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September 10, 2010
 

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Action on Agricultural Legislation Uncertain

The outlook for action on any legislation affecting agriculture during the remainder of the 111th Congress remains uncertain.

Lawmakers return from their August recess on Sept. 13 with a target date for pre-election adjournment of Oct. 8 - only 16 legislative days later. A small business jobs bill is the pending business and the Senate is expected to make another attempt at a scaled-down energy bill.

Amendments to repeal or modify new IRS-1099 reporting requirements scheduled to go into effect in ’12 (see next article) are first on the schedule.

Another pending amendment to the small business bill, which has been offered by Sen. Grassley (R-IA), would extend biodiesel tax incentives. The nation’s biodiesel industry basically has shut down since the credit expired at the end of last year. Ethanol producers hope to avoid a similar fate this year and anticipate that Congress will renew the industry’s 45 cents per gallon blender’s tax credit and 54 cent per gallon import tariff.

Senate Majority Leader Reid (D-NV) has postponed comprehensive climate and energy legislation until ’11. Sen. Reid has said that he remains hopeful the Senate will complete work this year on a narrow measure that includes provisions to enhance deployment of natural gas-powered trucks, rebates for home energy efficiency retrofits and a renewable electricity standard.

The problems revealed by the one of the largest egg recalls in US history, which occurred last month may strengthen the support for the Food Safety Modernization Act (S.510), which would expand the Food and Drug Administration’s authority. The bill has bipartisan support and is expected to pass.

Congress also is expected to consider tax extenders and must approve a Continuing Resolution in order to fund government agencies and programs beginning on Oct. 1. Many of these issues likely are to be addressed for the longer term when Congress convenes for a lame-duck session following the mid-term elections.

 
NCC: Repeal Burdensome 1099 Reporting Requirement

The NCC joined 25 state and national farm, livestock and commodity organizations in urging Congressional repeal of a proposed 1099 reporting requirement.

Under existing law, a Form 1099 must be issued to unincorporated service providers that are paid more than $600 during a tax year. Under new reporting rules set to start in ’12, a Form 1099 will be required for payments to incorporated vendors and will be expanded to cover payments made for goods as well as services which total $600 or more in a calendar year to a single non-employee payee. Payments made to corporations no longer would be excluded from the reporting requirement.

The organizations sent letters to Sen. Johanns (R-NE) and to Rep. Lungren (R-CA) saying that under the proposed new requirement, “Virtually all business-to-business transactions will be covered, creating a new major paperwork burden for the farms, ranches and related agri-businesses. The business of producing food, fiber and fuel is a hands-on venture where productivity and competitiveness is compromised by government rules and regulations that turn producers into bookkeepers. Prompt action is needed by Congress to reverse this onerous tax-reporting requirement.”

When the Senate returns on Sept. 14, there will be cloture votes on two amendments to H.R. 5297, the Small Business Jobs Act of 2010. One amendment by Sen. Johanns would repeal the new Form 1099 rules and “pay for” repeal by reducing the number of people subject to the individual mandate to buy health insurance.

An alternative amendment by Sen. Nelson (D-FL) would exempt firms with fewer than 25 employees from reporting requirements and raise the threshold for reporting for larger firms from $600 to $5,000. Credit card purchases would be exempted from information reporting requirements. Under Sen. Nelson’s amendment, the changes would be paid for with a provision to repeal the manufacturing deduction allowed for oil companies.

 
USDA Sees 18.84 Million US Crop in ’10-11

In its September crop report, USDA estimated a ’10-11 US crop of 18.84 million bales, up 310,000 bales from the August report. Upland production was estimated at 18.34 million bales and extra long staple (ELS) production at 498,000 bales. Harvested area was estimated at 10.77 million acres, implying a non-harvested area of 265,000 acres based on USDA’s revised planted acreage number. The resulting abandonment rate is roughly 2.40%. The national average yield per harvested acre was estimated to be roughly 839 pounds, 13 pounds more than the five year average.

Planted area for ’10-11 was raised 129,000 acres from USDA’s June acreage report. Planted acres in the Southeast were raised 77,000 acres from June. Mid-South planted acres were raised 50,000 acres from the June report. Total upland planted acres in the Southwest were decreased by 19,000 acres. Upland planted acres in the West were increased 21,000 acres from the June report. ELS planted area was unchanged from the June report.

