Cotton's Week: November 14, 2008

Cotton's Week: November 14, 2008

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Transition Team Taking Shape

President-elect Obama’s transition co-chair John Podesta announced the names of individuals who will direct agency review teams. These teams will move into federal agencies to gather information necessary to guide policy decisions when the new Administration takes office in January.

President Bush has instructed all agencies to provide assistance to the teams to ensure a smooth transition.

David J. Hayes will be responsible for energy and natural resource agencies including USDA. He is global chair of the Environment, Land & Resource Dept. at the law firm of Latham & Watkins. He served as deputy secretary of the Interior during the Clinton Administration and in a variety of leadership positions in the environmental, energy and resources field. He is vice chair of the Board of American Rivers and a senior fellow at the World Wildlife Fund with focus on climate change issues. He is a Stanford U. Law School graduate.

Published reports indicate the USDA team will be co-chaired by Bart Chilton and Carole Jett. No announcement has been made pending review by counsel to determine if Chilton can serve on transition while also serving as a member of the Commodities Futures Trading Commission (CFTC).

Chilton formerly served as chief of staff to then USDA Secretary Dan Glickman as well as serving in the same capacity for Senate Majority Leader Tom Daschle (D-SD). He was legislative director for the National Farmers Union and was on staff at the Farm Credit Administration.

Carole Jett recently retired as associate deputy chief for Programs at the Natural Resources Conservation Service (NRCS). She served as farm bill coordinator for NRCS during the ’02 and ’08 farm bill debates and was instrumental in the development and administration of conservation programs, including the Conservation Stewardship Program and its predecessor, the Conservation Security Program.



Sales Weak, Shipments Steady

Net export sales for the week ending Nov. 6 were 138,200 bales (480-lb). This brings total ’08-09 sales to about 7.1 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 6.7 million bales.

Total new crop (’09-10) sales are 82,100 bales. Shipments for the week were 230,600 bales, bringing total exports to date to 3.5 million bales, compared with the 3.8 million bales at the comparable point in the ’07-08 marketing year.



USDA Now Sees 13.53 Million Bales

In its November report, USDA projects a ’08-09 US crop of 13.53 million bales, down 180,000 bales from the October report. Upland production was put at 13.07 million bales and ELS production at 459,000 bales.

Harvested area was estimated at 7.76 million acres, implying a non-harvested area of 1.66 million acres based on USDA’s revised acreage report. The resulting abandonment rate is roughly 17.62%. The national average yield per harvested acre was estimated to be roughly 837 pounds, 16 pounds above the five-year average.

On a regional basis, the Southeast crop is estimated at 3.35 million bales, based on harvested acres of 1.93 million and a regional average yield of 834 pounds.

In the Mid-South, production is estimated to be 3.49 million bales, based on harvested area of 1.85 million acres and an average yield of 906 pounds.

The Southwest upland crop is an estimated 5.40 million bales. The harvested area is estimated to be 3.53 million acres and the estimated regional average yield is 734 pounds.

Upland production in the West is an estimated 839,000 bales with harvested area of 279,000 acres and a regional average yield of 1,443 pounds. The ELS crop is estimated to be 459,000 bales. The ELS harvested area is pegged at 170,000 acres with an average yield of 1,296 pounds.

See the following table for state estimates.
 

US Cotton Crop, ’08-09

 

PLANTED

ACRES

Thou.

HARV.

ACRES

Thou.

YIELD PER

HARV.

ACRE

Lb.

5-YEAR

AVG.

YIELD

Lb.

480-

POUND

BALES

Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

1,947  

1,926 

834  

755 

3,345  

   Alabama

290  

285 

842  

675 

500  

   Florida

67  

65 

812  

692 

110  

   Georgia

950  

940 

843  

784 

1,650  

   North Carolina

440  

438 

800  

774 

730  

   South Carolina

135  

134 

860  

716 

240  

   Virginia

65  

64 

863  

822 

115  

MID-SOUTH

1,900  

1,847 

906  

939 

3,485  

   Arkansas

650  

640 

1,013  

1,031 

1,350  

   Louisiana

290  

260 

517  

928 

280  

   Mississippi

365  

360 

867  

915 

650  

   Missouri

310  

307 

1,048  

956 

670  

   Tennessee

285  

280 

917  

823 

535  

SOUTHWEST

5,105  

3,533 

734  

686 

5,400  

   Kansas

35  

28  

686  

535 

40  

   Oklahoma

170  

155 

805  

685 

260  

   Texas

4,900  

3,350 

731  

688 

5,100  

WEST

287  

279 

1,443  

1,347 

839  

   Arizona

130  

128 

1,425  

1,371 

380  

   California

120  

117 

1,559  

1,382 

380  

   New Mexico

37  

34 

1,115  

946 

79  

TOTAL UPLAND

9,239  

7,585 

827  

812 

13,069  

TOTAL ELS

175  

170 

1,296  

1,259 

459  

   Arizona

1  

1 

960  

889 

2  

   California

155  

151 

1,335  

1,321 

420  

   New Mexico

3  

3 

800  

877 

5  

   Texas

16  

15 

1,024  

877 

32  

ALL COTTON

9,414  

7,755 

837  

821 

13,528  

Source: USDA-NASS November Crop Production Report.
Planted Acres revised from June Acreage Report.





Stocks-to-Use Decline Large

USDA’s November report sees US mill use and exports unchanged at 4.40 million bales and 13.00 million bales, respectively, generating a total ’08-09 offtake of 17.40 million bales. Ending stocks are estimated to be 6.20 million bales for a stocks-to-use ratio of 35.6%.

