Cotton's Week: June 27, 2008

Cotton's Week: June 27, 2008

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’08 DCP Signup Underway

Agriculture Secretary Ed Schafer announced that sign-up for the ’08 crop Direct and Counter Cyclical program (DCP) has begun and will continue through Sept. 30.

USDA previously announced the availability of marketing assistance loans and published the ’08 crop of cotton premium and discount schedule.

Secretary Schafer said producers can complete their ’08 DCP contract at USDA Service Centers or on-line. Producers may request an advance of 22% of the direct payment for each commodity with a base on the farm. For cotton, the direct payment rate is 6.67 cents/lb. He said USDA will issue the advance payments as soon as possible after enrollment. Final DPs for the ’08 crops will be issued after Oct. 1, ’08, as specified in the new farm bill.

During a news conference, in addition to announcing the signup, Secretary Shafter and other top USDA officials answered questions concerning new farm bill implementation. A transcript of the press conference is available from the NCC’s home page, www.cotton.org.

USDA also has issued a number of notices to Farm Service Agency offices providing information on the ’08 program. Notice CM-603 advises county offices that provisions of the new farm law require that “County offices shall consider the signature of an individual acting in a representative capacity to be valid, even if there was not a proper signature authority on file” if all the following apply – contract was acted on by county office; individual signing document did not knowingly falsify evidence of signature authority or signature; and, documentation of signature authority acceptable according to 1-CM is submitted to the county office.

Notice LP-2096 advises offices that the new farm law continues the $2.5 million adjusted gross income test to determine eligibility for all ’08 crop, program, or fiscal year commodity and conservation programs. In addition, Notice LP-2096 advises county offices that for the ’08 crop LDPs, e LDPs and marketing loan gains requested after May 21, ’08, a producer must file a ’08 Adjusted Gross Income (AGI) certification by completing a CCC-526 (dated 6-12-’08) or if a producer participating in the ’08 DCP program acknowledges receiving a CCC-509 (dated 6-20-’08) certifying there has been no change in the producer’s AGI that would affect eligibility, FSA may use the certification on the CCC-509 instead of CCC-526. Notice PL-174 provides ’08 AGI policy and revised form CCC-526. LP-2096 also advises offices that “AGI certification is not required for commodity loan making, loan repayments at principal plus interest, or certificate exchange gains.”

Notice CM-602 advises offices that under provision of the new farm law, producer(s) on a farm may not receive direct or counter-cyclical payments (or ACRE beginning ’09) if the sum of the base acres on the farm is 10 acres or less unless the farm is owned by a socially disadvantaged or limited resource farmer. The notice also prohibits reconstitution of the farm unless very specific and limited conditions are met.



Keenum Nominated for FCA Board

President Bush announced the nomination of Dr. Mark Keenum to be a member of the Farm Credit Administration Board for the remainder of a six-year term expiring May 21, ’14. The nomination requires Senate confirmation. No date has been set for a hearing at this point.

Dr. Keenum currently serves as under secretary for Farm and Foreign Agricultural Services at USDA, a position he has held since ’06. He also served as agriculture assistant and chief of staff to Sen. Cochran (R-MS) for more than 17 years.



Energy Market Speculation Acted On

The House approved (by 402-19) legislation (HR 6377) authorizing a resolution directing the Commodity Futures Trading Commission (CFTC) to take emergency action to address “excessive” speculation in energy markets.

The Energy Markets Emergency Act requires CFTC to “utilize all its authority, including emergency powers, to take steps to curb excessive speculation in the energy futures markets.”

Speaker Pelosi (D-CA) indicated the House will consider comprehensive legislation on speculation in energy markets when Congress returns from the July 4 recess. House Agriculture Committee Chairman Peterson (D-MN) announced plans to conduct a series of hearings on legislation that has been introduced in recent weeks.

Speaker Pelosi indicated there are differences of opinion about the extent and impact of speculation that need to be resolved and said the non-binding resolution approved June 26 is a first step that serves notice that additional regulation is coming. Speaker indicated there also is support for providing additional funds to CFTC for oversight activities.

Chairman Peterson said the Agriculture Committee will “thoroughly examine” all proposed legislation and try to move forward with legislation if there is consensus.



BMAS Weekly Submissions Improve

Through the first six months of '08, warehouses with USDA Cotton Storage Agreements (CSA) reduced the number of missed "Bales Made Available for Shipment" (BMAS) reports significantly when compared to the same period of the previous year.

Through mid-June '08, 43 warehouses failed to submit BMAS reports on time to USDA on one or more occasions. During the same period in ’07, 60 warehouses with CSAs missed one or more reports and six warehouses failed to submit reports three times -- earning third strikes -- and were removed from the Commodity Credit Corp. (CCC) "Approved List of Warehouses".

Through the same period in '08, two warehouses were removed from the CCC list for failing to report three times. The "Spotlights" section at FSA Commodity Operations publishes a list of Removed/Suspended/Reinstated Warehouses. With the July 4 holiday approaching, warehouses are reminded that July 7th is not a federal holiday so BMAS reports for the week ending Saturday, June 28 are due by close of business on Monday, July 7.

