketing year. With a little more than two months remaining in the marketing year, weekly shipments must average roughly 370,000 bales to reach the USDA projection of 14.20 million bales.



Prices Effective May 30-June 5, '08

Adjusted World Price, SLM 11/16

60.73 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

2.89 cents

*No Adjustment Made Under Step I
 
Five-Day Average
 
Current 5 Lowest 3135 CFR Far East

73.95 cents

Forward 5 Lowest 3135 CFR Far East

81.43 cents

Coarse Count CFR Far East

73.79 cents

Current US CFR Far East

73.00 cents

Forward US CFR Far East

NA

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

56.37 cents

**

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

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