Cotton's Week: November 7, 2008

Cotton's Week: November 7, 2008

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Cotton Belt Results Incomplete

The Cotton Belt election results are still incomplete so the full impact on the 111th Congress is far from clear but President-elect Obama has named transition team leaders.

While Sens. Sessions (R-AL), Pryor (D-AR), Roberts (R-KS), Landrieu (D-LA), Cochran (R-MS), Wicker (R-MS) [in a special election], Inhofe (R-OK), Graham (R-SC), Alexander (R-TN) and Cornyn (R-TX) were successful in their re-election bids, Sen. Dole (R-NC) was defeated and Sen. Chambliss (R-GA) failed by the narrowest of margins to get 50% and will be in a run-off on Dec. 2.

In other noteworthy races, Sen. McConnell (R-KY), the Republican leader and member of the Agriculture Committee, was re-elected as was Agriculture Committee member Sen. Coleman (R-MN) who faces a recount. Former Agriculture Secretary Mike Johanns was elected to the Senate from Nebraska.

Cotton Belt House races resulted in the defeat of Reps. Hayes (R-NC), Lampson (D-TX) and Cazayoux (D-LA). Two Virginia races featuring incumbent Republicans Virgil Goode and Thelma Drake are still too close to call. Two new members, Democrats Bobby Bright and Parker Griffith, were elected to replace retiring Reps. Everett and Cramer in Alabama.

New Mexico will have three new Representatives elected to replace members who ran for the Senate seat vacated by Pete Domenici and in Arizona, Ann Kilpatrick was elected to fill the seat vacated by Rick Renzi.

The House Agriculture Committee lost seven members to defeat. In addition to Reps. Hayes and Lampson, Reps. Musgrave (R-CO), Kuhl (R-NY), Walberg (R-MI), Boyda (D-KS) and Mahoney (D-FL) were defeated.

There will be significant changes in House leadership as Minority Whip Blunt (R-MO) announced he will not seek re-election to that position in the 111th Congress and the selection of Rep. Emanuel (D-IL) as White House chief of staff leaves a key position in the Democratic leadership vacant.

In the Senate, there is potential for significant re-shuffling of committee chairs as a result of the election of  Sen. Biden to be vice president. The departure of Sen. Biden creates a vacancy in the chair of the Foreign Relations Committee and should Sen. Byrd (D-WV) and/or Sen. Kennedy (D-MA) decide to give up their chairs due to health considerations, there will be considerable movement, which would even impact the Agriculture Committee.

In related news, President-elect Obama announced the leaders of his transition team will be John Podesta, former chief of staff to President Clinton; Valerie Jarrett, a Chicago businesswoman; and Pete Rouse, former chief of staff to Sen. Daschle (SD) and most recently chief of staff to Sen. Obama. During the next several weeks, members of the transition team will be assigned to coordinate with departments and agencies.

Agriculture Secretary Schafer has designated key USDA career personnel to serve as contacts for the transition. The Obama transition team has not announced members of the agriculture team as yet.



Link Named AMS Administrator

James E. Link is the new administrator of USDA’s Agricultural Marketing Service (AMS), directing programs that facilitate the efficient marketing of U.S. agricultural products.

"Jim Link's experience as a rancher, businessman and educator will be an asset in his new role at AMS, where he will help to market U.S. agricultural products in domestic and international markets," said Bruce Knight, Under Secretary for Marketing and Regulatory Programs.

Link, who replaces Lloyd Day, will be responsible for procuring commodities, including fruits and vegetables, meat, poultry, fish and egg products, for the national school lunch and other federal food and nutrition programs.

Prior to this appointment, Link served as administrator of USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) since ’05. He a bachelor's degree in business administration from Emporia State U. and an MBA from Texas Christian U.



Program Provisions Summarized

The NCC summarized selected provisions of the final rule implementing the Upland and ELS Cotton Programs for ’08-12 that was effective Oct. 30. The summary is on the NCC website (members only) at http://www.cotton.org/issues/members/2008/regsumm.cfm.

The regulation implements the following provisions: 1) non-recourse marketing assistance loan for upland cotton, 2) recourse seed cotton loan for upland cotton, 3) non-recourse marketing assistance loan for ELS cotton, 4) ELS competitiveness program, 5) recourse seed cotton loan for ELS cotton, 6) economic adjustment assistance program for domestic users of upland cotton, and 7) miscellaneous provisions and clarifications.

The Federal Register earlier had published the Commodity Credit Corp.’s notice of its revising regulations as required by the Food, Conservation, and Energy Act of 2008 (the '08 Farm Bill) to administer loan and payment programs for upland cotton and extra-long staple (ELS) cotton producers and establishing new regulations to specify payment provisions for domestic users of upland cotton. That notice can be accessed from the NCC’s home page, www.cotton.org.



ITC Monitoring Chinese Textiles

The International Trade Commission (ITC) announced it would monitor certain textile and apparel imports from China at the request of the House Ways and Means Committee.

The ITC said in a release that it would provide the House committee its first statistical report on Dec. 1 on the volume, value, unit value, and import market share of textiles covered by the Memorandum of Understanding Concerning Trade in Textile and Apparel Products which expires Dec. 31. ITC said the reports would be provided to the committee every two weeks and posted on the ITC website. It also said a yearly compilation of data would be made available.

On Oct. 9, House Ways and Means Chairman Rep. Rangel (D-N.Y.) asked the ITC to begin to monitor Chinese textile imports given the expiration of the memorandum of understanding that entered into force in late ’05 and the import surges that prompted the negotiation of the MOU in the first place (197 DER A-4, 10/10/08). ITC said it would conduct the monitoring under an investigation entitled Textile and Apparel Imports from China: Statistical Reports (Inv. No. 332-501).

