Cotton's Week: October 2, 2009

Cotton's Week: October 2, 2009

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’09 DP Delay Announced

A recently released Farm Service Agency (FSA) notice informed county FSA offices of a delay in direct final payments for certain farm organizations due to software problems.

The notice, which can be found at: http://www.fsa.usda.gov/Internet/FSA_Notice/dcp_224.pdf, indicates that there are two primary situations where delay may occur: 1) where the county office has been unable to complete entering all payment limitation adjustments and 2) situations where the implementing software currently does not make all of the appropriate adjustments.

Operations with the following situations may be affected by the software issue --

·        Farms with fruit and vegetable (FAV) acre reductions or planting violations, reporting or maintenance reductions;
·        Producers with common attribution information;
·        Farms having 10 or less base acres;
·        Farms where some members of an entity have not met the requirement of contributing active personal management or labor; and
·        Payments to public schools.

Payments in these situations are only being delayed.



Boll Weevil Nearly Eradicated

During the NCC’s Boll Weevil Action Committee (BWAC) annual meeting in Dallas, TX, USDA Animal & Plant Health Inspection Service (APHIS) National Boll Weevil Eradication Program Coordinator Bill Grefenstette reported that 1) the boll weevil now has been eradicated from 97% of US cotton acreage and 2) the Cotton Belt’s remaining significant populations of boll weevils are concentrated in southern Texas.

Based on a report from the Texas Boll Weevil Eradication Foundation, Texas has made tremendous progress in the eradication effort, but challenges continue to arise. The report states that producers have acknowledged how volunteer cotton plants have contributed to boll weevil populations and have increased efforts to remove or treat volunteer cotton plants. Recent research has demonstrated that cotton plants not intended for harvest, but voluntarily growing where seeds have fallen, provide a continued source of weevils.

Upon the recommendation from the Technical Advisory Committee, the BWAC approved a letter inquiring about possible USDA Agricultural Research Service research funds to address additional research needs. The BWAC also made recommendations to APHIS on the allocation of federal boll weevil cost share funding as part of the Joint Cotton Pest Account, once approved by Congress.

Grefenstette also announced his plans to retire as national coordinator in late December. The BWAC commended him on his long service to the eradication effort, and adopted a resolution to urge USDA/APHIS to maintain the national coordinator position.



FSA Senior Officials Named

USDA’s Farm Service Agency issued a notice designating senior officialsfor the Office of the Administrator.

The following senior leaders are new or acting employees and are designated to the following program areas:Jonathan W. Coppess, administrator; Caitlin Hartman, confidential assistant to the Administrator; Charles Berge, acting senior technical advisor to the Administrator; andToby Osherson, special assistant to the Administrator; Carolyn B. Cooksie, associate administrator for Operations and Management; Mark M. Palmer, director, Office of External Affairs;Heidi G. Ware, acting director, Office of Budget and Finance; Agnes Leung, acting deputy director, Office of Budget and Finance;James W. Monahan, deputy administrator for Commodity Operations; Brandon C. Willis, deputy administrator for Farm Programs; Chris P. Beyerhelm, acting deputy administrator for the Farm Loan Program; and Karis Gutter, deputy administrator for Field Operations.



State Department Post Filled

Robert D. Hormats has been sworn in as the Dept. of State’s new Under Secretary for Economic, Energy and Agricultural Affairs. He will serve as the Department’s senior economic official, advising the Secretary on international economic policy. As Under Secretary, he will lead the Department’s work on issues ranging from trade, energy and aviation to bilateral relations with America's economic partners. Most recently, Hormats served as vice chairman of Goldman Sachs (International).



Senate Climate Legislation Unveiled

Sens. Boxer (D-CA), chair of the Environment and Public Works Committee, and Kerry (D-MA), chair of the Foreign Relations Committee, released their joint version of a climate change bill, entitled the Clean Energy Jobs and American Power Act.

The bill is very similar to the Waxman/Markey bill which passed the House in June. The bill’s first section addresses reductions and adaptations including efficiencies, carbon capture, renewable energy, research and green jobs. The latter sections establish a cap and trade system for greenhouse gas (GHG) emissions.

There are, however, some notable differences between the two bills. For example, the Senate climate change bill would set slightly stricter caps on greenhouse gas emissions in the early years, requiring a 20% reduction in emissions from ’05 levels by ’20 compared with a 17% cut mandated in the House bill. Its only provision for agriculture is the establishment of a program that directs the Secretary of Agriculture to establish a GHG Reduction Incentives Program to provide financial assistance to owners and operators of agricultural land and forest land for projects and activities that measurably increase carbon sequestration or reduce GHG emissions.

The House bill specifically exempts agriculture from emission caps and provides for an agricultural offset program administered by the USDA. The Senate bill also does not specifically forbid EPA to regulate stationary sources but, rather, delays those decisions until ’20.

The draft bill is void of specifics or evasive on many of the key issues, including the method for distributing billions of dollars in emissions allowances. In addition, the Senate bill avoids the designation of a federal agency to administer an offset program, but authorizes the President to do so.

Congressional staff indicate that they view the draft, with its many unfinished details, as an opening bid that will be reshaped substantially in efforts to reach the 60-vote threshold needed to bring a bill to a floor vote. The “placeholder language” leaves room for these issues to be negotiated with affected industries, interest groups and lawmakers.

