The House approved (329-91) a stopgap funding measure, and the Senate is expected to approve the measure during the week of Sept. 17. Thecontinuing resolution (H.J. Res. 117) would fund government agencies and programs through March 27, '13 at an annualized rate of $1.047 trillion for discretionary spending,which matches the caps set in the 2011 Budget Control Act (P.L. 112-25).
Appropriators made a point of stressing that they limited add-on provisions to the bill, a move designed to win conservative support.
The White House was expected to release a report on Sept. 14 that provides an estimate by the Office of Management and Budget of how much would be cut from each federal account at the program, project and activity levels if the scheduled $109 billion in automatic, across-the-board cuts are implemented on Jan. 2, '13.
The sequestration is mandated by the Budget Control Act of 2011 because a special congressional committee did not agree on a plan to cut the deficit by at least $1.2 trillion. Legislation approved in August (PL 112-155) required the report to be delivered last week but the White House said it was delayed because of preparation complexity.
The House approved a plan to avoid the automatic cuts by a partisan vote (223-196). The legislation (H.R. 6365) would require the President to submit to Congress by Oct. 15 a plan to replace the defense cuts with other spending reductions, and the plan could notinclude revenue increases. The bill will not be considered by the Senate but the measure allows members to voice their concern over the $109 billion in automatic, across-the-board cuts.
Farm Bill Passage Rally Held
Agricultural groups rallied at the Capitol on Sept. 12 to try to convince House Republican leaders to schedule a vote on a five-year farm bill before Congress adjourns in September, but it appears there is little chance that the House will take up the measure approved by the Agriculture Committee.
As criticism mounted over the House leadership's unwillingness to schedule time for the legislation reported by the Committee with a strong bipartisan vote in late July, there were indications that House leaders might be testing support for a short-term extension prior to adjourning.
During the "Farm Bill Now" rally, several members, including Ranking Member Peterson (D-MN), indicated there has been a lack of significant pressure on Congress by farmers probably because they are busy with harvest and the prices for grains and oilseeds are relatively attractive.
House Agriculture Committee Chairman Lucas (R-OK) expressed the same concern when he said he did not see enough of a sense of urgency from stakeholders over the August recess.
The continuing resolution (see story above) did not include provisions to extend any commodity or conservation programs. However, it did continue appropriations for the supplemental nutrition assistance program, known as SNAP, at the current level.
The farm bill also appears to be emerging as a presidential election issue, which is unprecedented in recent elections because farm bills normally are non-partisan. President Obama slammed Republicans for not bringing up the legislation when he visited Iowa last month and said that Republican vice presidential nominee Rep. Ryan (R-WI) is among the members blocking the bill (Inside U.S. Trade, Aug. 17).
If consideration is delayed until the lame-duck session,there is a question of whether Congress will consider a simple one-year extension of current law or the five-year bill approved by the House Agriculture Committee. In any event, it is unlikely the Administration could implement the significant program changes included in the versions approved by the Senate and the House Agriculture Committee for the '13 crop so the first year of any new legislation is likely to be a version of current law used as a transition program. However, a one-year extension instead of a comprehensive five-year bill will create a new set of challenges, including having to restart the debate with a significantly lower budget baseline and a more conservative Congress.
In another unusual development, Rep. Braley (D-IA)filed a discharge petition to require the House to vote on the legislation approved by its Agriculture Committee. The House would be required to vote on the bill if at least 218 members sign the petition. Meanwhile, Reps. Welch (D-VT) and Noem (R-SD) are gathering signatures on a letter requesting a meeting with House Majority Leader Cantor (R-VA) to discuss scheduling the farm bill for a vote.
Chinese Mills Get Access to Reserves
China recently permitted sales of cotton from its reserves to Chinese mills with a base grade price of $1.32 per pound and the China National Cotton Reserve Corp. (CNRC) announced unlimited purchase quantities of '12/13 cotton on the base grade price from Sept. 10, '12 to March 31, '13. At the same time reserve sales began, the CNRC began purchasing new crop cotton at the state reserve price of $1.46 per pound.
There is concern that mills may sell cotton recently purchased from reserves back to the CNRC at the higher price for new crop cotton. The National Development and Reform Commission (NDRC) calls this "turn-selling of reserved cotton" and is cautioning China's mills of serious punishment for such practice.
