Cotton's Week: April 9, 2009

Cotton's Week: April 9, 2009

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No Change for Cotton in Regulations

Agriculture Secretary Vilsack announced that the new regulations for Marketing Assistance Loans (MAL) and Loan Deficiency Payments (LDP) are being implemented in accordance with the ’08 farm law. These changes generally apply to grains and oilseed crops. 

USDA officials said there is nothing in these regulations that change any of the existing provisions for cotton. The cotton regulation published in Nov. ’08 was the first one implemented under the new farm law; whereas, the new regulations are specific to other commodities.

USDA specifically noted that there will be no changes in the use of premiums and discounts at the time of cotton loan-making, and there are no changes to the Cotton Storage Agreement between the Commodity Credit Corp. and cotton warehouses.

The new regulations were delayed, in part, over the new administration's desire to review all new regulations before they were published. The cotton regulation was finalized prior to this review. For more information on MALs and LDPs, please visit your Farm Service Agency county office or http://www.fsa.usda.gov.



ACRE Enrollment Opens on April 27

Agriculture Secretary Vilsack announced that beginning April 27 producers can elect and enroll in the Average Crop Revenue Election (ACRE) program -- a provision of the ’08 farm law.

Producers have until Aug. 14, ’09, to make their decision for the ’09 crop. USDA will not accept any late-filed applications. Producers who elect the ACRE program for a farm must agree to forego counter-cyclical payments; accept a 20% reduction of the direct payments; and accept a 30% reduction in loan rates for all commodities produced on the farm.

Commodities eligible for ACRE payments are wheat, corn, grain sorghum, barley, oats, upland cotton, long grain rice, medium and short grain rice, peanuts, soybeans, sunflower seed, canola, flaxseed, safflower, mustard seed, rapeseed, sesame seed, crambe, dry peas, lentils, small chickpeas and large chickpeas.

The ACRE program was created to give producers an option in lieu of traditional counter-cyclical payments. Producers may elect and enroll in ACRE for the ’09 crop year even if they already have accepted advance direct payments under the Direct and Counter-Cyclical Program. To elect ACRE for a farm, producers must complete Form CCC-509 ACRE, which irrevocably elects ACRE for the farm through crop year ’12. Form CCC-509, the contract to participate in ACRE, then must be completed each year that the producer intends to participate and receive benefits.

For more information about ACRE, visit your local Farm Service Agency county office or http://www.fsa.usda.gov.



Senate Approves USDA Nominations

The Senate approved the nominations of James W. (Jim) Miller to be under secretary of Agriculture for Farm and Foreign Agricultural Services; Kathleen Merrigan to be deputy secretary of the Agriculture Department; and Joe Leonard, Jr., as assistant secretary for civil rights. They are the first senior-level officials to join Agriculture Secretary Tom Vilsack.

Miller currently is chief of staff for the National Farmers Union, a position he accepted in ’99 after serving four years as senior analyst for Agriculture and Trade on the majority staff of the Senate Budget Committee. Merrigan helped develop USDA's organic labeling rules while head of the Agricultural Marketing Service from ’99-01 and then became an assistant professor at Tufts U. Leonard is currently a senior advisor to Rep. Kilpatrick (D-MI) and former executive director of the Congressional Black Caucus.

Meanwhile, President Obama has nominated Dallas Tonsager for undersecretary for rural development. Tonsager currently serves as a board member of the Farm Credit Administration, a position to which he was appointed in ’04.

Yet to be announced are undersecretary nominees for natural resources, public nutrition, food safety, research and marketing.



EPA Not Requesting CWA Rehearing

The day prior to the 6th Circuit’s April 9 deadline, EPA announced that it will not request a 6th Circuit rehearing of NCC v EPA but will, instead, request a 24-month extension. The announcement was made at a conference in Baltimore with state pesticide officials.

NCC President/CEO Mark Lange had written to EPA Administrator Lisa Jackson urging her to seek a rehearing before the April 9 deadline. Lange stated the NCC believes that decision “overlooked agriculture’s exemptions in the Clean Water Act (CWA) and will have significant detrimental impacts across U.S. agriculture. These additional burdens will be placed on farmers with no added water quality benefits that the FIFRA label does not already provide.”

The Jan. 7, ’09 court decision vacated EPA’s rule that exempted pesticide applications over or near water from the need for a National Pollution Discharge Elimination System (NPDES) permit under the Clean Water Act. An extension is needed in order for EPA to develop a permitting system for pesticide applications which, until now, always have been regulated under FIFRA.

CropLife America and other litigants plan to proceed to file their own motion to rehear the case but, without a similar request from EPA, a favorable outcome seems unlikely. If the court does not rehear the case, the decision to require NPDES permits for pesticides will stand.

Sens. Harkin (D-IA) and Chambliss (R-GA), the chairman and ranking Republican on the Senate Agriculture Committee, said in an April 3rd letter that if the court's ruling were to stand, EPA should develop a nationwide general permit for which sprayers would seek coverage, rather than an individual or state-by-state permitting approach. Nebraska already is crafting a general permit under its delegated authority that would merely require compliance with pesticides regulations under FIFRA.

Environmentalists are seeking a more stringent approach, charging that Nebraska's approach is a mere “paper permit” that does not adequately protect the environment.

Environmentalists are urging EPA to craft model permit language for both general permits and site-specific permits for cases where pesticide spraying may reach impaired waters.

