Cotton's Week: December 4, 2009

Cotton's Week: December 4, 2009

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House Disaster Bill Appreciated

The NCC and other national commodity organizations expressed appreciation to Reps. Childers (D-MS) and Berry (D-AR) for introducing legislation that will deliver urgently needed emergency financial assistance to growers who have suffered ’09 crop yield and quality losses due to severe weather.

The organizations also have pledged to work for the legislation’s prompt passage so growers can plan for ’10.

In the letters, which can be accessed in the Issues area of the NCC’s website, www.cotton.org, the organizations thanked the Representatives for their efforts in delivering much-needed financial assistance to producers and rural communities and assisting them in recovering from devastating losses caused by excessive rain during harvest, hurricanes and other weather-related natural disasters that have affected growers in the Mid-South, Southwest and neighboring states. They pledged to urge other House leaders to work with the group to identify an appropriate legislative vehicle that could be enacted to provide timely emergency financial assistance to farmers and ranchers who have suffered weather-related losses in ’09.

In the face of the compounded financial stress caused by the mounting crop losses and the imminent repayment of production loans, the organizations said the Berry and Childers legislation can deliver urgently needed disaster assistance by utilizing a delivery mechanism similar to Direct Payments. The payments would be limited to growers in counties with a Secretarial disaster declaration. The projected cost of the emergency assistance would be offset so there is no increase in the budget deficit.



House Passes Estate Tax Bill

The House approved (225-200) a bill (H.R. 4154) that would make permanent the ’09 estate tax rate and exemption levels – as 26 Democrats voted with 174 Republicans in opposition.

The opponents argued that full repeal is preferable but they are open to other options, such as indexing, setting a lower tax rate and providing higher exemption levels.

“The purpose of this bill is to establish clarity and certainty in the tax code for the estate tax while exempting 99.7 percent of the estates in this country from this estate tax altogether,” said bill sponsor Rep. Pomeroy (D-ND) who introduced it in November.

The legislation would make permanent the current estate tax rate of 45% and the non-indexed exemption levels of $3.5 million for individuals ($7 million for couples). The estate tax rate is scheduled to fall to zero in ’10 and then rebound to 55% in ’11, with an exemption level of $1 million.

Some Democrats said the legislation represents a compromise between Republicans' preference for repeal and a bipartisan plan to extend the current estate tax through ’10 and, over the following 10 years, reduce the rate from 45% to 35% while raising the exemption from $3.5 million to $5 million for individuals.

The legislation now moves to the Senate where prospects are unclear because a health care bill is on the floor for the foreseeable future and key senators prefer alternate plans. Finance Committee Chairman Baucus (D-MT) favors indexing the ’09 exemption levels to prevent the tax from affecting the middle class in future years. Finance Committee members Lincoln (D-AR) and Kyl (R-AZ) have proposed gradually bringing the top tax rate down to 35% and increasing the exemption to $5 million and then indexing the exemption for inflation.



Cotton’s Week Email Exclusive

Beginning on Jan. 8, ’10, the Cotton’s Week newsletter will be distributed to NCC members by email only and no longer by regular mail. NCC members who have not yet provided the NCC with their email addresses should send them to memberservice@cotton.org as soon as possible.

The newsletter will continue to be posted on the NCC’s website, www.cotton.org, under the News and Events section, but will require a password. Passwords will be provided upon completion of the short form located at http://www.cotton.org/register/request-password.cfm.



Doha Progress Meeting Set

The World Trade Organization's (WTO) seventh ministerial conference ended with agreement to organize a meeting in early ’10 to review progress in the Doha Round of trade talks. The ministers also agreed to convene the WTO's eighth ministerial conference sometime in ’11, with the exact date and venue to be decided later.

A “stock-taking” session for first quarter of ’10 will assess the progress made in the Doha talks and determine whether it is still possible to meet the goal of concluding the round by the end of ’10.

Brazil, China and India are insisting that the negotiations on agriculture and industrial tariffs be based on draft negotiating texts produced in Dec. ’08 and that the drafts should not be altered because they reflect the general will of WTO members. US Trade Representative Kirk said that the draft texts never secured consensus support from the WTO membership and are still works in progress.

“The texts are called drafts for a reason,” Kirk declared. “We have never advocated we should start over,” but “if we can build on those texts, if we can fill in the gaps, then we think we have a better chance.”.

In his closing press conference, Kirk rejected calls for the United States to cut its domestic cotton subsidies before the conclusion of the Doha round to help African cotton producers.

During the meetings, African Ministers consistently called on the United States to dramatically modify the cotton program and to allow all products from least-developed nations to enter the United States duty and quota free. The Minister from Burkina Faso, speaking for the so-called Cotton-4 countries, indicated they have lost patience over the lack of progress on cotton in the Doha round and may file a formal complaint with the WTO challenging the US cotton program unless the United States agrees to make modifications in advance of any final Doha agreement. The Minister from South Africa suggested the negotiations not continue as a “single-undertaking” but rather be broken into “digestible pieces” that would require the United States to make concessions on cotton before a final comprehensive agreement is reached.

Ambassador Kirk rejected the notion of abandoning the single undertaking approach, saying he would not be willing to make specific concessions then wait to see what was offered to the United States in return. In reference to the Africans’ call for concessions on cotton, he pointed out that tariff cuts by advanced developing countries in the Doha round would help create new export opportunities for the world's poorest countries. He also noted that these countries will have to improve their infrastructure and competitiveness to take advantage of any new export opportunities.

