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August 12, 2011
 

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Special Deficit Reduction Panel Formed

The 12 members who will serve on a special bipartisan, bicameral committee on deficit reduction have been named by the leaders of the House and Senate, as required by the Budget Control Act of 2011 that was signed into law on Aug. 2.

House Speaker Boehner (R-OH) announced that Ways and Means Committee Chairman Camp (R-MI), House Republican Conference Chairman Hensarling (R-TX) and House Energy and Commerce Committee Chairman Upton (R-MI) will serve on the 12-member committee. Speaker Boehner, as required by the legislation, also named Hensarling to serve as co-chairman.

House Minority leader Pelosi (D-CA) named Reps. Clyburn (D-SC), Beccera (D-CA) and Van Hollen (D-MD) to the committee. Rep. Clyburn is assistant Democratic leader; Rep. Van Hollen is ranking member on the Budget Committee; Rep. Becerra serves as the House Democratic Caucus vice-chair and is a member of the Ways & Means Committee.

Senate Minority Leader McConnell (R-KY) announced that Minority Whip Kyl (R-AZ); Sen. Portman (R-OH), the former Office of Management and Budget director; and Sen. Toomey (R-PA), a freshman affiliated with the Tea Party; will represent Senate Republicans.

Senate Majority Leader Reid (D-NV) named Sen. Murray (D-WA), a member of the Appropriations Committee, to serve as co-chair with Rep. Hensarling. Sen. Murray will be joined by Finance Committee Chairman Baucus (D-MT) and Foreign Relations Committee Chairman Kerry (D-MA) on the super committee.

The joint committee is required to produce by Nov. 23 a plan that would reduce the deficit by at least $1.2 trillion over 10 years. A simple majority of committee members is required to approve a package for consideration by the House and Senate. If the committee produces a plan, the House and Senate are required to vote on the package, without amendment, by Dec. 23. If the committee fails to produce a plan or the House and Senate fail to approve a plan which achieves at least a $1.2 trillion reduction over 10 years, then spending cuts will be automatically triggered beginning on Jan. '13. The cuts will be made through a sequestration process last implemented in the mid-80s under the Gramm-Rudman-Hollings legislation. The cuts will be equally divided between defense and non-defense programs. About 180 programs are exempted from cuts under sequestration.

Committees, including the House and Senate agriculture panels, are allowed to provide recommendations to the super committee by Oct. 14. The super committee is required to produce a plan that achieves the required savings and the legislative language necessary to modify programs to achieve the savings. The committee could produce a plan that achieves less than the total goal, and if that plan is approved, sequestration would be employed to achieve the balance of savings necessary to reach the goal.

 
FMCSA: No Intention to Propose New Agricultural Regulations

The US Dept. of Transportation's Federal Motor Carrier Safety Administration (FMCSA) says it has no intention to propose new regulations governing the transport of agricultural products. The FMCSA's press release announcement is at www.dot.gov/affairs/2011/fmcsa2411.html.

The NCC stated that it was pleased that the FMCSA agrees that onerous regulations are not needed and that agriculture has worked with individual states to develop common sense enforcement practices.

The NCC recently had submitted comments, available at www.cotton.org/news/releases/2011/upload/NCC-FMCSA-Comments.pdf
, to the FMCSA expressing its concern with the agency's interpretations and some of its proposed guidances. The NCC’s comments focused on: 1) the distinction between interstate and intrastate commerce in deciding whether operations of commercial motor vehicles within the boundaries of a single state are subject to FMCSA regulations; 2) the factors that states are using in deciding whether farm vehicle drivers transporting agricultural commodities, farm supplies and equipment as part of a crop share agreement are subject to the commercial driver’s license (CDL) regulations; and 3) proposed guidance to determine whether off-road farm equipment or implements of husbandry operated on public roads for limited distances are considered commercial motor vehicles.

The NCC’s comments also noted the concern that the interpretations and some of the proposed guidance in the notice could adversely affect the long-standing exemptions, waivers and exceptions that agricultural operations have effectively used for more than 25 years. These exemptions, waivers and exceptions properly take into account agricultural operations’ seasonal nature, limited access to and the availability of CDL drivers, the types of vehicles as well as their varying functions or loads, the hours of service during peak seasonal activities, the use of family members, and costs. Furthermore, agricultural operations and organizations have worked closely with individual states, which have been given authority to grant these exemptions.

