In its July report, USDA projects ’10-11 US cotton production to be 18.30 million bales, up 1.60 million bales from last month’s report. The higher production estimate is a result of the increased planted area, as reported in the June 30 acreagereport, combined with a lower abandonment rate and a higher average yield per harvested acre. The projected abandonment rate and yield have been adjusted to reflect early July crop conditions in the Southwest, which are the most favorable since the ’94-95 crop year.
Relative to the June report, mill use was raised 100,000 bales to 3.40 million bales and exports were up 800,000 bales to 14.30 million bales. The estimated total offtake stands at 17.70 million bales. With beginning stocks of 2.90 million bales, this would result in US ending stocks of 3.50 million bales on July 31, ’11, and a stocks-to-use ratio of 19.8%.
USDA left US ’09-10 cotton production at 12.19 million bales, unchanged from the June report. Exports and mill use also were unchanged at 12.25 million bales and 3.40 million bales, respectively. The estimated total offtake stands at 15.65 million bales, generating ending stocks of 2.90 million bales and a stocks-to-use ratio of 18.5%.
USDA projects ’10-11 world cotton production to be 116.02 million bales, up 1.70 million bales from last month. Mill use is set at 119.70 million bales. With beginning stocks at 50.99 million bales, this would result in world ending stocks of 49.91 million bales on July 31, ’11, and a stocks-to-use ratio of 41.7%, which, if realized, would be the smallest stocks-to-use ratio since ’94-95.
USDA gauged ’09-10 world production at 102.55 million bales, down 340,000 bales from last month. World mill use was raised 120,000 bales to 116.55 million bales, putting world ending stocks at an estimated 50.99 million bales with a stocks-to-use ratio of 43.7%.
Obama Pushing For Long-Delayed Trade Agreements
As part of his initiative to double US exports in five years, President Obama said he wants to move three long-delayed free trade agreements (FTAs) with Colombia, Panama and South Korea. He also cited the ongoing Trans-Pacific Partnership negotiations as another effort to create new export markets.
He pledged to push hard in the Doha Development Agenda trade round “to improve those negotiations so that they have a higher level of ambition in the way that will translate directly into more opportunities for American exporters.”
The President said he wants to get the Colombian and Panamanian FTAs to Congress “as soon as possible” once outstanding issues -- principally related to worker rights -- are resolved.
He also reiterated his determination to reach a deal on modifications to the US-Korea FTA before his trip to Korea in November. Korea’s restrictions on US beef and barriers to imported autos are the chief obstacles holding up further consideration of the agreement. Last week, the President announced that he has instructed US Trade Representative Kirk to begin discussions with his Korean counterpart. According to projections, the Korean FTA would increase exports of goods by an estimated $10-11 billion annually, which would support an estimated 70,000 jobs. The projected gains could exceed that estimate if reductions in non-tariff barriers and increases in services exports are included.
The President said his effort, known as the National Export Initiative (NEI), to double US exports and create millions of new US jobs “are off to a solid start.” US exports grew almost 17% over the first four months of this year compared to the same period last year.
The White House released a progress report on the NEI, which included references to increased access to export financing provided by the Export-Import Bank and agreements with: 1) China to reopen its market to US pork and pork products and 2) Russia to reopen its market to US poultry exports.
It is estimated that 36% of all manufacturing jobs and 19% of all agricultural employment are tied to exports. Exports from the services sector supported 2.8 million jobs.
The President introduced members of his new Export Council, which will be chaired by Boeing President and CEO Jim McNerney. The Council is composed of the secretaries of Agriculture, Commerce, Energy, Homeland Security, Labor, State and Treasury; the US Trade Representative; the administrator of the US Small Business Administration and the chairman of the Export-Import Bank of the United States. Five members of the US Senate designated by the President of the Senate serve a two-year term and five members of the House of Representatives designated by the Speaker of the House serve a two-year term.
CBO Says Climate Change Bill Would Raise Billions
According to a report released by the Congressional Budget Office (CBO), the broad climate change bill co-authored by Sens. Kerry (D-MA) and Lieberman (I-CT) and released for comments in May would raise $751 billion over the next decade and spend $732 billion of it -- shielding consumers and industries from rising energy costs, increasing nuclear power capacity and providing tax credits and refunds to low- and middle-income households.
The bill would auction emissions allowances to the three sectors that emit the bulk of US greenhouse gas emissions: 1) electric utilities, 2) manufacturers and industrial operations and 3) refineries and other fuel providers. In the early years of the program, many of the affected operations, particularly those in the utility sector, would receive free allowances to help comply with caps.
