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January 6, 2012
 

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Beltwide Attendees Get Timely Updates

NCC Chairman Charles Parker, who urged attendees at the '12 Beltwide Cotton Conference in Orlando, FL, to participate in the forum's many workshops, seminars and technical conferences, said that research, education and technology transfer continue to be critically important. He reiterated the NCC's longstanding commitment of the necessary resources for technology development and transfer. The forum attracted 2,250 participants.

Parker also listed a number of critical issues the NCC worked on this past year ranging from repeal of IRS Form 1099 reporting requirements to a number of environmental issues, including the urgent need for passage of H.R. 872 (legislation to eliminate the requirement of NPDES permits for use of FIFRA-registered pesticides). He said the US cotton industry faced a difficult challenge in '11 of establishing farm policy on an expedited basis but – through the NCC's policy process – developed a consensus farm bill proposal for an effective income safety net through an affordable revenue based crop insurance program.

"This was accomplished in view of significantly reduced federal budget resources and the WTO Brazil case ruling, which requires the U.S. to change the cotton program provisions identified as trade distorting," Parker said.

The Missouri producer noted the continuing efforts to improve cotton flow, including the re-appointment of the NCC's Performance and Standards Task Force to focus on two delegate resolutions emanating from the Vision 21 Cotton Flow Study.

John Maguire, the NCC's senior vice president, Washington Operations, told attendees that if the process of developing new farm legislation involves re-evaluation of all options and requires hearings, committee mark-ups and floor debates, then it is unlikely new legislation can be enacted before the elections and may stretch into a Lame Duck session or even into '13, well after the current law expires.

Maguire indicated that Congress missed a golden opportunity to lock in $23 billion as US agriculture's share of federal deficit reduction. House and Senate Agriculture Committee Chairs Lucas (R-OK) and Stabenow (D-MI) crafted a plan that would have offered farmers a choice of programs that fit their region and cropping patterns and would have offered the certainty of knowing what policy would be in place when current law expires. The plan, which was developed for consideration by the Joint Committee on Deficit Reduction, also included recommendations by the cotton industry that would have met budget targets and served as a basis to resolve the long standing US-Brazil WTO dispute thus eliminating the threat of retaliation against US exports. The proposal also included continuation of the marketing loan, a top cotton industry priority.

Maguire said it is unfortunate that the Joint Committee could not develop a comprehensive deficit reduction plan that included solid farm policy. He noted there probably is only a slim chance that the plan might be considered in early '12 but more likely Congress will begin the debate on deficit reduction and farm policy under a more complicated and time consuming process known as "regular order." Because '12 is a Presidential election year and the entire House and one-third of the Senate are also up, it would not be surprising if a new farm bill is not adopted until late '12 or even early '13. In addition, the opportunity to hold agricultural cuts to $23 billion may have been missed with the failed '11 effort.

Maguire stated the NCC has kept working to remind Congress that the cost for all commodity, conservation and crop insurance programs is less than 2% of the federal budget. He also expressed concern about the deep divisions that emerged during debate on farm policy in late '11. He cautioned those in attendance that commodity groups have to work together and the cotton industry, with its unique challenges, needs to coalesce around a policy and strategy or risk failure.

He said the industry leaders who developed STAX (cotton's shallow loss, area revenue insurance program) did their best to address budget, trade and political considerations. If STAX is not included in future farm legislation, then cotton could be pushed into a one-size-fits-all revenue program similar to ACRE, an option that does not address the industry's requirements and -- failing to address the Brazil case -- could lead to a damaging trade dispute. He also said the industry must continue to work to extend the marketing loan program that has served the industry so well and to work for reasonable payment limitation and income tests if they are deemed to be politically necessary.

In other Cotton Production Conference general session reports (as reported in the trade media):

Mike Quinn, CEO of Carolinas Cotton Growers Cooperative, said the fundamentals for cotton -- production and mill use -- remain roughly the same for '12 as they were in '11, except there's a good likelihood ending stocks for the coming year may increase about 12% -- based on a lot of "ifs." But, he says, there are several factors that hold the key to identifying where the market will go this year that will just have to play out.

First, he said, the sovereign debt crisis faced by Europe (the largest economic unit in the world) will have to be dealt with either by monetizing that debt or through governmental austerity measures -- the balance of which is important to avoiding defaults that could slam the global economy back into more chaos. He said he's optimistic bankers and politicians in Europe will find the balance.

