Cotton's Week: May 29, 2009

Cotton's Week: May 29, 2009

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June 1st Is Important Farm Program Deadline

Although USDA has extended from June 1 to Aug. 14 the deadline for the ’09 farm program sign-up -- June 1, ’09 is still the deadline that will be used to determine ownership interest in a legal entity that receives payments subject to limitation. Thus, while growers have until Aug. 14 to complete signup for this year’s program participation and to actually submit the appropriate forms, the status of their farm organization will be determined as of June 1.

For example, as of June 1: 1) corporations, LLCs, LLPs, LPs and other similar legal entities must be formed to be recognized for payment eligibility purposes; 2) stockholder changes must have been made to be recognized for payment eligibility purposes; 3) partnership agreement has to be in place if forming a new partnership; and 4) amendments to partnerships have to be in place by June 1, ’09 for adding, deleting or changing partners.

If you have questions, please contact your local Farm Service Agency office.



Intrastate Waters Regulation Get’s Focus

On April 2, ’09, Sen. Feingold (D-WI) reintroduced the Clean Water Restoration Act (CWRA), S. 787, with 24 co-sponsors. Rep. Oberstar (D-MN) is expected to introduce a companion bill in the House.

A key and controversial provision in the CWRA replaces the term “navigable waters of the United States” with “waters of the United States” in the Clean Water Act (CWA). It also defines these waters as “all waters subject to the ebb and flow of the tide, the territorial seas, and all interstate and intrastate waters and their tributaries, including lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, natural ponds, and all impoundments of the foregoing, to the fullest extent that these waters, or activities affecting these waters, are subject to the legislative power of Congress under the Constitution.” The bill leaves intact agricultural exemptions such as agricultural storm water discharges and return flows from irrigated agriculture in Section 502 and others (See http://www.thomas.gov/cgi-bin/query/ C?c111:./temp/ ~c1110rV3 QW for the bill’s full text).

The bill’s authors contend the CWRA restores the CWA’s original intent and clarifies the CWA jurisdiction. Motivation for the bill springs from two recent US Supreme Court decisions which restricted the CWA’s scope of jurisdiction.

The bill’s proponents argue that the two decisions have forced the Army Corps of Engineers and the EPA to undertake a case-by-case analysis of America's waterways to determine if they are authorized for federal protection and that only those waterways deemed to be "navigable" or to have a "significant nexus" to a navigable waterway are guaranteed federal protection under the CWA. As such, they estimate that 60% of US creeks, rivers and streams and tens of millions of wetlands acres and other sensitive water bodies have lost federal protection in the last few years due to the Supreme Court's decisions.

CWRA opponents claim the bill does not "restore" the CWA but, instead, greatly expands its scope and jurisdiction. They argue the bill would bring federal oversight to activities that affect all "waters of the United States" as opposed to merely "navigable waters" as called for in the original CWA. They also contend that if the legislation were enacted, it would fundamentally change the law by completely severing the CWA from the commerce clause of the US Constitution, significantly changing the intent of Congress when it enacted the CWA. The opponents believe this would result in an unprecedented CWA expansion. Should this bill pass and the 6th Circuit decision stand (see May 22 Cotton’s Week), there could be severe ramifications for cotton producers, including CWA permitting for pesticide applications and increased wetland protections.

The markup for S. 787, which has been postponed several times, is currently scheduled for June 4. Reports indicate that the Senate Environment and Public Works Committee (EPWC) leadership believe there are sufficient votes to move the bill out of committee. The EPWC is chaired by Sen. Boxer (D-CA) and the ranking Republican is Sen. Inhofe (R-OK). Other Cotton Belt members are: Udall (D-NM), Vitter (R-LA), Bond (R-MO) and Alexander (R-TN).



CFTC Chairman Confirmed by Senate

The Senate voted 88-6 to confirm Gary Gensler as chairman of the Commodity Futures Trading Commission. Gensler had faced questions about his work to deregulate financial markets in his previous Washington jobs. However, in his confirmation hearing, Gensler said the derivatives market, in particular, now needs more regulation.

Senate Agriculture Committee Chairman Harkin (D-IA) called on Gensler to reform and restore regulation of trading in futures and other derivatives contracts.

Harkin says he is ready to move forward with legislation that would provide regulatory reform for over-the-counter derivatives. The bill would bring these types of financial transactions onto regulated exchanges in order to add openness, transparency and integrity in futures trading.



Industry Conveys HOS Support

The NCC and the National Cotton Ginners Assoc. joined 50 agriculture groups to express support for maintaining the agricultural hours-of-service (ag HOS) exemption during the upcoming transportation authorization debate. There has been a recent push by some organizations to repeal the ag HOS exemption.

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users exempted agricultural carriers from the hours-of-service regulations if they operated only within a 100-mile radius from their central base of operation. The flexibility provided by this exemption is needed during busy planting and harvest seasons. Elimination of this exemption not only would increase agricultural operating costs and reduce transportation efficiency, but may create safety issues during harvest and planting seasons if producers are required to hire more temporary and possibly less experienced drivers.

As previously reported in the May 1 Cotton’s Week issue, the American Trucking Assocs. has developed the “Manager’s Guide to Safe Trucking During Agricultural Planting and Harvest Season” which is available at NCC’s home page, www.cotton.org.

Congress is expected to reauthorize the transportation bill later this year.



