Cotton's Week: October 24, 2008

Cotton's Week: October 24, 2008

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Cotton Organizations Convey Concern Over Farm Law Regulation

In a letter to Agriculture Secretary Ed Schafer, the NCC, the National Council of Textile Organizations, AMCOT, the American Cotton Shippers Assoc. and the American Cotton Producers conveyed serious concern about the delay in publishing the regulation necessary to implement the cotton provisions of the Food, Conservation and Energy Act of 2008.

The delay, they wrote, has resulted in a significant volume of cotton being redeemed from the loan based on an Adjusted World Price (AWP) that was not calculated in accordance with the statute.

The new law includes several important adjustments in the calculation of the weekly AWP. These changes, which were to be effective beginning with the start of the ’08 crop year on Aug. 1, were designed to improve the accuracy of the AWP calculation and to ensure US cotton moves to market at competitive prices. One of the changes which required using Far East rather than North Europe price quotations was implemented through administrative action. Two other important changes still have not been implemented three months into the ’08 crop year.

“The new law also includes an economic adjustment assistance program for our hard-pressed textile industry which must compete with low cost, subsidized imports of textile and apparel products,” the letter stated. “The economic adjustment assistance program also became effective on August 1. In the absence of regulations, domestic textile mills have no guidelines on how to participate in the program. They have no assurance that consumption records and investment decisions which have been made since August will comply with the eventual program requirements.”

The letter noted that the estimated costs of the modifications to the AWP calculation and the economic adjustment assistance program were offset by reductions in the cotton target price, adjustments to the cotton loan schedule which effectively reduced the loan on certain qualities, and a reduction in the maximum cotton storage credit rates. It also stated growers, merchants, marketing cooperatives and mills have a reasonable expectation that the regulation implementing the adjustments to the AWP and initiating the economic adjustment assistance program should be published in a timely manner so US cotton can be redeemed and marketed at a competitive price and domestic mills can make informed decisions.

“It should also be noted that a majority of the savings to be achieved through reforms to payment limitations, eligibility and new income tests are the result of reductions in benefits to cotton farmers,” the groups stated.

The groups asked that the Secretary do what is necessary to immediately publish the applicable regulations. They also said they expect USDA to provide appropriate adjustments for those growers, merchants and cooperatives that have had to redeem significant amounts of cotton from the loan or have had to accept a loan deficiency payment based on an AWP that was not calculated in accordance with the new statute.



Sales Strong, Shipments Steady

Net export sales for the week ending Oct. 16 were 323,100 bales (480-lb). This brings total ’08-09 sales to approximately 6.7 million. Total sales at the same point in the ’07-08 marketing year were approximately 6.2 million bales. Total new crop (’09-10) sales are 81,600 bales.

Shipments were 235,900 bales, bringing total exports to date to 2.7 million bales, compared with the 3.4 million bales at the comparable point in the ’07-08 marketing year.



Supplemental No-Match Rule Issued

The Dept. of Homeland Security (DHS) issued a Supplemental Final Rule that provides additional background and analysis for the department's No-Match Rule on employee social security numbers.

The DHS regulation, which was originally proposed in June ’06 and issued in Aug. ’07 as a Final Rule, clarifies what steps employers can take to resolve discrepancies identified in "no-match" letters issued by the Social Security Administration (SSA). It also provides guidance to help businesses comply with legal requirements intended to reduce the illegal employment of unauthorized workers.

Implementation of the No-Match Rule has been stayed following a preliminary injunction issued by the US District Court for the Northern District of California last year. In March ’08, DHS published a Supplemental Proposed Rule addressing the issues raised by the Court in its order enjoining implementation of the rule, including a more detailed analysis of how the department developed the no-match policy and a detailed economic analysis of the rule. DHS soon will return to the District Court to request that the injunction be lifted so that implementation of the rule can proceed.

SSA informs employers via "no-match" letters that certain employees' names and corresponding Social Security numbers provided on the employers' Form W-2 wage reports do not match SSA's records. The No-Match Rule details the steps employers may take when they receive a "no match" letter and guarantees that US Immigration and Customs Enforcement (ICE) will consider employers who follow those steps to have acted reasonably. If an employer follows the safe harbor procedures in good faith, ICE will not use the employer's receipt of a no-match letter as evidence to find that the employer violated the employment provisions of the Immigration and Nationality Act by knowingly employing unauthorized workers.



Pollution-Free Status Reconfirmed

The Bremen Cotton Exchange’s testing of ’08/09 cotton crop samples found them to be pollutant-free. Neither heavy metals nor pesticides were discovered in the samples tested. Cotton for this year’s tests came from 15 countries, including the United States.

The Exchange has been carrying out pollutant analysis on raw cotton regularly since ’91 – and no critical values have been detected. The Exchange takes random samples from current crop bales which are then examined at the independent Hohenstein Research Institute for traces of pesticides and heavy metals, according to Eco-Tex Standard 100, Product Class 1. The Product Class 1 contains the strictest evaluation criteria, as it refers to textiles and textile toys for babies and toddlers to the age of three.

Detailed information on the test series is at www.baumwollboerse.de.



Survey Responses Needed

US cotton producers are urged to complete a questionnaire that will provide a gauge on the strides that producers have made in production efficiency and help Cotton Incorporated promote US cotton and direct its future research. The summarized survey data also will be used to show the global textile industry, brands, retailers and even consumers the true extent of cotton’s limited environmental impact.