In addition to comments filed by outside groups, a bipartisan group of 22 Senators (including nine Cotton Belt Senators) sent a letter to the FMCSA strongly objecting to the changes proposed in the Federal Register notice.

 
Status Report Filed on ESA Mega-Lawsuit

The Center for Biological Diversity, EPA and Intervenors [Crop Life of America and American Farm Bureau Federation (on behalf of NCC and others)] filed a joint status report on July 29 on settlement negotiations in the Endangered Species Act mega-lawsuit. The report updated the court on settlement talks (no substantive agreements have been reached) and asked for a 60-day continuation of the stay of the litigation and the postponement of the Aug. 12 status conference until Oct. 14. The court now has granted both requests.

In January, the Center for Biological Diversity and the Pesticide Action Network (Plaintiffs) filed a complaint for declaratory and injunctive relief against EPA, alleging that EPA had failed to consult with the Fish and Wildlife Service and the National Marine Fisheries Service regarding the effects of registered pesticides on endangered species throughout the United States. The plaintiffs asked the court to require EPA to initiate and complete the consultation process, and to compel EPA to restrict pesticide uses that may result in their entering endangered species’ occupied or critical habitat until the consultation process is complete (see April 1, ’11 Cotton’s Week).

There are more than 300 pesticides named in the suit, many of which are commonly used in cotton production (including Orthene, Finish, Karate Z, Bidrin, Cotoran, Imidacloprid, Lannate, Dual II Magnum, Diamond, Gramoxone, Caparol and Dropp — to name a few). The complaint alleges that 216 endangered species are affected. This action could potentially disrupt every type of agriculture – from row crops to specialty crops – nationwide.

 
USDA Sees 16.55 Million Bale US Crop

In its August crop report, USDA projected a '11 US cotton crop of 16.55 million bales. Upland production was estimated at 15.82 million bales and extra-long staple (ELS) production at 737,200 bales. Harvested area was estimated at 9.67 million acres, implying a non-harvested area of 4.06 million acres based on USDA's June acreage report. The resulting abandonment rate is 29.57%. The national average yield per harvested acre was estimated to be 822pounds, equal to the five-year average.

On a regional basis, the Southeast crop is estimated at 5.26 million bales, based on harvested acres of 3.04 million and a regional average yield of 832 pounds, 44 pounds above the region's five-year average. In terms of yield per harvested acre, Virginialeads all the region's states with an estimated yield of 989 pounds per harvested acre, 162 pounds more than their five-year average. The largest gains in yield are expected for Virginiaand Alabama. The only decline in yields is expected for Florida, down 47 pounds from the five-year average.

In the Mid-South, expected production is 4.43 million bales. Harvested area is estimated to be 2.29 million acres and the expected yield is 928 pounds per harvested acre. Louisianais expected to see the largest decline in terms of yield. Louisianais down 65 pounds from their five-year average to 800 pounds per harvested acre. The largest gains are expected to be seen in Mississippiwhere yields are estimated at 936 pounds per harvested acre, 58 pounds higher than their five-year average.

The Southwest upland crop is estimated at 4.65 million bales. Expected harvested area is 3.56 million acres and the regional average yield is 627 pounds, 84 pounds below their five-year average of 711 pounds per harvested acre. All states in the region are down in terms of yield with the greatest decline expected to be seen in Oklahoma, down 332 pounds to 408 pounds per harvested acre. The Texasupland crop is estimated at 4.50 million bales. Expected harvested area is 3.40 million acres and the regional average yield is 635 pounds, down 76 pounds from their five-year average.

Upland production in the West is an estimated 1.48 million bales with an estimated harvested area of 495,000 acres and a regional average yield of 1,438pounds, 11 pounds higher than the region's five-year average. The greatest gains in yield are expected for California, up 113 pounds to an estimated 1,587 pounds per harvested acre.

The ELS crop is an estimated 737,200 bales. Harvested area is pegged at 288,000 acres with an average yield of 1,231 pounds per harvested acre.