For the ’07-08 crop year, USDA estimates US production at 19.21 million bales with mill use and exports unchanged from the October report at 4.61 million and 13.65 million bales, respectively. Total ’07-08 offtake is estimated to be 18.26 million bales, with higher ending stocks of 153,000 bales from the previous month to 10.04 million bales due to a revision by the US Census Bureau. The estimated stocks-to-use ratio for the ’07-08 marketing year is 55.0%.

The report has ’08-09 world production estimates lowered 890,000 bales to 112.87 million bales from the October report. World mill use was lowered by 2.98 million bales to a projected 119.33 million bales. Consequently, world ending stocks for ’08-09 are projected to be 57.40 million bales for a stocks-to-use ratio of 48.1%.

For the ’07-08 marketing year, USDA put world production at 120.54 million bales, down 50,000 bales from the October report. Estimated world mill use was unchanged at 123.37 million bales. World ending stocks on July 31, ’08 now are estimated at 61.40 million bales for a corresponding stocks-to-use ratio of 49.8%.



Storage Deficit States Determined

USDA Commodity Credit Corp. (CCC) has designated Florida, Kansas and Missouri as storage deficit areas. According to Release No. 0289.08, “CCC determines an area to be storage deficit if the production of cotton exceeds the combined approved inside storage capacity of warehouses that have entered into a Cotton Storage Agreement (CSA) with CCC, less carry-in stocks for the area.” To be authorized for outside storage of cotton loan collateral, a warehouse must agree to specific storage and reporting requirements for yard-stored bales.

The CCC release reminds warehouses that approval to store cotton outside applies only to bales pledged as collateral for a marketing assistance loan with CCC. This approval does not extend to CCC-owned cotton or other cotton that is not pledged as CCC loan collateral, and does not relieve the warehouse of any obligations to the producers or others regarding storage. All cotton, in which CCC does not have an interest, must be stored in compliance with all applicable licensing and/or state laws, rules and regulations.

For application information, contact Paul Rodriguez at (816) 926-6662 or Paul.Rodriquez@kcc.usda.gov.



Update Shipping Order Use Urged

With the start of the ’08 shipping season, the NCC is urging shippers to make use of EWR, Inc.’s enhanced “Update Shipping Orders” (USO). A new feature introduced earlier this year (see Aug. 29 Cotton’s Week) allows shippers and warehouses to take advantage of the USO when scheduling cotton shipments. Prior to the latest EWR, Inc. programming enhancement, the USO feature only was available to shippers who submitted shipping orders (SO) electronically (along with electronic warehouse receipts). With the latest EWR, Inc. programming update, “Early Shipping Order” (ESO) users now can benefit from the enhanced USO.

The ESO initiative was in response to a NCC Cotton Flow Committee recommendation approved by the NCC Board. The NCC asked EWR, Inc. to serve as a portal/clearinghouse for data related to the scheduling and confirmation of shipment dates while encouraging the use of and access to scheduling tools designed to facilitate cotton flow.

In making the recommendation, the Cotton Flow Committee recognized that adoption, along with intelligent use, of digital tools such as the SO, ESO and USO has the potential of saving the cotton industry both time and valuable resources. Proper execution of these types of requests allows warehouses more flexibility in managing their resources by helping to reduce labor, fuel and equipment needs. Collateralized shippers also benefit from enhanced USOs by minimizing the time their working capital is tied up as cotton bales move from warehouses to mills.



Environmental Task Force to Meet

The NCC’s Environmental Task Force (ETF), chaired by Michael Tate, a Huntsville, AL producer, is scheduled to meet on Nov. 17-18 at the NCC headquarters. The ETF advises the NCC on environmental legislation, regulations, and policy.

Meeting topics include pesticide and biotechnology regulations, climate change and sustainability. The ETF also will meet with representatives of crop protection and nutrition companies to discuss each company’s products and priorities.

Other ETF members are: Allen McLaurin, Laurinburg, NC; Barry Evans, Kress, TX; Cannon Michael, Dos Palos, CA; James Dodson, Robstown, TX; Bowen Flowers, Clarksdale, MS; John Lindamood, Tiptonville, TN; Ronnie Lee, Bronwood, GA; and Steven Bales, Buckeye, AZ.



Sourcing USA Summit Held

The 2008 Sourcing USA Summit, a biennial event hosted by Cotton Council International, Cotton Incorporated and USDA, gathered 215 CEOs from top cotton buying mills representing 30 countries, as well as 150 US cotton exporters and agents.

This 5th Summit, being held in Lost Pines, TX, on Nov. 13-15, is aimed at fostering enhanced collaboration along the cotton supply chain by bringing together global leaders for an open exchange of ideas.

Anchoring the conference was an assessment by the Center for Strategic Studies, title “Cotton’s Revolutions,” a study that identified three key focal areas for global cotton: resources, technology and governance.

NCC Chairman Larry McClendon opened the Nov. 14 session. He thanked attendees for participating in the midst of uncertain financial times and stated that one of the conference’s primary goals was to convey the strong US commitment to the suppliers’ success.  In an earlier seminar with Chinese attendees, NCC Vice Chairman Jay Hardwick summarized the Chinese mill responses to the NCC-CCI survey on contamination experiences and bale packaging preferences.

NCC President/CEO Mark Lange's remarks will wrap up the conference.



Prices Effective Nov. 14-20, '08

Adjusted World Price, SLM 11/16

36.12 cents

*

Fine Count Adjustment ('07 Crop)

  0.16 cents


Fine Count Adjustment ('08 Crop)

  0.00 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 15.88 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

 54.71 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

51.93 cents


Current US CFR Far East

53.75 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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