Cotton's Week: December 12, 2008

Cotton's Week: December 12, 2008

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Farm Law Regulations Release Urged

The NCC joined every major commodity and farm organization in conveying serious concerns about the significant delay in publishing the regulations implementing numerous commodity and conservation provisions of the Food, Conservation, and Energy Act of 2008.

In a letter to Agriculture Secretary Ed Schafer, copied to Office of Management & Budget Director Jim Nussle and to Congressional leaders, the groups urged the Administration to release the regulations immediately.

The letter reminded officials that the new farm law includes a requirement that implementing regulations be issued within 90 days of enactment. The statute also specifies that a 22% advance Direct Payment should have been offered to eligible producers beginning on Dec. 1.

Ricky Bearden, a Texas producer and NCC director, said, “Farm program signup should be underway and producers should be receiving advance direct payments to use in financing their 2009 crops. Price volatility has caused many producers to delay marketing their crops so cash flow is critical and the advance payment option provided by Congress is increasingly important to farmers, suppliers and financial institutions. In addition, some producers would like to know the details of the new Average Crop Revenue Election (ACRE) program option so they can decide whether to enroll or continue to participate in the traditional price support program. The decision to participate in ACRE is a long term irrevocable commitment so farmers need to know the details of the new program to make an informed decision.”

The letter also pointed out that the new law also significantly lowers the adjusted gross income test used to determine program eligibility and contains modifications to payment limitation rules that will eliminate spousal discrimination and will provide for the direct attribution of payments.

“Farmers will have to carefully review their farming operations to determine the impact these changes will have on them prior to signing up for commodity and conservation programs,” Bearden said.



House Committee Appointments, Leadership Announced

House Democratic and Republican leaders announced the first round of committee appointments and leadership. Full committee rosters and subcommittee chairs likely will not be finalized until early next year.

Chairman  Peterson (D-MN) will continue to lead the House Agriculture Committee and Rep. Lucas (R-OK) will serve as ranking member. Lucas replaces Rep. Goodlatte (R-VA) who stepped down from the position due to Republican Caucus term limits placed on chairmen and ranking members.

Reps. Etheridge (D-NC) and Grijalva (D-AZ) were appointed to the Ways and Means Committee which primarily handles trade and tax issues and is considered one of the most powerful House committees. The Ways and Means Committee is considered an “Exclusive Committee,” which means Members are not allowed to serve on any other committees.

It is yet to be determined if Rep. Etheridge will receive a waiver to remain on the Agriculture Committee. Rep. Davis (D-TN) has been appointed to the Appropriations Committee.

Senate leaders have yet to name committee leadership and rosters for the next Congress as Majority Leader Reid (D-NV) is working to revamp the number of subcommittees that Democratic Senators may chair in order to allow less senior members to take leadership roles. However, it is expected that Chairman Harkin (D-IA) and Ranking Member Chambliss (R-GA) will continue to lead the Senate Agriculture Committee.



No Doha Ministerial This Month

WTO Director General Pascal Lamy held video conferences mid-week with China, India and the US in an attempt to move the Doha negotiations toward a ministerial. On Dec. 12, Lamy concluded that the existing differences would not result in a modalities text and he decided not to call a ministerial meeting in December.

These actions followed a week of discussions stemming from revised draft Doha negotiating texts released on Dec. 6 by WTO Agriculture Negotiating Group Chair Crawford Falconer and Non-Agricultural Market Access Committee Chair Luzius Wasescha. These texts largely institutionalized the parameters and language that led to the collapse in the July WTO ministerial.

Reaction to the texts was swift and decisive.

A letter from House Ways and Means Chairman Rangel (D-NY) and Senate Finance Chairman Baucus (D-MT) with their respective ranking members urged the Bush administration to remain firmly committed to a Doha outcome that serves the entire US economy saying, “Developed and advanced developing countries must commit to provide meaningful new market access opportunities if Congress is to support a deal. If key trading partners are unwilling to do so at this time, then negotiations on a modalities package cannot conclude.”

Senate Agricultural Committee Chairman Harkin (D-IA) and ranking member Chambliss (R-GA), with the support of 20 Committee members, wrote President Bush stating, “We urge you to reject the calls now being made for further U.S. concessions and instead insist that our trading partners meet their obligation to match our level of ambition by making offers that will produce very substantial market access gains for U.S. agriculture.”

A NCC-issued statement stressed the lack of market access in the new texts and concluded that, “The negotiating text continues to evolve in a direction that will provide little, if any, gains for U.S. agriculture.” (The full statement is available at www.cotton.org.) The National Assoc. of Manufacturers held a similarly unfavorable view of the Non-Agricultural Market Access draft text.

Negotiators are now left with a difficult task. The draft texts have not been successful in bridging differences; yet by WTO practice, they likely will be the starting point when the negotiations resume at some future date. Finding market access that meets the level of ambition contained in the disciplines on domestic support appears insurmountable.



Sales Stay Weak, Shipments Steady

Net export sales for the week ending Dec. 4 were 114,000 bales (480-lb). This brings total ’08-09 sales to slightly more than 7.7 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 7.8 million bales. Total new crop (’09-10) sales are 95,400 bales.

Shipments were 224,000 bales, bringing total exports to date to 4.4 million bales, compared with the 4.7 million bales at the comparable point in the ’07-08 marketing year.