'11 US Cotton Crop

PLANTED

ACRES

Thou.

HARV.

ACRES

Thou.

YIELD PER

HARV.

ACRE

Lb.

5-YEAR

AVG.

YIELD

Lb.

480-

POUND

BALES

Thou.

UPLAND

SOUTHEAST

3,138

3,037

832

788

5,261

Alabama

450

430

726

630

650

Florida

93

90

725

772

136

Georgia

1,450

1,380

870

833

2,500

North Carolina

760

755

826

807

1,300

South Carolina

270

268

788

754

440

Virginia

115

114

989

827

235

MID-SOUTH

2,330

2,289

928

924

4,425

Arkansas

650

640

975

1,014

1,300

Louisiana

280

270

800

865

450

Mississippi

600

590

936

878

1,150

Missouri

340

334

1,035

999

720

Tennessee

460

455

849

819

805

SOUTHWEST

7,468

3,558

627

711

4,648

Kansas

68

58

521

629

63

Oklahoma

300

100

408

740

85

Texas

7,100

3,400

635

711

4,500

WEST

500

495

1,438

1,427

1,483

Arizona

250

248

1,432

1,469

740

California

190

189

1,587

1,474

625

New Mexico

60

58

977

1,064

118

TOTAL UPLAND

13,436

9,379

809

811

15,817

TOTAL ELS

289

288

1,231

1,265

737

Arizona

11

11

873

903

20

California

260

259

1,269

1,329

685

New Mexico

3

3

832

782

5

Texas

15

15

894

822

27

ALL COTTON

13,725

9,667

822

822

16,554

Source: USDA-NASS August Crop Production Report.



 
USDA Raises '11-12 Export Projection

In its August report, USDA raised US cotton export projections by 300,000 bales to 12.30 million bales while US mill cotton use was unchanged at 3.80 million bales. Projected total offtake is 16.10 million bales for the '11-12 marketing year. With beginning US stocks of 2.85 million bales, this would result in ending stocks of 3.30 million bales on July 31, '12, and a stocks-to-use ratio of 20.5%.

For the '10-11 marketing year, USDA puts US production at 18.10 million bales. US mill use is unchanged from the previous month at 3.80 million bales while exports were lowered 100,000 bales to 14.40 million bales. The estimated total offtake now stands at 18.20 million bales, generating ending stocks of 2.85 million bales and a stocks-to-use ratio of 15.7%.

In its report, USDA projected world production for the '11-12 marketing year to be 122.71 million bales, down 450,000 bales from the July report. World mill use was lowered 1.57 million bales to 115.18 million bales. With beginning world stocks at 44.99 million bales, this would result in ending stocks of 52.66 million bales on July 31, '12, and a stocks-to-use ratio of 45.7%.

For the '10-11 marketing year, USDA raised world production 30,000 bales from the previous month to 114.59 million bales. Mill use is estimated at 113.93 million bales, 1.00 million bales lower than the previous month. Consequently, world ending stocks are estimated to be 44.99 million bales with a stocks-to-use ratio of 39.5%.

 
New Marketing Year's Sales Strong

Net export sales for the week ending Aug. 4 were -5,800 bales (480-lb). Combined with outstanding sales of approximately 853,600 bales on July 31 that were carried forward and '11-12 sales of 6.4 million bales made in the previous marketing year -- brings total '11-12 sales to approximately 7.3 million bales. Total sales at the same point in the '10-11 marketing year were approximately 5.9 million bales. Total new crop ('12-13) sales are 142,200 bales.

Shipments for the week were 85,700 bales, bringing total exports to date to 85,700 bales compared with the 184,800 bales at the comparable point in the '10-11 marketing year.

 

 
Effective Aug. 12-18, ’11

Adjusted World Price, SLM 11/16

 87.78 cents

*

Fine Count Adjustment ('10 Crop)

 0.00 cents


Fine Count Adjustment ('11 Crop)

  0.00 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

1


Limited Global Import Quota (480-lb bales)

204,465


ELS Payment Rate

0.00 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

108.34 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

NA


Current US CFR Far East

116.65 cents


Forward US CFR Far East

NA


 

'10-11 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (Aug.-June)

81.47 cents

**


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