Second, China is in the midst of building national reserves of cotton and in doing so could remove 15-18 million bales of cotton from the world supply in '12 if it continues that trend. That would be enough to offset the potential increase in ending stocks. Too, Pakistan is also on an internal buying binge that could negate its cotton production from bloating world stocks, he explained.

Given an optimistic resolution to the global debt problem, and China and Pakistan removing cotton from the market, Quinn says such a scenario would be very supportive of prices. However, he noted, that Chinese and Pakistani cotton reserve doesn't cause cotton to disappear; it only provides what he called a "synthetic demand" for the year. "The cotton is still in the warehouse and has to be considered as part of world stocks eventually," he said.

Any interruption of either of these processes could derail the status quo in cotton prices just shy of $1, but Quinn notes the far futures cotton contracts are showing strength in early January they haven't seen in recent months -- indicating hedge fund traders and other investors are "looking at commodities again." He says with today's technology in which "millions of dollars can move almost instantaneously at the click of a mouse," growers and their marketers should keep a close eye on far contracts for opportunities.

U. of Florida Extension Specialist/Professor David Wright told attendees that while US cotton growers planted 14.7 million acres in '11 — two million plus acres more than projected by USDA planting intention surveys — when all the accounting is done, they likely will end up losing an unprecedented 5 million plus acres of cotton and produce perhaps 2 million bales less than in '10 due to weather-related problems. He said thanks to extremely high yields in California and Arizona and average to good yields in parts of the Mid-South and Southeast, US producers will end up with a respectable average yield of more than 770 pounds per acre.

"Despite the bitter taste of having so much of a promising, highly valued cotton crop destroyed by weather, cotton growers are going into the 2012 season with an optimistic outlook," Wright stated. "There will be some new pesticides available this year and some high yielding varieties available to farmers. By and large most farmers are looking forward to planting cotton this year. They have some good tools to use for this year's crop. Though they have moderated from record highs, prices remain good, hovering around 90 cents a pound, and that's still competitive with other crop options."

Florida State Climatologist David Zierden predicted a continuation of La Niña and dry conditions through winter and at least into spring planting season across the US Cotton Belt. "We had a strong La Niña last spring and summer and also expect it to continue this winter and into planting time," he said. "La Niña is a trigger for drought. And we're in a La Niña phase now, similar to this time last year."

Zierden said chances for severe drought may not be quite as strong for the Southeast in '12, but drought tendencies for the Southwest are "very much enhanced for this spring." He expects conditions to remain dry through March from the Southeast across to Louisiana and into Texas, New Mexico and Oklahoma.

Zierden said computer models that incorporate production data such as soil type, planting dates, crop history and historical weather patterns have shown that planting cotton early when La Niña is expected could be an advantage. "Planting early following a dry winter, assuming some rainfall, improves the odds," Zierden said. "It doesn't work every time. Sometimes the climate pattern will go the other way, but the models at least provide a better chance of making yield. It gives us some predictability."

He said farmers can get more information on computer crop simulation from agroclimate.org and then can work with Extension agents or other crop consultants to refine production strategies.

U. of Georgia Extension Entomologist Phillip Roberts, part of a four-man panel that discussed "Managing Cotton With a Changing Arsenal of Tools," said the top goals in effective insect management in cotton are to preserve yield potential and improve the stability and consistency of control -- and reaching those goals is best achieved through the combined use of current and future technologies.

Roberts said it is not sustainable to depend on new technologies alone as few new methods have evolved in recent years. He emphasized that, "There is no question that insect control technology including foliar insecticides, seed treatments, and traits will continue to get better (but) we must preserve existing technologies. Much pressure exists on current insecticides for bug control. History has shown that insect pests are resilient. There are no silver bullets."

Recorded presentations from the '12 Beltwide Cotton Conferences will be available to this year's attendees at www.cotton.org/beltwide. Production Conference recordings will be on that site in 10-14 days and Technical Conference recordings in about 30 days. The full Beltwide Proceedings will be available in mid-May.

 
Reminder: CSP Signup Deadline Near

The ranking period cut-off date for the Conservation Stewardship Program (CSP) is Jan. 13, '12. USDA's Natural Resources Conservation Service (NRCS) says producers interested in CSP should submit applications to their local NRCS office by the deadline so that their applications can be considered during the first ranking period of '12.