The Southeast crop is estimated at 4.22 million bales. Expected harvested area is 2.58 million acres and the regional average yield is 783 pounds, nine pounds less than the five-year average for the region. In the Mid-South, expected production is 3.74 million bales. Harvested area is estimated to be 1.91 million acres with an expected yield of 940 pounds per harvested acre, 25 pounds more than the five-year average for the that region. The Southwest upland crop is estimated at 9.32 million bales. Expected harvested area is 5.71 million acres and the regional average yield is 783 pounds, 68 pounds more than their five-year average of 715 pounds per harvested acre. Upland production in the West is an estimated 1.07 million bales. Expected harvested area is 359,000 acres and the regional average yield is 1,431 pounds, 81 pounds more than the region’s five-year average.

The ELS crop is an estimated 498,000 bales. Harvested area is pegged at 207,000 acres with an average yield of 1,154 pounds per harvested acre, 91 pounds less than the five-year average.

State-by-state estimates are included in the accompanying table.

US Cotton Crop, ’10-11

 

PLANTED

ACRES

Thou. 1/

HARV.

ACRES

Thou.

YIELD PER

HARV.

ACRE

Lb.

5-YEAR

AVG.

YIELD

Lb.

480-

POUND

BALES

Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

2,602  

2,584 

783  

792 

4,215  

   Alabama

345  

343 

630  

653 

450  

   Florida

92  

89 

701  

771 

130  

   Georgia

1,330  

1,325 

833  

840 

2,300  

   North Carolina

550  

545 

775  

814 

880  

   South Carolina

202  

200 

816  

721 

340  

   Virginia

83  

82 

673  

879 

115  

MID-SOUTH

1,930  

1,910 

940  

915 

3,740  

   Arkansas

545  

540 

1,067  

1,011 

1,200  

   Louisiana

255  

250 

787  

872 

410  

   Mississippi

425  

420 

903  

859 

790  

   Missouri

315  

313 

966  

976 

630  

   Tennessee

390  

387 

881  

822 

710  

SOUTHWEST

5,931  

5,713 

783  

715 

9,318  

   Kansas

51  

48 

680  

602 

68  

   Oklahoma

280  

265 

815  

731 

450  

   Texas

5,600  

5,400 

782  

716 

8,800  

WEST

366  

359 

1,431  

1,350 

1,070  

   Arizona

195  

193 

1,467  

1,410 

590  

   California

124  

123 

1,522  

1,363 

390  

   New Mexico

47  

43 

1,005  

1,026 

90  

TOTAL UPLAND

10,829  

10,566 

833  

816 

18,343  

TOTAL ELS

209  

207 

1,154  

1,245 

498  

   Arizona

3   

3 

960  

891 

5  

   California

185  

184 

1,174  

1,310 

450  

   New Mexico

3  

3 

928  

825 

6  

   Texas

18  

18 

1,015  

821 

37  

ALL COTTON

11,038  

10,773 

839  

826 

18,841  

Source: USDA-NASS September Crop Production Report.
1/ Updated from June Acreage Report.

 
Mill Use, Export Estimates Raised

In its September report, USDA raised US mill cotton use by 200,000 bales to 3.60 million bales from its August report. Exports were raised by 500,000 bales to 15.50 million bales due to very tight foreign supplies. This generates a total ’10-11 offtake of 19.10 million bales. Ending stocks for ’10-11 are projected at 2.70 million bales for an ending stocks-to-use ratio of 14.1%.

USDA projects ’10-11 world production to be 116.95 million bales, up 100,000 bales from last month. Mill use is set at 120.53 million bales. With beginning stocks at 46.98 million bales, this would result in world ending stocks of 45.44 million bales on July 31, ’11, and a stocks-to-use ratio of 37.7%.

For the ’09-10 crop year, USDA puts US cotton production at 12.19 million bales. Mill use was raised 50,000 bales from the August report to 3.45 million bales. Exports were raised 40,000 bales from the August report to 12.04 million bales. Total offtake for the ’09-10 crop year stands at 15.49 million bales. Ending stocks were lowered 100,000 bales to 3.00 million bales. The stocks-to-use ratio for the ’09-10 marketing year is 19.4%.

World production for the ’09-10 marketing year was set at 101.15 million bales, down 1.00 million bales from August. World mill use was lowered 510,000 bales to 117.20 million bales. Consequentially, world ending stocks totaled 46.98 million bales with a stocks-to-use ratio of 40.1%.

 
Ocean Carriers Discontinue Furnishing Container Chassis

The Agriculture Transportation Coalition (AgTC) reported that ACL, CMA-CGM, Cosco, Evergreen, Hanjin, Maersk, NYK and OOCL have followed through with plans to stop providing chassis used to dray containers shipside.

Truckers draying containers shipside now will have several choices. They can  provide their own chassis, use customer-owned chassis or rent chassis. According to AgTC, truckers likely will charge the cargo owners additional amounts to cover their own extra operational and administrative costs.

The shipping lines correctly point out that the United States is the only market in the world where ocean carriers have provided the chassis.