H-2A Final Rule Suspended

The US Dept. of Labor (DOL) announced the suspension of the H-2A Final Rule published on Dec. 18, ’08 and in effect as of Jan. 17, ’09. The Dec. 18 ’08 Final Rule implemented reforms sought by the agricultural community in light of no comprehensive immigration reform. DOL is republishing and reinstating the regulations that were in place on Jan. 16, ’09 for a period of nine months. After Jan. 16, ’10 the DOL will either have engaged in further rulemaking or may lift the suspension. Notice of this suspension is published in the Federal Register (FR Doc 12436 5/29/2009.)

In addition to the suspension, the ’09 Adverse Effect Wage Rates (AEWR) was published in the Federal Register. Some question whether the new ’09 AEWR rates published at this late date will be confusing, difficult and costly to administer. The new rates cover job orders beginning 30 days after the rule’s publication.

The National Cotton Ginners Assoc. (NCGA) sent a letter to DOL asking that the original rule published on Dec. 18, ’08 remain in effect. NCC and NCGA will continue to engage in the rulemaking process with DOL.



AgJOBS Bills Introduced

The Agricultural Job Opportunities, Benefits and Security Act (“AgJOBS”) bill, which would seek to provide a legal, stable labor supply, has been reintroduced in the House and Senate. Sen. Feinstein (D-CA), along with 16 cosponsors, introduced the bill in the Senate. Reps. Berman (D-CA) and Putnam (R-FL), along with 25 cosponsors, introduced the measure in the House.

The bill has two main parts: 1) an “earned legalization” program enabling many undocumented farm workers and H-2A guest workers to earn a “blue card” temporary immigration status with the possibility of becoming permanent US residents by continuing to work in agriculture and by meeting additional requirements, and 2) revisions to the existing H-2A temporary foreign agricultural worker program.

President Obama committed during his campaign to address immigration reform during his first term in office. It is unclear whether Congress will take up the issue this year; but many lawmakers and outside groups are pushing for that timetable.



March Mill Cotton Use Raised

According to the Commerce Dept., April (four-week month) total cotton consumption in domestic mills was 113.5 million pounds for a seasonally adjusted annualized rate of 3.10 million bales (480-lb). Last April’s annualized rate was 4.56 million bales.

The March (five-week month) estimate of domestic mill use of cotton, though, was raised by 5.1 million pounds to 150.3 million pounds. The revised seasonally adjusted annualized rate of consumption for March is 3.19 million bales. This is lower than last year’s March annualized rate of 4.25 million bales.

Based on Commerce estimates from Aug. 3, ’08 through May 2, ’09, projected total pounds consumed during crop year ’08-09 would be 1.74 billion pounds or 3.63 million bales. USDA’s latest estimate of ’08-09 crop year mill use is 3.55 million bales.

Preliminary May domestic mill cotton use and revised April figures will be released by Commerce on June 25.



Sales Weak, Shipments Strong

Net export sales for the week ending May 21 were 106,800 bales (480-lb). This brings total ’08-09 sales to about 13.3 million bales. Total sales at the same point in the ’07-08 marketing year were about 14.3 million bales.

Total new crop (’09-10) sales are 785,400 bales.

Shipments for the week were 292,300 bales, bringing total exports to date to 10.1 million bales, compared with the 10.5 million bales at the comparable point in the ’07-08 marketing year.



US Textiles Showcased to Koreans

Some of the largest Korean knitters and apparel makers with operations in C. America recently visited US textile manufacturers as part of Cotton Council International’s (CCI) COTTON USA Sourcing Program. The tour provided an excellent opportunity for US mills to highlight their commitment to quality/efficiency and boost relationships with the Korean manufacturers.

Ten companies from Korea and the CBI region, along with three US retailers, began their tour in Pinehurst, NC, with a half-day seminar. Research specialists gave a cost comparison of manufacturing knit garments (East vs. West), an outlook for US and world textile and apparel trade, and an overview of the cotton price situation.

The group toured Cotton Incorporated’s headquarters in Cary, NC, before dividing up and visiting nine US textile manufacturing operations in Georgia, South Carolina, North Carolina and Virginia.

Participating US mills were: Buhler Quality Yarns Corp.; Carolina Cotton Works, Inc.; Clovertex, LLC; Contempora Fabrics, Inc.; Frontier Spinning Mills; Hamrick Mills, Inc.; Hanes Brands; Parkdale; Tuscarora Yarns, Inc.; and Zagis USA.



Prices Effective May 29-June 4, '09
Adjusted World Price, SLM 11/16

    44.41 cents*

 

 

Fine Count Adjustment ('07 Crop)

 0.74 cents


Fine Count Adjustment ('08 Crop)

  0.34 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 7.59 cents


Import Quotas Open

4


Limited Global Import Quota (480-lb bales)

251,906


ELS Payment Rate

  7.23 cents


*No Adjustment Made Under Step I

 

Five-Day Average

 

Current 5 Lowest 3135 CFR Far East

61.18 cents


Forward 5 Lowest 3135 CFR Far East

66.33 cents


Coarse Count CFR Far East

61.40 cents


Current US CFR Far East

62.81 cents


Forward US CFR Far East

68.13 cents


 

'08-09 Weighted Marketing-Year Average Farm Price  
 

Year-to-date (Aug.-March)

49.74 cents

**

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

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