“Unless we are willing to honestly confront the issues of competition and infrastructure as it relates to many of the farmers in West Africa, they will not be able to fully take advantage of whatever trade liberalizing opportunities come to cotton,” Kirk said.

Under the Hong Kong ministerial declaration, countries are to cut their cotton subsidies faster and deeper than other agriculture subsidies. The ’08 draft agriculture text calls on the United States to cut its cotton subsidies by 82.2% over an implementation period that is one-third as long as that for other agricultural products. The United States has rejected such a massive cut as unacceptable.



House Panel Holds Climate Change Hearing

The House Agriculture Subcommittee on Conservation, Credit, Energy, and Research heard testimony from USDA chief economist Dr. Joe Glauber on the economic impacts on US agriculture and agricultural offsets created by provisions of the bill that the House passed in June (H.R. 2454, the American Clean Energy and Security Act of 2009 known as the Waxman/Markey bill).

Dr. Glauber reported on a refined and expanded report that USDA originally released in July. The findings suggest that “price and income effects due to higher production costs will be relatively small, particularly over the short run (’12-25) when fertilizer producers will be eligible for significant rebates.” The report estimates less than a 2% reduction in net cash revenue for farms across the nation.

Glauber also emphasized that agricultural offsets will play a role in mitigating higher energy costs in production agriculture. However, he admitted that not all producers will benefit from offset revenue and that energy-intensive crops, e.g. cotton and rice, will be most severely affected by a cap and trade system. The USDA report estimates that offset revenues for most of the Cotton Belt will be $0 for the period ’15-25 and between $0.1 – 3.9B in ’40-50. The bulk of offset revenue will be realized in the Corn Belt and Great Lake states.

Afforestation projects are the clear winners among ag offset endeavors. The USDA reports estimates that 59 million acres will be planted to trees by ’50 with a corresponding loss of 35 and 24 million acres of cropland and pasture, respectively.

House Agriculture Chairman Collin Peterson (D-MN) questioned USDA’s use of EPA’s estimates of energy cost increases under Waxman/Markey and asked that another study be conducted to more realistically estimate the resultant increase in energy costs of a cap and trade program for greenhouse gases.



BWCC Early Registration Deadline Extended

The NCC has extended early registration for the ’10 Beltwide Cotton Conferences until Dec. 23.

NCC and Cotton Foundation members, along with researchers, consultants, Extension personnel and association representatives, can register for $125 through Dec. 23. After that date, the registration cost is $150 for those groups.

For those who have not made arrangements and are planning to attend, registration and housing reservations can be done easily online by visiting the BWCC website, www.cotton.org/beltwide, and clicking on the respective registration and housing links.

Room reservations must be made by Dec. 15 to receive the conference rate. Room reservations can be made online or by calling the headquarters hotels -- the New Orleans Marriott (504-581-1000) and Sheraton New Orleans (504-525-2500).

The final ’10 Beltwide Cotton Conference program also is available at www.cotton.org/beltwide.



’10 Annual Meeting Registration Open

Meeting information, including housing and travel, as well as online registration, for the NCC’s ’10 Annual Meeting, Feb. 4-8, at The Peabody Hotel in

Memphis is now available. The annual meeting site, http://www.cotton.org/news/meetings/am/2010/index.cfm, also can be accessed from the Annual Meeting icon on the NCC’s home page, www.cotton.org.

Room reservations also can be made by calling 1-800-732-2639 (Press 2). Contact Mary Saemenes, the NCC’s travel consultant at Travelennium, at 888-232-1738 or msaemenes@travelennium.com for air and car rental reservations.



US Mill Cotton Use Slides

According to the Commerce Dept., October (four-week month) total cotton consumption in domestic mills was 130.0 million pounds for a seasonally adjusted annualized rate of 3.33 million bales (480 lbs). Last year’s October annualized rate was estimated at 4.31 million bales.

The September (five-week month) estimate of domestic mill use of cotton was lowered 183,000 pounds to 139.0 million. The revised seasonally adjusted annualized rate of consumption for September is 2.90 million bales. This is lower than last year’s September annualized rate of 4.15 million bales.

Preliminary November domestic mill use of cotton and revised October figures will be released by Commerce on Dec. 23.



Sales Strong, Shipments Slip

Net export sales for the week ending Nov. 26 were 274,400 bales (480-lb). This brings total ’09-10 sales to about 5.1 million bales. Total sales at the same point in the ’08-09 marketing year were about 7.6 million bales. Total new crop (’10-11) sales are 160,100 bales.

Shipments for the week were 130,400 bales, bringing total exports to date to 2.9 million bales, compared with the 4.2 million bales at the comparable point in the ’08-09 marketing year.



Prices Effective Dec. 4-10, '09

Adjusted World Price, SLM 11/16

57.82 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

 0.00 cents


Import Quotas Open

13


Special Import Quota (480-lb bales)

821,030


ELS Payment Rate

  11.17 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

74.19 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

77.10 cents


Current US CFR Far East

80.90 cents


Forward US CFR Far East

NA


 

'09-10 Weighted Marketing-Year Average Farm Price  
 

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

55.46 cents

**

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

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