A bilateral textile agreement negotiated by the United States and China in ’05 containing textile quotas on 34 product categories expires Dec. 31, ’08.

The House Ways and Means Committee’s request, as well as more details on the scope of the investigation, is available on the ITC website at http://www.usitc.gov.



Galveston Moratorium Lifted

ICE Futures US Board announced that it “…vacated the moratorium that was issued for the Port of Galveston with respect to certificated cotton on September 15, 2008.”

The notice also updated the status of certificated bales in Moody Compress # 3 and Moody Compress # 9. The Notice stated that “...the Exchange has now completed its inspection of each facility and the bales that were identified by the operator as not damaged as a result of Hurricane Ike; there are approximately 1,800 such bales in Moody #9 and 300 such bales in Moody #3. Based upon the results of this inspection, the Exchange has determined that these bales are now tenderable, effective immediately.”

According to the Notice, all certificated bales in other Galveston warehouses remain non-tenderable pending Exchange inspection of facilities and bales.

In a related action, USDA’s Farm Service Agency reinstated the Cotton Storage Agreement for Warehouse Code 858056, Eugene B. Smith & Co., Inc. / MOODY COMPRESS & WAREHOUSE #4, effective Oct. 30.



Air Quality Task Force Set

The Agricultural Air Quality Task Force met in Arlington, VA, to continue discussions on air quality issues related to agriculture.

The newly-appointed task force membership includes: Kevin G. Rogers, producer/Rogers Brothers Partnership, Arizona; Bill Norman, vice president, NCC’s Technical Services; Roger Isom, California Cotton Ginners & Growers Assoc.; Robert V. Avant, Jr., Texas A&M U.; and Bryan Shaw, Texas Commission on Environmental Quality.

The task force is chaired by the chief of the Natural Resources Conservation Service (NRCS) and is comprised of USDA employees, industry representatives and other experts in agriculture and air quality. The panel's role is to advise the Agriculture Secretary on issues related to agricultural air quality, including strengthening and coordinating USDA air quality research efforts and identifying cost-effective ways the agriculture industry can improve air quality.

"This task force serves a very important role because conservation of our natural resources, including protecting air quality, is particularly vital to our farmers and ranchers who depend on these resources to produce our nation's food and fiber," Schafer said.

More information on the task force is at: http://www.airquality.nrcs.usda.gov/AAQTF/ or by contacting NRCS’ Michele Laur at 202-720-1858 or michele.laur@wdc.usda.gov.



US Cotton Showcased in Shanghai

Cotton Council International (CCI) and Cotton Incorporated joined to promote US cotton under the banner “U.S. Cotton: Your Natural Choice” at this year’s Intertextile Apparel Shanghai fabric trade show.

In spite of the recent economic downturn, more buyers attended from around the world. In addition, more mainland Chinese buyers joined the trade show, and CCI and Cotton Incorporated received more inquiries regarding the US cotton industry’s services from these buyers. More than 5,000 visitors passed through the US cotton booth, with 2,500 face-to face contacts and enquiries.

CCI featured top COTTON USA licensees’ products in four different boutique showcases. More than 20 brands and 15 suppliers expressed interest in becoming COTTON USA licensees and inquired about the COTTON USA Supply Chain Marketing Program. Cotton Incorporated presented technical solutions offered for cotton fabric finishes and fashion and color trend forecasting. Supima joined CCI and Cotton Incorporated at the booth to promote US Pima cotton.



November CCC Lending Rates Set

USDA’s Commodity Credit Corp. (CCC) announced interest rates for Nov. ’08 -- the borrowing rate-based charge is 1.50%, down 2.00% in Oct. ’08. For ’96 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during Nov. ’08 is 2.50%, down from 3.00% in Oct. ’08.

Past monthly releases announcing interest rates charged by CCC on commodity and marketing assistance loans disbursed for that particular month reflect the interest rate the US Treasury charged CCC for that month. This was the interest rate specified by CCC since Jan. 1, ’82, but the process of establishing the interest rate was changed by a provision of the Federal Agriculture Improvement and Reform Act of 1996 (the Act), enacted on April 4, ’96.

Section 163 of the Act requires that monthly interest rates applicable to commodity and marketing assistance loans are to be 100 basis points - or 1% - greater than the rate determined under the applicable interest rate formula in effect on Oct. 1, ’95. This formula resulted in a rate equivalent to the amount the US Treasury charged CCC for borrowing for the month. 

More information is available from USDA Farm Service Agency's Financial Management Division at (703) 305-1386.



Sales Rebound, Shipments Steady

Net export sales for the week ending Oct. 30 were 248,700 bales (480-lb). This brings total ’08-09 sales to about 7.0 million bales. Total sales at the same point in the ’07-08 marketing year were about 6.5 million bales. Total new crop (’09-10) sales are 82,100 bales.

Shipments for the week were 199,500 bales, bringing total exports to date to 3.2 million bales, compared with the 3.6 million bales at the comparable point in the ’07-08 marketing year.



Prices Effective Nov. 7-13, '08

Adjusted World Price, SLM 11/16

38.77 cents

*

Fine Count Adjustment ('07 Crop)

  0.00 cents


Fine Count Adjustment ('08 Crop)

  0.00 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 13.23 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

 57.36 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

55.35 cents


Current US CFR Far East

57.25 cents


Forward US CFR Far East

NA


 

'07-08 Weighted Marketing-Year Average Farm Price  
 

Final Marketing Year Average Price

59.30 cents

 


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