With polyester selling at approximately $0.75 per pound, China's pricing policy continues to push Chinese mills toward man-made fiber use.
USDA Sees 17.1 Million US Bales This Season
In its September crop report, USDA estimated a '12-13 US crop of 17.11 million bales, down 540,000 bales from the August report. Upland production was estimated at 16.45 million bales and extra-long staple (ELS) production at 657,000 bales. Harvested area was estimated at 10.44 million acres, implying a non-harvested area of 1.92 million acres based on planted acreage that was revised from USDA's June Acreage Report. The resulting abandonment rate is roughly 15.51%. The national average yield per harvested acre was estimated to be roughly 786 pounds, 31 pounds lower than the five-year average.
On a regional basis, the Southeast crop is estimated at 5.09 million bales, based on harvested acres of 2.73 million and a regional average yield of 895 pounds, 106 pounds more than the region's five-year average. In the Mid-South, expected production is 3.80 million bales. Harvested area is estimated to be 1.97 million acres, with an average yield of 928 pounds per harvested acre. The Southwest upland crop is estimated at 6.32 million bales. Expected harvested area is 5.13 million acres and the regional average yield is 591 pounds, 111 pounds less than their five-year average. Upland production in the West is an estimated 1.25 million bales with projected harvested area of 386,000 acres and a regional average yield of 1,554 pounds, 87 pounds more than the region's five-year average.
The ELS crop is an estimated 657,000 bales. Harvested area is pegged at 237,000 acres with an average yield of 1,328 pounds per harvested acre (see state-by-state estimates in table below).
Source: USDA-NASS September Crop Production Report.
1/ Updated from June Acreage Report.
US Cotton Export Projection Lowered
In its September report, USDA lowered its '12-13 US export projection by 300,000 bales from the August report to 11.80 million bales due to lower US production and lower world imports. USDA sees '12-13 US mill use unchanged from the August report at 3.40 million bales. This generates a total '12-13 offtake of 15.20 million bales. Ending stocks for '12-13 are projected at 5.30 million bales for an ending stocks-to-use ratio of 34.9%.
For the '11-12 crop year, US cotton production is set at 15.57 million bales. Estimated mill use and exports were unchanged from the August report at 3.30 million bales and 11.71 million bales, respectively. Total offtake for the '11-12 crop year is estimated at 15.01 million bales. Ending stocks were raised 50,000 bales to 3.35 million bales. The estimated stocks-to-use ratio for the '11-12 marketing year is 22.3%.
USDA's September report projects '12-13 world production to be 114.03 million bales, down 80,000 bales from last month. Mill use is projected at 107.55 million bales, down 610,000 bales from last month. With beginning stocks at 69.88 million bales, this would result in world ending stocks of 76.52 million bales on July 31, '13, and a stocks-to-use ratio of 71.1%.
World production for the '11-12 marketing year was estimated to be 124.16 million bales, up 1.49 million bales from last month. World mill use was lowered 1.10 million bales to 104.28 million bales. Consequently, world ending stocks are estimated to be 69.88 million bales with a stocks-to-use ratio of 67.0%.
Contamination Prevention Effort Reinforced
The NCC is urging ginners to help in an industrywide contamination prevention effort at their gins and by urging their farmers to increase their inspection for potential seed cotton contaminants.
In an email bulletin to more than 600 gins and ginner interest organizations, NCC President/CEO Mark Lange stated, "Even though U.S. cotton still is considered one of the least contaminated growths, the U.S. cotton industry must be diligent if it wants to maintain that status. I ask you to carefully review the procedures you have in place to detect and prevent contamination from entering baled cotton lint from all sources, particularly plastic contaminants. Of greatest concern, based on recent reports from multiple domestic spinners, are pieces of black plastic polyethylene film, red polypropylene twine, and yellow plastic film used to wrap round modules. While plastic contamination from any source and in any color should be of concern, these three types of contamination seem to be most prevalent in the 2011 crop."
The bulletin urges ginners to ask their farmers to: 1) inspect fields prior to harvest for foreign materials that could easily be picked up by harvesting equipment, 2) remove foreign materials such as twine, ditch liners, field mulch, shopping bags and related plastics from their fields before harvest, and 3) inspect harvest equipment daily for plastic contaminants.
