The debate over a Continuing Resolution (CR) necessary to provide funding for agencies and programs for the remainder of FY11 will shift to the Senate when Congress returns from a week long recess.
Early on Feb. 19, just before leaving town for the President’s Day recess, the House approved a CR along party lines. The legislation, H.R. 1, covers the remainder of FY11 and would cut about $61.5 billion from FY10 spending levels and provide $99.6 billion less than the Administration’s FY11 budget proposal, which was never enacted.
Senate Democratic Leaders immediately rejected the House plan as draconian. Initially, Senate Democrats indicated they would draft a one-month extension at current spending levels while working on the longer-term CR. House Republicans indicated any short-term CR would have to include proportionate cuts to the CR passed on Feb. 19.
Reports now indicate Senate Democrats are drafting a short term CR that contains many cuts that are taken from the Administration’s recently submitted FY12 budget. Senate Democratic leaders said they will consider proposals to cut spending more deeply when they negotiate a long-term government spending bill for the remainder of FY11.
Although they previously said they supported $41 billion in cuts, Senate Majority Leader Reid (D-NV) said he and other Democrats agree they will consider more reductions in order to finish work soon on a bill to fund the federal government for the balance of the fiscal year. Reid told reporters, though, that Senate Democrats are not prepared to accept the hundreds of riders and legislative changes that House Republicans inserted into the CR before it was passed on Feb. 18.
The $1.2 trillion CR was subject to some four days of debate in the House as Members from both parties drafted more than 500 amendments to the measure. While most of those amendments were not actually debated, many were considered during the more than 80 hours of debate on the floor. During a series of key votes on Feb. 18, Republicans overwhelmingly backed proposals to ban federal agencies from spending any money to implement health care reform. Additional measures targeting certain EPA activities were approved, including one to keep the agency from enforcing rules to limit stationary source emissions.
The CR moving to the Senate carries hundreds of policy changes that Senate Democrats have decried. Republicans, however, demonstrated an unwillingness to make even deeper spending cuts than those already contained in H.R. 1.
During the debate, the House rejected amendments by Rep. Kind to prohibit USDA from making contributions to the Brazilian Cotton Institute which would have resulted in the United States being non-compliant with a government to government agreement and would trigger retaliation against US exports. The House also rejected an amendment by Rep. Blumenauer (D-OR) to create a $250,000 per legal entity limit for all farm program benefits.
WTO Head Not Optimistic on Doha Breakthrough
The head of the World Trade Organization (WTO) warned that time was running out for securing a breakthrough in the Doha Round of trade talks. WTO Director-General Lamy told the organization's members that urgent progress was needed soon if they were to achieve their goal of wrapping up the Doha talks by the end of the year.
Many officials believe there is little hope of securing progress on Doha in ’12, an election year in the United States and other countries, and feel there are rapidly dwindling prospects of concluding the negotiations at all should they extend beyond the current year.
Officials said the talks that took place in Geneva during the week of Feb. 14-17 among 11 key members representing the main Doha negotiating alliances—Argentina, Australia, Brazil, Canada, China, the European Union (EU), India, Japan, Mauritius, South Africa and the United States—were conducted in a cooperative spirit but produced nothing which could be cited as concrete progress. Officials said the same issues which have stymied progress over the past two-and-a-half years continue to hold up progress—the insistence by the United States and (to a lesser extent) other developed countries that emerging economies such as Brazil, China and India must do more to open up their markets in agriculture, industrial goods and services. These countries counter that the developed countries have not indicated what additional concessions they are willing to make to secure the market access desired or have even ruled out making additional concessions in some cases.
One trade diplomat said the only ray of hope that came out of last week's talks was a suggestion by the United States and the EU that further reductions in farm subsidy spending caps might be offered beyond those set out in the current draft negotiating text on agriculture. “They're offering cuts in water for real market access gains,” complained one developing country diplomat.
During a briefing of members on the outcome of two weeks of meetings and consultations in the farm trade talks that began on Feb. 7, David Walker, the New Zealand ambassador chairing the agriculture negotiations, admitted that while there were a few signals of movement in positions, nothing “audibly” new emerged from the discussions.
WTO members have set the end of ’11 as the target for concluding the Doha Round, now in its 10th year. To accomplish this, the Doha negotiating groups’ chairs are to produce revised draft texts by April that will reflect progress in the negotiations and serve as the basis for a final push for a deal. With no progress to date, though, diplomats already are warning that the negotiations are running out of time.