CSP is offered in all 50 states, through continuous sign-ups. The program provides conservation benefits including improvement of water and soil quality, wildlife habitat enhancements and adoption of conservation activities that address the effects of climate change. Eligible lands include cropland, pastureland, rangeland, non-industrial private forest land and agricultural land under the jurisdiction of an Indian tribe.

A CSP self-screening checklist is available to help potential applicants determine if CSP is suitable for their operation. The checklist highlights basic information about CSP eligibility requirements, contract obligations and potential payments. It is available from local NRCS offices and on the CSP website at www.or.nrcs.usda.gov/programs/csp/.

As part of the CSP application process, applicants will work with NRCS field personnel to complete the resource inventory using a Conservation Measurement Tool (CMT). The CMT determines the conservation performance for existing and new conservation activities. The applicant's conservation performance will be used to determine eligibility, ranking and payments.

Additional information on CSP can be found on the NCC's home page, www.cotton.org, by clicking on the Conservation icon. Producers interested in signing up during this ranking period should contact their local NRCS office.

 
'12 High Cotton Winners Honored

The '12 High Cotton Awards recipients are: Southeast – Kent Wannamaker, St. Matthews, SC; Delta – Coley Bailey Jr., Coffeeville, MS; Southwest – Shawn Holladay, Lamesa, TX; and Far West – Don Cameron, Helm, CA. They were honored during a breakfast at the Beltwide Cotton Conferences.

The awards, presented annually to this nation's most conservation-minded and environmentally-aware cotton producers, are sponsored by Farm Press Publications through a grant to The Cotton Foundation. Greg Frey, vice president at Penton Media Inc., which publishes the Farm Presses, said this year's recipients "are some of the most efficient cotton producers in the nation. But they also do their utmost to protect the land, air and water. They represent the very best in environmental stewardship. All of them are veteran farmers, and they always put the environment and taking care of their land and water first."

More information about the recipients is at www.deltafarmpress.com.

 
Keerti Rathore Receives Cotton Genetics Research Award

Dr. Keerti Rathore, a Texas A&M U. associate professor and researcher, is the recipient of the '11 Cotton Genetics Research Award. The announcement was made at the '12 Beltwide Cotton Improvement Conference. In recognition, he received a plaque and a monetary award.

Since '03, Dr. Rathore has worked as an associate professor in A&M's Soil and Crop Sciences Dept. and its Institute for Plant Genomics and Biotechnology. He also has served as director of the Institute's Laboratory for Crop Transformation since '97.

A significant research highlight is Rathore's work on the reduction of gossypol in cottonseed. Dr. Wayne Smith, an A&M professor – cotton breeding and associate head, said, "Keerti has lines that show 95% reduction in seed gossypol that makes these seed, an excellent source of oil and protein, edible by humans. This effort could lead to a new, high quality food source for people around the world."

Smith noted that Rathore's work was reported in the Proceedings of the National Academy of Sciences as well as in such news agencies as the British Broadcasting Company, Wall Street Journal, Scientific American, National Geographic, and most recently, Time.

US commercial cotton breeders have presented the Cotton Genetics Research Award for more than 40 years to recognize outstanding basic research in cotton genetics. The Joint Cotton Breeding Committee, comprised of representatives from state experiment stations, USDA, private breeders and the NCC, establishes award criteria.

 
Sales Weak, Shipments Steady

Net export sales for the week ending Dec. 29, '11 were -3,400 bales (480-lb). This brings total '11-12 sales to approximately 10.6 million bales. Total sales at the same point in the '10-11 marketing year were approximately 14.3 million bales. Total new crop ('12-13) sales are 445,100 bales.

Shipments for the week were 182,100 bales, bringing total exports to date to 2.9 million bales, compared with the 4.4 million bales at the comparable point in the '10-11 marketing year.

 

 
Effective Jan. 6-12, ’12

Adjusted World Price, SLM 11/16

 77.98 cents

*

Fine Count Adjustment ('10 Crop)

 1.65 cents


Fine Count Adjustment ('11 Crop)

  1.70 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

9


Limited Global Import Quota (480-lb bales)

603,269


ELS Payment Rate

0.00 cents


*No Adjustment Made Under Step I

 

Five-Day Average




Current 5 Lowest 3135 CFR Far East

98.54 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

NA


Current US CFR Far East

106.00 cents


Forward US CFR Far East

NA


 

'11-12 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (Aug.-Nov.)

92.75 cents

**


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