USDA officials have expressed appreciation to warehouse operators for making a conscientious effort to submit their reports on time.



EPA Reviewing Pesticides

Through the Food Quality Protection Act’s new mandated registration review program, EPA is reviewing each registered pesticide every 15 years to determine whether it still meets the Federal Insecticide, Fungicide, Rodenticide Act standard for registration.

According to EPA, the new program ensures that, as the ability to assess risk evolves and as policies and practices change, all registered pesticides continue to meet the statutory standard of no unreasonable adverse effects.

Registration review is replacing EPA's pesticide re-registration and tolerance reassessment programs as those programs are being completed. EPA completed cumulative risk assessments and risk management decisions for the organophosphate (OP) pesticides in Aug. ’06 and the carbamate pesticides in Sept. ’07. The registration review of the OPs is scheduled to begin in ’08, and the carbamate review will begin in ’09. EPA says that further consideration is needed regarding these pesticides' effects on endangered species. Endocrine disruption also is likely to be taken under consideration in these reviews.

By law, the agency must complete the first 15-year cycle of registration review by Oct. 1, ’22.  To meet this requirement, EPA will begin opening about 70 dockets annually beginning in FY09 and continuing through ’17. As of FY08, EPA expects 722 pesticide cases comprising 1,135 active ingredients to undergo registration review. Newly registered pesticides will be folded in each year. The agency must complete the registration review of each new pesticide active ingredient within 15 years of its initial registration.

Currently, 42 registration review cases have had dockets opened for comment and five additional cases were determined not to require dockets because no federal registrations remain.  Included in these reviews are dicrotophos (Bidrin), profenofos (Curacron) and glufosinate (Liberty).



Vietnam Trade Mission Successful

A Vietnamese delegation of textile representatives met with key US industry officials across the Cotton Belt during the COTTON USA Special Trade Mission (STM).

The Cotton Council International-sponsored tour included briefings by CCI and the NCC; a seminar with ICE Futures US; and tours of a gin, farm, warehouse, merchandising operation, USDA classing office and Cotton Incorporated’s world headquarters. The delegation met with the following industry organizations: AMCOT, American Cotton Shippers Assoc., Southern Cotton Growers Assoc., American Cotton Producers, Texas Cotton Producers, Texas Cotton Assoc., Western Cotton Shippers Assoc., the San Joaquin Valley Quality Cotton Growers Assoc. and Supima.

The delegation consisted of 11 textile mills and representatives from the Ministry of Industry and Trade, the Vietnam Spinning Assoc., and the Vietnam National Textile and Garment Group. STM textile executives represent companies that consume about 260,000 bales of cotton.

The US cotton industry foresees expanding opportunity to supply Vietnam’s fiber needs as trade relations grow between the two countries. Currently, Vietnam is the seventh largest importer of US cotton, with more than 283,000 bales exported so far in ’07/08. This number already exceeds imports of US cotton in ’06/07, which totaled 223,000 bales. US imports currently equaling about a third of total cotton sales in Vietnam.

The STM participants noted increased investment in the Vietnamese textile industry and expected significant increases in cotton imports.



Mill Cotton Use Slips

According to the Commerce Dept., May (four-week month) total cotton consumption in domestic mills was 170.13 million pounds for a seasonally adjusted annualized rate of 4.53 million bales (480-lb). Last year’s May annualized rate was 4.90 million bales.

The April (four-week month) estimate of domestic mill use of cotton was lowered by 4.5 million pounds to 172.23 million pounds. The revised seasonally adjusted annualized rate of consumption for April is 4.60 million bales. This is lower than last year’s April annualized rate of 4.91 million bales.

Preliminary June domestic mill use of cotton and revised May figures will be released by Commerce on July 24.



Sales Stay Weak, Shipments Steady

Net export sales for the week ending June 19 were 29,900 bales (480-lb). This brings total ’07-08 sales to approximately 15.4 million bales. Total sales at the same point in the ’06-07 marketing year were roughly 14.3 million bales.

Total new crop (’08-09) sales are 911,400 bales. Shipments for the week were 295,200 bales, bringing total exports to date to 11.7 million bales, compared with the 10.4 million bales at the comparable point in the ’06-07 marketing year.

With slightly more than one month remaining in the marketing year, weekly shipments must average roughly 420,000 bales to reach the USDA projection of 13.90 million bales.



Prices Effective June 27-July 3, '08

Adjusted World Price, SLM 11/16

66.60 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

NA

Limited Global Import Quota (480-lb. bales)

NA

ELS Payment Rate

0.00 cents

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

79.19 cents

Forward 5 Lowest 3135 CFR Far East

84.00 cents

Coarse Count CFR Far East

78.13 cents

Current US CFR Far East

79.15 cents

Forward US CFR Far East

NA

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

56.64 cents

**

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

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