The online Natural Resource Survey, open through Oct. 31, is anonymous and requires about 20-25 minutes to complete. Individual responses are not being tracked, and respondents are asked to complete the questionnaire only once and only if he/she has production responsibility for a cotton farming operation. The questionnaire can be accessed at http://www.cottoninc.com/Ag-eSurvey/.



Cotton Board Members Named

Agriculture Secretary Ed Schafer announced the appointment of 13 members, 13 alternates and one non-voting consumer advisor to the Cotton Board. All appointees will serve three-year terms beginning Jan.1, ’09 and ending Dec. 31, ’11.

The re-appointed members are: Robert L. McGinnis, West Memphis, AR; John J. Baxter, Watson, AR; Aaron A. Barcellos, Los Banos, CA; Thomas A. Parker, Lake Providence, LA; Mike P. Sturdivant, Jr., Itta Bena, MS; David M. Grant, Garysburg, NC; Barry W. Evans, Kress, TX; D. Compton Cornelius, Crosbyton, TX; Rodger C. Glaspey, Fresno, CA; David A. Levey, Mequon, WI; Gail W. Strickler, Brookfield, CT; Maureen E. Gray, New York, NY; and Deborah M. Gregg, Irvine, CA.

The re-appointed alternate members are: E. Ritter Arnold, Marked Tree, AR; Robert A. Gammill, Tyronza, AR; Steve Cantu, Tranquility, CA; George G. LaCour, Jr., Morganza, LA; and Michael S. Hubbard, Gastonia, NC.

The newly appointed alternate members are: C. Harry Flowers, Dublin, MS; Jerry L. Hamill, Enfield, NC; Tom M. Hegi, Petersburg, TX; John R. Dunlap, Floydada, TX; H. Malloy Evans, Cheraw, SC; Courtney O'Keefe, Easton, CT; Flora J. Wong, Mercer Island, WA; and Rafael A. Hernandez, Highland Village, TX. The re-appointed consumer advisor is Billie J. Collier, Tallahassee, FL.

The cotton research and promotion program is designed to advance the position of cotton in the marketplace. It is funded by assessments on all domestically produced cotton and imports of foreign-produced cotton and cotton-containing products, and is authorized by the Cotton Research and Promotion Act of 1966. USDA's Agricultural Marketing Service monitors the program.



August Cotton Mill Use Raised

According to the Commerce Dept., September (five-week month) total cotton consumption in domestic mills was 199.0 million pounds for a seasonally adjusted annualized rate of 4.18 million bales (480-lb). Last year’s September annualized rate was 4.88 million bales.

The August (four-week month) estimate of domestic mill cotton use was raised by 316,000 pounds to 174.1 million pounds. The revised seasonally adjusted annualized rate of consumption for August is 4.62 million bales. This is lower than last year’s August annualized rate of 4.80 million bales.

Preliminary October domestic mill cotton use of cotton and revised September figures will be released by Commerce on Nov. 26.



Buyers Tour Participation a Record

A record number of companies joined Cotton Council International’s (CCI) COTTON USA Buyers Tour to China.

Despite the global economic downturn and renewed industry interest to source from the Western Hemisphere, the record number of participants in CCI’s recent COTTON USA Buyers Tour to China reported a strong interest in sourcing from China.

This was the fourth COTTON USA Supply Chain Marketing Buyers Tour to China over the past 18 months. The weeklong event held in Shanghai attracted buyers representing Chinese, European, Japanese, Indonesian, Thai and US brands and retailers. The COTTON USA Apparel Buyers Tour enabled buyers to conveniently explore the advantages of sourcing US cotton-rich garments from the strong textile economies of China and Hong Kong.

The tour began with an extensive briefing session that included introductions to CCI, Cotton Incorporated and new cotton product developments from Cotton Incorporated including Storm Denim, Wicking Windows and Tough Cotton. Also included were a trade show and factory visits in Ningbo and Hangzhou, where the buyers inspected each company’s manufacturing facilities and US cotton-rich wovens, denims, knitwear, sportswear and garments. The tour ended at the Intertextile Shanghai trade show where buyers held follow-up meetings with the mills they met at the beginning of the tour.

The participating buyers represented companies from eight countries, among them Bay Apparel, Cabelas, Capital Mercury, Hanes Brands International, Jockey, Komar, Target and Quicksilver from the United States. Very notable was the participation of major leading consumer brands from China including Li Ning (the brand owned by a star of the Bejing Olympics, Mr. Li Ning), Metersbonwe and Semir.

CCI recruited 20 of China’s leading knit and woven fabric or garment suppliers to participate in the event. All of these companies are COTTON USA Mark licensees and either spin US-grown cotton or use yarns or fabrics supplied from COTTON USA licensed mills.

CCI also conducted a survey of participants to help with future plans.



Prices Effective October 24-30, '08

Adjusted World Price, SLM 11/16

44.62 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

7.38 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

61.62 cents

Forward 5 Lowest 3135 CFR Far East

NA

Coarse Count CFR Far East

58.88 cents

Current US CFR Far East

60.40 cents

Forward US CFR Far East

NA

 
2007-08 Weighted Marketing-Year Average Farm Price  
 
Final Marketing-Year Average Price

59.30 cents

**


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