The Western Environmental Law Center said, in a March 31 letter to EPA Administrator Jackson, that all NPDES permits for pesticide spraying should “require a determination that the pesticide application is necessary (i.e. that non-pesticide alternatives are inadequate) and should mandate compliance with best management practices” and other measures to reduce harm to water quality.



Pesticides Review Schedule Updated

EPA has issued an updated schedule for the registration review program -- the periodic review of all registered pesticides mandated by the Food Quality Protection Act (FQPA). The updated schedule provides the timetable for opening dockets for the next four years of the registration review program (FY09-12). This schedule keeps EPA on the required track to meet the completion date of Oct. 1, ’22 for all pesticides registered as of Oct. 1, ’07.

EPA also announced that the Agency intends to review the neonicotinoid pesticides as a group, and has moved several of these pesticides ahead in the schedule so that dockets for all will open no later than in FY12. The neonicotinoids are a class of insecticides with a common mode of action that affects the central nervous system of insects, causing paralysis and death. European studies suggest that neonicotinic residues can accumulate in pollen and nectar of treated plants, and represent a potential risk to pollinators. The registration review docket for the neonicotinoid imidacloprid opened in Dec. ’08.

Beginning in ’09, all new dockets for conventional pesticide cases entering registration review will have a 60-day public comment period. The Schedule for Beginning Reviews and a schedule explanation are at: http://www.epa.gov/oppsrrd1/registration_review/schedule.htm.

Information on neonicotinoids and other groups of related pesticides’ beginning registration review is at: http://www.epa.gov/oppsrrd1/registration_review/highlights.htm.



CCI Buyers Tour Successful

Despite tough economic conditions, Cotton Council International’s (CCI) week-long COTTON USA Supply Chain Marketing Buyers Tour to Turkey attracted buyers representing Japanese, Italian, German, United Kingdom and US brands and retailers, as well as Turkish buying offices for international retailers.

The tour – the fifth such in Turkey in the past six years – enabled buyers to meet with leading US cotton-rich Turkish fabric and garment suppliers.  

In the current marketing year, Turkey is the third largest customer of US cotton fiber exports, buying nearly 30% of its cotton from the United States. Turkey’s textile industry is ranked 10th largest in world trade and is the 2nd largest supplier of textiles to the European Union.

Turkish manufacturers seek US cotton for its consistent quality and lack of contamination, while brands and retailers seek garments manufactured in Turkey by COTTON USA licensees for their high quality fabric and workmanship. 

The participating buyers represented companies from six countries. CCI recruited 22 of Turkey’s leading knit and denim fabric or garment suppliers to participate in the event. All of those companies are COTTON USA Mark licensees and either spin US-grown cotton or use yarns or fabrics supplied from COTTON USA licensed mills.



Sales, Shipments Steady

Net export sales for the week ending April 2 were 264,000 bales (480-lb). This brings total ’08-09 sales to slightly more than 12.0 million bales. Total sales at the same point in the ’07-08 marketing year were about 12.2 million bales. Total new crop (’09-10) sales are 385,000 bales.

Shipments were 299,300 bales, bringing total exports to date to 7.9 million bales, compared with the 8.5 million bales at the comparable point in the ’07-08 marketing year.



USDA Lowers ’08-09 Production

In its April report, USDA gauged US ’08-09 cotton production at 12.83 million bales, a reduction of 206,000 bales from the previous month based on USDA’s final Cotton Ginnings report.

Mill use was lowered 100,000 to 3.65 million bales and exports increased 500,000 bales to 12.50 million bales reflecting recent strong export sales and shipments. The estimated total offtake now stands at 16.15 million bales generating ending stocks of 6.70 million bales.

The report estimated ’08-09 world production at 108.34 million bales, down 310,000 bales from the March report.

World mill use was lowered 1.31 million bales due to decreases for China and others. China’s consumption is lowered 1.0 million bales, accounting for three-fourths of the drop in world consumption. Consequently, world ending stocks are estimated to be 63.43 million bales with a stocks-to-use ratio of 57.8%.



AWP Transportation Differential Adjusted

In the April 9 announcement of the Adjusted World Price (AWP), USDA incorporated the results of the latest industry survey of transportation charges. The new survey, which historically has been updated in the spring of each year, lowers transportation and marketing costs from 14.89 cents to 13.07 cents. The new transportation differential is reflected in the AWP that takes effect on Friday, April 10.

As specified by the ’08 farm law, the determination of the AWP shall reflect the full costs of transportation and marketing from an average US location to the Far East markets. The decline in transportation costs reflects lower energy costs and a slowdown in overall shipping demand.

The previous cost of 14.89 cents was based on a survey conducted in Sept. ’08. The current estimate of 13.07 cents exceeds the initial Far East survey of 12.41 cents, conducted in Feb. ’08.



Prices Effective April 10-16, '09

Adjusted World Price, SLM 11/16

38.37 cents

*

Fine Count Adjustment ('07 Crop)

 1.06 cents


Fine Count Adjustment ('08 Crop)

  0.66 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 13.63 cents


Import Quotas Open

6


Limited Global Import Quota (480-lb bales)

453,165


ELS Payment Rate

  11.43 cents


*No Adjustment Made Under Step I

 

Five-Day Average

 

Current 5 Lowest 3135 CFR Far East

 55.14 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

54.25 cents


Current US CFR Far East

55.40 cents


Forward US CFR Far East

NA


 

'08-09 Weighted Marketing-Year Average Farm Price  
 

Year-to-date (Aug.-Feb.)

50.82 cents

**

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

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