Progress Continues in TPP’s Fifth Round
The fifth round of Trans-Pacific Partnership (TPP) Agreement negotiations between the United States and eight other countries ended in Santiago, Chile, on Feb. 18 with “continued progress.”
The next round will take place in Singapore in late March. Negotiators are planning an ambitious agenda ahead of the next negotiating round in Singapore, the US Trade Representative’s office (USTR) said in a written statement issued on Feb. 18. The teams agreed to a longer round to give negotiators more time to make progress in each group. Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam are participating in the talks with the United States.
The TPP eventually could act as the foundation for a broader trade agreement among the 21 economies in the Asia-Pacific Economic Cooperation forum.
In Santiago, the teams began looking at how best to craft a TPP rule of origin, which will help support development of a regional trade agreement. The countries plan on exchanging proposed product-specific rules of origin in March, USTR said. The US government would like to wrap up the TPP in time for the next APEC leaders' summit in November in Honolulu. Four other rounds will take place before the APEC meeting, including talks in Singapore in March, Vietnam in June, the United States in September and Peru in October.
USDA Sees ’11 Cotton Production Increase
At the annual Agricultural Outlook Forum in Washington, DC, USDA economists offered insights into their outlook for the ’11 cotton market. That included expectations that US cotton area will increase to 13.0 million acres in ’11 in response to stronger market prices. Assuming normal abandonment and yields in line with recent trends, USDA economists project US cotton production of 19.5 million bales for the ’11-12 marketing year. USDA analysts also reminded attendees that USDA’s first survey-based estimate of acreage intentions – Prospective Plantings – will be published on March 31.
The US textile industry is expected to consume 3.5 million bales in ’11-12, down slightly from the ’10-11 estimate. US exports also are expected to fall in ’11-12, due primarily to increased export competition from other international producers. With exports of 15.0 million bales, total offtake of US cotton is estimated at 18.5 million bales, down from 19.4 million bales in ’10-11. Total US ending stocks would recover to 2.9 million bales for the ’11-12 marketing year. While stocks rebound by 1.0 million bales from the ’10-11 year, the US stocks-to-use relationship remains relatively tight, according to the USDA projections.
USDA economists call for ’11-12 world cotton production to grow to 127.5 million bales, an increase of 12.2 million bales from the previous year. Increases are expected in most countries, with the combined increase in China and India accounting for just more than one-half of the global increase. World cotton consumption in ’11-12 will benefit from higher production and continued strong world economic growth. Global mill use is forecast at 120.0 million bales, up from the ’10/11 estimate of 116.6 million bales. Ending stocks for ’11-12 are forecast at 50.3 million bales, up 7.5 million bales from the previous year.
During its 44th annual meeting in Memphis, the NCC’s Joint Cotton Industry Bale Packaging Committee (JCIBPC), chaired by Stan Creelman, added a marking requirement for PET strap during its review of the ’10 Specifications for Cotton Bale Packaging Materials.
The JCIBPC also reviewed the official bale bagging and tie tare weight table that is part of the packaging specifications before changing the official tare weight for PE film and six wire bale tie patterns from five pounds to four pounds. If approved by USDA, the new tare weight will be in effect when the ’11-12 cotton crop is harvested.
During the Committee’s executive session, several changes were made to the JCIBPC Points of Policy. Those changes were directed at guidelines for experimental test programs and included two requests for commercial firms with experimental test programs. In both cases, the firms are expected to: 1) work with the gins using their experimental materials and urge those gins to recess their bale ties, and 2) track experimental material usage by PBI number. The Committee’s points of policy review included adding a new policy directed at large capital expenditures testing and large scale testing.
During the Committee’s review of ’11 requests for experimental test programs, it granted requests for continued testing of light-weight cotton bale bags, a woven polypropylene bale bag using an additional construction and continued testing of 8.5 gauge wire in a six-wire application. New test programs were granted for ¾” by 0.055” PET strap when used on an approved Samuels Strapping System, a modified (lightweight) 8’ x 8’ polypropylene bag construction and a request for a test program involving an automated cotton bale bagging system – using approved bags with the exception of sonic weld on bottom seam. The Committee also granted a field trial for a “woven (8 x 5) polyethylene extruded back seam bag.”At the textile mill group’s urging, the Committee reaffirmed the current color provisions for polypropylene bagging that only allow “...translucent white or translucent light gold.”