CBO's analysis of the broader bill indicated that carbon prices -- the per-ton charge industry would pay in order to emit one ton of greenhouse gas emissions -- would start at about $14 per ton in ’12 and increase to about $25 per ton by ’20. Those are slightly more modest allowance prices than CBO calculated for the House cap-and-trade bill passed in June ’09 (H.R. 2454), at $16 per ton in ’12 and $28 per ton by ’20.
Since the bill's release on May 12, the co-authors have scaled back to cover only electric utilities, which emit about 40% of total US emissions, and perhaps some large industrial emitters. The modifications are designed to attract the 60 votes needed to eliminate the threat of a filibuster. The co-authors have indicated they want their scaled-back proposal included in energy legislation that the Senate may consider in late July.
CBO said most of the $732 billion in new spending provided in the bill -- $602.7 billion -- would be issued in free emissions allowances that would be given to electric utilities, energy-intensive manufacturers and other industries over the 10-year period to reduce their compliance costs and shield consumers from higher energy bills. The bill calls for phasing out the free emissions allowances completely by ’30. The bill would spend $16.6 billion between ’11 and ’19 on carbon capture and storage efforts at coal-fired power plants.
The bill includes two programs to help low- and middle-income households that could be disproportionately affected by rising energy costs caused by carbon caps. The first, an energy refund program, would provide refunds for a family of four earning up to $33,000 a year, which would cost $92.8 billion over the 10-year period. A second program, a refundable tax credit aimed at middle-income families, would provide tax credits for a family of four earning up to $64,000 at a cost of $10.4 billion over the same period.
New Videos Added to Conservation Information Portal
A new video, entitled “Tips,” has been added to the NCC’s “Conservation in Cotton Production,” a recently created portal on its website to help itsproducermembers determine which federal conservation programs would be beneficial to their operations and to better understand the programs’ requirements and enrollment processes.
The portal contains videos on the new Conservation Stewardship Program, the Conservation Reserve Program, Environmental Quality Incentives Program and other easement programs. The “Tips” video offers suggestions for improving producers’ odds of acceptance into these programs. For example, it encourages producers to: 1) check all programs before making a decision on which program to participate in, 2) know their local and state conservation district’s priorities and 3) participate in their local conservation district.
The portal, at http://www.cotton.org/econ/govprograms/conservation-programs.cfm, offers a central information venue with these short educational videos and program fact sheets outlining the various conservation programs. The videos contain commentary from Bruce Knight, former chief of USDA’s Natural Resources Conservation Service, along with cotton producers who have utilized the programs.
The portal will be continually updated with the latest conservation news regarding sign-up deadlines and new programs offered through USDA. The NCC is exploring the addition of a “Fieldprint Calculator” tool that would allow growers to see how their efficiency performance compares to national and state averages.
House Passes Campaign Spending Bill
By a 219-206 vote largely along party lines, the House passed a bill (H.R. 5175) that would respond to a major campaign finance court ruling by beefing up disclosure provisions for campaign spending and restricting campaign money from government contractors and foreign-controlled companies.
The measure, known as the DISCLOSE Act, was brought forward by the Administration, Congressional Democratic leaders, and campaign reform groups as a response to the Supreme Court's January decision in Citizens United v. Federal Election Commission (130 S. Ct. 876, 78 USLW 4078 (2010)). It has been opposed by Congressional Republicans and hundreds of organizations on both the right and left of the political spectrum.
A central provision of the DISCLOSE Act would require that sources of money provided to such groups, which is available to pay for political advertising, would have to be publicly disclosed through reports to the Federal Election Commission.
The US Chamber of Commerce, the nation's leading business organization that has spent tens of millions on ads during recent Congressional campaigns but provided no information about its funding sources, has been among the leading opponents of the measure.
During the House debate, opponents of the DISCLOSE Act referred repeatedly to special provisions added by Democratic leaders that would grant exemptions from full disclosure requirements for the National Rifle Assoc. and other large so-called Section 501(c)(4) groups with more than 500,000 members.
The legislation faces an uncertain future in the Senate where Minority Leader McConnell (R-KY) is strongly opposed.
EPA Sets Goals to Reduce Pesticides in Environment
Continuing its efforts to take a more aggressive approach in enforcing environmental laws, EPA has released its Draft Strategic Plan outlining the agency’s priorities for FY11-15.