With the Senate still bogged down on a health care overhaul and the climate legislation already months behind the timetable that Boxer initially laid out, it seems almost impossible to pass a bill this year. At least four other Senate committees — Finance; Agriculture, Nutrition and Forestry; Foreign Relations; and Commerce, Science and Transportation — have jurisdiction over portions of the bill and may hold mark-ups.

The Finance Committee remains consumed with health care legislation, and aides say next in line may be a financial services regulation overhaul. Sen. Lincoln (D-AR), chair of the Agriculture, Nutrition and Forestry, has voiced both 1) concerns that farmers could be hurt by the bill and 2) reservations about a cap-and-trade approach. She left open the possibility of a markup in her committee.

With such a workload remaining, it seems unlikely that a climate change bill will reach the Senate floor before early next year. However, a possible goal could be to complete a markup in Boxer’s committee before a United Nations climate summit in Copenhagen in December.

Meanwhile, the EPA also released a proposed regulation that would force industrial emitters that emit more than 25,000 tons of carbon dioxide a year, including utilities, energy-intensive manufacturing and refineries, to invest in the cleanest available technology for new projects or major renovations. The emission threshold exempts small businesses and other concerned institutions, i.e. large new schools. The rules apply to as many as 7,500 industrial facilities, including 4,000 power plants, all of which under the Clean Air Act must meet requirements for emissions of a registered pollutant. The rules could take effect in ’11, although legal challenges are expected.

The release’s timing, in conjunction with the introduction of the Boxer/Kerry bill, is being seen by some as a warning shot to Congress that the EPA is ready to move if lawmakers do not.



Mississippi River Initiative Launched

USDA announced a new initiative to improve water quality and the overall health of the Mississippi River Basin.

The Mississippi River Basin Healthy Watersheds Initiative (MRBI) will provide about $320 million over the next four years for voluntary projects in priority watersheds located in 12 key states, including Arkansas, Louisiana, Mississippi, Missouri and Tennessee. Participation in the initiative, to be managed by USDA's Natural Resources Conservation Service (NRCS), will be made available through a competitive process for potential partners at the local, state and national levels.

The MRBI will help agricultural producers implement conservation and management practices that avoid, control and trap nutrient runoff. The initiative is performance oriented, which means that measurable conservation results are required in order to participate.

Priority watersheds for the initiative will be identified by NRCS in consultation with conservation partner organizations and state technical committees. Watersheds will be selected using an evaluation process that will include information from the Conservation Effects Assessment Project, the USGS Spatially Referenced Regression on Watersheds Attributes, state-level nutrient reduction strategies and priorities, and available monitoring/modeling of nitrogen and phosphorus levels in the Basin. Using this watershed evaluation process will ensure water quality and nutrient issues are improving as part of MRBI.

In addition to other federal, state and partner funding, NRCS is targeting $80 million annually over the next four years through Cooperative Conservation Partnership Initiative, Conservation Innovation Grants and the Wetlands Reserve Enhancement Program.

For information about the MRBI, including eligibility requirements, visit www.nrcs.usda.gov or your USDA Service Center.



COTTON USA Orientation Tour Underway

The ’09 COTTON USA Orientation Tour is enabling textile executives from 12 Asian, Latin American and European countries to travel the US Cotton Belt from Sept. 28-Oct. 8 to familiarize themselves with US cotton and how the fiber is produced, processed and marketed.

The 28 participants represent 23 companies from Bangladesh, China, Colombia, Indonesia, Japan, Korea, Mexico, Peru, Taiwan, Thailand, Turkey and Vietnam. The companies are expected to consume about 1.5 million bales in ’09, and of that about 700,000 US cotton bales -- equal to five percent of annual US cotton exports.

The group will visit a Mid-South farm; observe cotton research in North Carolina, Mississippi and Texas; and tour the USDA cotton classing office in Bartlett, TN. The participants also are meeting with exporters in the four major Cotton Belt regions and receiving briefings from CCI, NCC, Cotton Incorporated, American Cotton Shippers Assoc., Texas Cotton Assoc., Lubbock Cotton Exchange, AMCOT, Western Cotton Shippers Assoc., American Cotton Producers, Southern Cotton Growers Assoc., Delta Council, Plains Cotton Growers Assoc., San Joaquin Valley Quality Cotton Growers Assoc. and Supima.



Sales Weak, Shipments Steady

Net export sales for the week ending Sept. 24 were 77,700 bales (480-lb). This brings total ’09-10 sales to about 3.6 million bales. Total sales at the same point in the ’08-09 marketing year were about 5.7 million bales. Total new crop (’10-11) sales are 90,200 bales.

 Shipments for the week were 192,500 bales, bringing total exports to date to 1.4 million bales, compared with the 2.0 million bales at the comparable point in the ’08-09 marketing year.



Prices Effective Oct. 2-8, '09

Adjusted World Price, SLM 11/16

47.60 cents

*

Fine Count Adjustment ('08 Crop)

 0.00 cents


Fine Count Adjustment ('09 Crop)

  0.00 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 4.40 cents


Import Quotas Open

9


Special Import Quota (480-lb bales)

566,567


ELS Payment Rate

  4.43 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

63.97 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

68.28 cents


Current US CFR Far East

70.55 cents


Forward US CFR Far East

NA


 

'08-09 Weighted Marketing-Year Average Farm Price  
 

Year-to-date (Aug.-July)

48.61 cents

**

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

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