EPA Issues Boiler MACT Rules
In response to federal court orders requiring the issuance of final standards, the EPA has issued final Clean Air Act standards for boilers and certain incinerators (Boiler MACT) that achieve significant public health protections through reductions in toxic air emissions, including mercury and soot, but cut the cost of implementation by about 50% from a proposal issued last year. EPA now estimates that compliance with the emissions limits will cost regulated industries $1.8 billion annually rather than the $3.6 billion it had estimated when the rules were proposed in ’10.
The final rules, which will be published in the Federal Register, revise the new source performance standards for commercial and industrial solid waste incinerators and sewage sludge incinerators, as well as establish national emissions standards for hazardous air pollutants for both area source and major source industrial, commercial, and institutional boilers and process heaters. Major sources are those that emit 10 tons per year or more of any single hazardous air pollutant or 25 tons per year or more of any combination of toxic pollutants. Facilities that emit less are area sources and subject to less stringent emissions standards.
In another revision, EPA will require new and existing boilers and process heaters that burn natural gas and refinery gas to perform annual maintenance rather than meet numeric emissions limits. Units that burn other gases also can qualify for the work practices if they can demonstrate that their fuel has contaminant levels similar to natural gas.
To ensure smooth implementation, EPA is working with the Depts. of Energy (DOE) and Agriculture (USDA) to provide the diverse set of facilities affected by the standards with technical assistance that will help boilers burn more cleanly and efficiently. DOE will work with large coal and oil-burning sources to help them identify clean energy strategies that will reduce harmful emissions and make boilers run more efficiently and cost effectively. In addition, USDA will reach out to small sources to help owners and operators understand the standards and their cost and energy saving features.
Although EPA is finalizing the rules, it also released a notice of reconsideration. EPA will reconsider additional subcategories for large industrial boilers, establishing work practice standards for major source boilers that have limited use, limits on fuel-switching for industrial incinerators, revisions to the carbon monoxide monitoring requirements for both incinerators and boilers, and setting particulate matter emissions limits under less stringent generally available control technology standards for small oil-fired boilers. More information is atwww.epa.gov/airquality/combustion.
US Mill Cotton Consumption Steady
According to the Commerce Dept., January (four-week month) total cotton consumption in domestic mills was 143.7 million pounds for a seasonally adjusted annualized rate of 3.91 million bales (480-lb). Last year’s January annualized rate was 3.66 million bales.
The December (five-week month) estimate of domestic mill cotton use was raised by 1.4 million pounds to 149.4 million pounds. The revised seasonally adjusted annualized rate of consumption for December is 3.86 million bales. The previous year’s December annualized rate was 3.48 million bales.
Using the latest Commerce Dept. figures, calendar ’10 mill use is estimated to be 1.74 billion pounds or 3.62 million bales. This is higher than calendar year ’09’s use of 3.29 million bales. Based on Commerce estimates from Aug. 1, ’10-Jan. 29, ’11, projected total pounds consumed during crop year ’10-11 would be 1.8 billion pounds or 3.75 million bales. USDA’s latest estimate of ’10-11 crop year mill use is 3.6 million bales.
Preliminary February domestic mill use of cotton and revised January figures will be released by Commerce on March 24.
Sales Slip, Shipments Continue Strong
Net export sales for the week ending Feb. 17 were 82,200 bales (480-lb). This brings total ’10-11 sales to about 15.4 million bales. Total sales at the same point in the ’09-10 marketing year were about 9.3 million bales. Total new crop (’11-12) sales are 3.5 million bales.
Shipments for the week were 486,100 bales, bringing total exports to date to 7.3 million bales compared with the 5.2 million bales at the comparable point in the ’09-10 marketing year.
Effective Feb. 25-March 3, ’11
Adjusted World Price, SLM 11/16
206.31 cents
*
Fine Count Adjustment ('09 Crop)
0.00 cents
Fine Count Adjustment ('10 Crop)
0.08 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
0
Special Import Quota (480-lb bales)
0
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
223.15 cents
Forward 5 Lowest 3135 CFR Far East
145.09 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
222.10 cents
Forward US CFR Far East
145.10 cents
'10-11 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-Dec.)
80.03 cents
**
**August-July average price used in determination of counter-cyclical payment