US Crop Estimate Raised Slightly

In its December report, USDA projected the ’08-09 US crop at 13.61 million bales, up 80,000 bales from the November report.

Upland production was estimated at 13.17million bales and extra long staple (ELS) production at 444,000bales. Harvested area was estimated at 7.76million acres, implying a non-harvested area of 1.66 million acres based on USDA’s revised acreage report. The resulting abandonment rate was roughly 17.62%. The national average yield per harvested acre was estimated to be 843 pounds, 22 pounds above the five-year average.

On a regional basis, the Southeast crop is estimated at 3.41 million bales, based on harvested acres of 1.93 million acres and a regional average yield of 849 pounds, 94 pounds above the region’s five-year average. In the Mid-South, expected production is 3.52 million bales. Harvested area is estimated to be 1.85 million acres and with an expected yield of 913 pounds per harvested acre. The Southwest upland crop is an estimated 5.40 million bales. Expected harvested area is 3.53 million acres and the regional average yield is 734 pounds, 48 pounds above their five-year average. Upland production in the West is an estimated 849,000 bales with harvested area of 279,000 acres and a regional average yield of 1,461 pounds, 114 pounds higher than the region’s five-year average.

The ELS crop is an estimated 444,000 bales. Harvested area is pegged at 170,000 acres with an average yield of 1,254 pounds per harvested acre.

State-level estimates are included in the following table.
 

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 

849  

755 

3,405  

   Alabama

290  

285 

842  

675 

500  

   Florida

67  

65 

886  

692 

120  

   Georgia

950  

940 

843  

784 

1,650  

   North Carolina

440  

438 

844  

774 

770  

   South Carolina

135  

134 

931  

716 

260  

   Virginia

65  

64 

788  

822 

105  

MID-SOUTH

1,900  

1,847 

913  

939 

3,515  

   Arkansas

650  

640 

990  

1,031 

1,320  

   Louisiana

290  

260 

517  

928 

280  

   Mississippi

365  

360 

947  

915 

710  

   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 

1,461  

1,347 

849  

   Arizona

130  

128 

1,500  

1,371 

400  

   California

120   

117 

1,518  

1,382 

370  

   New Mexico

37  

34 

1,115  

946 

79  

TOTAL UPLAND

9,239  

7,585 

833  

812 

13,169  

TOTAL ELS

175  

170 

1,254  

1,259 

444  

   Arizona

1  

1 

960  

889 

2  

   California

155  

151 

1,272   

1,321 

400  

   New Mexico

3  

3 

800  

877 

5  

   Texas

16  

15 

1,184  

877 

37  

ALL COTTON

9,414  

7,755 

843  

821 

13,613  

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





Slip Seen in US Mill Use, Exports

In its December report, USDA has US mill use dropping 100,000 bales to 4.30 million bales with exports falling to 12.25 million bales, down from 13.00 million bales in November. This generates a total ’08-09 offtake of 16.55 million bales. Ending stocks for ’08-09 are projected to be 7.10 million bales for an ending stocks-to-use ratio of 42.9%.

USDA’s ’08-09 world production estimates were lowered 1.31 million bales from the November report to 111.56 million bales. World mill use was lowered 2.74 million bales from the November report to a projected 116.59 million bales. Consequently, world ending stocks for ’08-09 are projected to be 58.77 million bales for a stocks-to-use ratio of 50.4%.



’09 BWCC Offers Timely Programming

Producers and others with a vested interest in US cotton are urged to finalize attendance plans for the ’09 Beltwide Cotton Conferences on Jan. 5-8 at the Marriott Rivercenter/Riverwalk in San Antonio, TX.

The Cotton Production Conference’s general session will open on Jan. 6 with reports from NCC Chairman Larry McClendon and Cotton Incorporated President Berrye Worsham. Marketing, economic and EPA updates will be given, respectively, by Gary Taylor, a Tennessee merchant, Gary Adams, NCC Vice President of Economic & Policy Analysis, and Keith Menchey, NCC manager of Science and Environmental Issues. In addition, Ogilvy Government Relations executive Thomas Hebert will provide a briefing on ’09 farm law conservation programs. Also that day, a panel of Extension cotton specialists will review the ’08 cotton season by region and another panel will discuss evolving pest management. On the 7th, a panel moderated by Texas producer Jimmy Dodson will focus on rotation’s impact on cotton. That will be followed by a panel of innovative growers sharing successful production techniques.

A hard copy of the ’09 Beltwide Cotton Conferences final program will be available at the meeting’s registration desk. In the meantime, the program can be viewed and a PDF file downloaded at www.cotton.org/beltwide.



Prices Effective Dec. 12-18, '08
Adjusted World Price, SLM 11/16

35.52 cents

*

Fine Count Adjustment ('07 Crop)

0.89   cents

Fine Count Adjustment ('08 Crop)

0.49   cents

 
Course Count Adjustment

0.00   cents

Marketing Loan Gain Value

16.48  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

54.11 cents

Forward 5 Lowest 3135 CFR Far East

            NA

Coarse Count CFR Far East

52.28 cents

Current US CFR Far East

53.90 cents

Forward US CFR Far East

            NA

 
2008-09 Weighted Marketing-Year Average Farm Price  
Year-to-Date (August-October)

57.68 cents

**

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


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