One of the plan's five strategic goals for improving the environment focuses on ensuring the safe management of chemicals, declaring that making "long-overdue progress" on this matter is "one of our highest priorities."
Whereas the previous administration's final ’06-11 Strategic Plan emphasized the reduction of pesticide and chemical risks to humans, communities and ecosystems, the Obama Administration's draft plan also targets specific reductions (still to be determined) in the amount and concentration of those chemicals in the environment.
The draft plan lists specific goals to:
Reduce, treat, or eliminate 19 million estimated cumulative pounds of toxic and pesticide pollutants by ’15. An average of 3.8 million pounds were reduced, treated or eliminated annually from ’05-08.
Collect $40 million from pesticide and toxic chemical enforcement actions by ’15. From FY06 to FY08, EPA collected an average of $8 million annually from such enforcement actions.
Complete by ’15 the Endocrine Disruptor Screening Program decisions for all of the chemicals for which complete program information is expected to be available by the end of ’14.
Reduce the disparity of concentration of chemicals in low income populations and in children by ’15.
Eliminate by ’15 the number of watersheds that exceeds aquatic life benchmarks for pesticides and industrial/commercial chemicals of concern.
Reduce by ’15 -- through enforcement actions -- the number of moderate to severe incidents affecting workers exposed to acutely toxic pesticides.
The agency is interested in comments on how these measures could be achieved. There were 326 moderate and severe incidents reported from ’99-03. The six pesticides of concern are chlorpyrifos, diazinon, malathion, pyrethrins, 2,4-D and carbofuran.
In terms of the agency's broader aims, EPA notes in the draft plan that it is pushing to modernize the Toxic Substances Control Act to give the agency clearer authority to collect and act upon critical data regarding chemical risks. The draft plan states that for pesticides, "the review processes will continue to place emphasis on the protection of potentially sensitive groups, such as children, by reducing exposures from pesticides used in and around homes, schools and other public areas."
Comments on the draft strategic plan are due by July 30 and may be submitted at www.regulations.gov, identified by Docket ID: EPA-HQ-OA-2010-0486.
High Yield Agriculture Slows Global Warming
Advances in high-yield agriculture over the latter part of the 20th century have prevented massive amounts of greenhouse gases from entering the atmosphere -- the equivalent of 590 billion metric tons of carbon dioxide -- according to a new study led by two Stanford scientists.
The yield improvements reduced the need to convert forests to farmland, a process that typically involves burning trees and other plants, which generates carbon dioxide and other greenhouse gases. The researchers estimate that if not for increased yields, additional greenhouse gas emissions from clearing land for farming would have been equal to as much as a third of the world's total output of greenhouse gases since the dawn of the Industrial Revolution in 1850.
The researchers also calculated that for every dollar spent on agricultural research and development since 1961, emissions of the three principal greenhouse gases -- methane, nitrous oxide and carbon dioxide -- were reduced by the equivalent of about a quarter of a ton of carbon dioxide -- a high rate of financial return compared to other approaches to reducing the gases.
"Our results dispel the notion that modern intensive agriculture is inherently worse for the environment than a more 'old-fashioned' way of doing things," said Jennifer Burney, lead author of a paper describing the study that will be published online by the Proceedings of the National Academy of Sciences.
Sales Weak, Shipments Reach Marketing Year High
Net export sales for the week ending July 1 were 122,400 bales (480-lb). This brings total ’09-10 sales to approximately 13.7 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 14.1 million bales. Total new crop (’10-11) sales are 2.8 million bales.
Shipments for the week were 368,300 bales -- a ’09-10 marketing year high. Total exports to date are 10.9 million bales compared with the 12.1 million bales at the comparable point in the ’08-09 marketing year. With approximately one month remaining in the marketing year, weekly shipments must average roughly 343,500 bales to reach the USDA projection of 12.3 million bales.
Effective July 9-15, ’10
Adjusted World Price, SLM 11/16
66.61 cents
*
Fine Count Adjustment ('09 Crop)
0.40 cents
Fine Count Adjustment ('10 Crop)
0.50 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
5
Special Import Quota (480-lb bales)
338,733
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
NA
Forward 5 Lowest 3135 CFR Far East
83.65 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
NA
Forward US CFR Far East
85.20 cents
'09-10 Weighted Marketing-Year Average Farm Price
Year-to-Date (August-May)
61.92 cents
**
**August-July average price used in determination of counter-cyclical payment