The AgTC article stated that, “while carriers have said that carriers and shippers should work together to jointly reduce costs, this appears to be a fairly significant increase in shipper costs (and administrative burden), with no recognition of the impact by the carrier, and no sharing of the burden. Essentially, this amounts to a unilateral rate increase...”

Additional information concerning container chassis and other agricultural transportation issues is available at www.agtrans.org.

 
Sunbelt Farmers to See Midwest Production, Processing Operations

Key commodity organization leaders and executives will see agricultural operations in Illinois on Sept. 13-16, as part of the NCC’s Multi-Commodity Education Program (MCEP).

The exchange between commodity producer leaders in the Sunbelt and the Midwest/Far West regions is designed to provide the program’s participants with: 1) a better understanding of production issues/concerns faced by their peers in another geographic region and 2) an opportunity to observe agronomic practices, technology utilization, cropping patterns, marketing plans and operational structure. The program is supported by The Cotton Foundation with grants from Deere & Company and Monsanto.

Other program benefits are the continuing dialogue among American farmers, regardless of what crops or locations, and the creation of lasting relationships between current and future producer leaders.

The tour’s producer participants include: Steven Clay, a Carnegie, OK, cotton, corn and peanut producer who serves as a director of Cotton Incorporated and treasurer of the Oklahoma Cotton Council; Barry Evans, a Kress, TX, cotton and grain sorghum producer who is chairman and past president of Plains Cotton Growers and a director of the Cotton Board; Jim Massey, a Robstown, TX, cotton and grain sorghum producer who serves as a director of the South Texas Cotton & Grain Assoc. and the Texas Grain Sorghum Producers; Robert Miller, a Wellington, KS, cotton, grain sorghum and soybean producer who serves as president of Kansas Cotton Growers and state chairman of the NCC’s American Cotton Producers (ACP); Paco Ollerton, a Casa Grande, AZ, cotton and small grains producer who serves as vice president of the Arizona Cotton Growers Assoc. and the ACP state co-chair; Jeff Posey, a Roby, TX, cotton, wheat, grain sorghum and corn producer who is past chairman of the Rolling Plains Cotton Growers and serves as a Cotton Board director; Gary Respess, a Pantego, NC, cotton, corn and soybean producer who is president of the North Carolina Cotton Producers Assoc. and is state ACP chairman; Doyle Schniers, a San Angelo, TX, cotton and wheat producer who is a director and past president of Southern Rolling Plains Cotton Growers, a vice president of Texas Cotton Producers and is the ACP state co-chair; and Stacy Smith, a Wilson, TX, cotton, grain sorghum and wheat producer who serves on the Plains Cotton Growers’ executive and finance committees.

Also participating are Billy Carter, the North Carolina Cotton Producers executive vice president, Nashville, NC; and John Gibson, the NCC’s Member Services director, Memphis.

The participants’ tour will begin on Sept. 13 at tour host Illinois Corn Growers Assoc.’s office in Bloomington. They will hear a presentation on the economics of corn and soybean production in the Midwest and then visit an area corn operation. The next day, the group will visit Archer Daniels Midland’s operation in Decatur and the Auburn corn and soybean farm of Gerry Niemeyer who currently serves as first vice president of the National Corn Growers Association. On the 15th, the Sunbelt contingent will tour Monsanto’s research facility in Monmouth and John Deere’s seeding plant in Moline. The tour concludes on the 16th with visits to the Illinois River Energy and Prairie Gold facility in Rochelle, the Utica lock on the Illinois River, and then to Donna Jeschke’s corn and soybean farm in Mazon. Jeschke is past chairman of the Illinois Corn Marketing Board.

This is the 4th MCEP tour since the initiative was launched in ’06.

 
Sales, Shipments Slip

Net export sales for the week ending Sept. 2 were 115,600 bales (480-lb). This brings total ’10-11 sales to approximately 7.2 million bales. Total sales at the same point in the ’09-10 marketing year were approximately 3.4 million bales. Total new crop (’11-12) sales are 236,100 bales.

Shipments for the week were 188,100 bales, bringing total exports to date to 1.1 million bales, compared with the 928,900 bales at the comparable point in the ’09-10 marketing year.

 

 
Effective Sept. 10-16, ’10

Adjusted World Price, SLM 11/16

80.67 cents

*

Fine Count Adjustment ('09 Crop)

 0.44 cents


Fine Count Adjustment ('10 Crop)

  0.54 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

7


Special Import Quota (480-lb bales)

475,574


ELS Payment Rate

0.00 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

97.51 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

NA


Current US CFR Far East

99.50 cents


Forward US CFR Far East

NA


 

'09-10 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (August-July)

62.45 cents

**


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