"It is very important that you also alert your gin employees to be watchful for all foreign materials in and around the gin," Lange said. "If seen, have the materials collected and removed to prevent them from entering the ginning stream. Please train your employees working at the module feeder and suck pipe to make sure module covers and wraps are safely and completely removed prior to ginning. This includes the complete removal of materials used to secure covers to conventional modules."
The bulletin noted that when handling round modules, it is particularly important that John Deere's wrap removal recommendations be followed so that the wrap remains in one piece upon removal. If cut in the wrong location, a piece of the inner, non-adhesive wrap end may be separated from the rest of the wrap and remain within the seed cotton. Deere has produced several publications on the proper care of round modules, including: handling in the field, transporting to the gin and delivering them to the gin feeder. These written publications, along with a poster that includes a diagram showing the proper location for cutting module wrap, can be found on the NCC's website at www.cotton.org/tech/quality/round-module-handling.cfm.
More contamination prevention information is on the NCC Quality Preservation web page at www.cotton.org/tech/quality/index.cfm, including the recent NCC-authored "Striving for Zero Tolerance" column in Cotton Farming magazine's current issue.
In response to the bulletin, National Cotton Ginners' Assoc. President Lee Tiller said, "the U.S. cotton industry has made great strides in eliminating contamination and the U.S. has a reputation of having contamination free cotton. It is imperative that we continue educational efforts that ensure we maintain this distinction."
Dow Works Out Agreement With 2,4-D Opponents
Dow AgroSciences and the Save Our Crops Coalition (SOCC) have been discussing how to resolve SOCC concerns over the potential for herbicide injury to non-target plants with the commercialization of Dow's new 2,4-D tolerant crops (Enlist™).
SOCC, which represents farmers and other agribusiness interests, has been very vocal about its fears that biotech crops tolerant of old herbicides such as 2,4-D and dicamba, will result in spray drift that harms nearby fruit and vegetable crops. On April 26, SOCC filed comments with USDA's Animal and Plant Health Inspection Service (APHIS) expressing concern about the effect on non-target crops from approval of synthetic auxin herbicide-tolerant crops. SOCC also asked APHIS to complete a full Environmental Impact Statement.
Dow and SOCC released a joint statement which states, "Dow AgroSciences and SOCC are now very pleased to announce the successful conclusion of those discussions. Through these discussions, both Dow AgroSciences and SOCC have achieved a better understanding of each other's perspective and have agreed to modify positions each organization has taken with respect to pending regulatory matters."
Dow has agreed to request from EPA an amendment to its Federal Insecticide, Fungicide & Rodenticide Act label to include additional statements to reduce the potential for drift during application. Such label instructions are legally binding. SOCC stated that "commitments made by Dow represent substantial measures to mitigate potential non-target plant damage impacts from herbicide spray drift and volatilization associated with 2,4-D."
Dow has developed a formulation for its Enlist 2,4-D that is far less volatile than older formulations but SOCC had feared the farmers might use cheaper, generic 2,4-D products. To counter this fear, Dow has vowed to keep prices of its Enlist 2,4-D low to discourage such a practice.
Dow also agreed to assist in 1) the investigation, diagnosis and resolution of alleged non-target claims, and 2) educating growers and applicators in management practices and proper application to reduce off-target movement, especially in areas with sensitive crops.
In return, SOCC retracted its challenge to the product submitted to USDA. Further, they acknowledged the "impressive research findings"demonstrating the reduced drift and volatilization potential of its new herbicide solution for Enlist crops.
Sales Strong, Shipments Steady
Net export sales for the week ending Sept. 6 were 348,600 bales (480-lb). This brings total '12-13 sales to approximately 5.2 million bales. Total sales at the same point in the '11-12 marketing year were approximately 6.8 million bales. Total new crop ('13-14) sales are 172,900 bales.
Shipments for the week were 132,000 bales, bringing total exports to date to 889,600 bales, compared with the 662,800 bales at the comparable point in the '11-12 marketing year.
Effective Sept. 14-20, ’12
Adjusted World Price, SLM 11/16
64.53 cents
*
Fine Count Adjustment ('11 Crop)
0.99 cents
Fine Count Adjustment ('12 Crop)
1.19 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
13
Special Import Quota (480-lb bales)
811,923
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
84.78 cents
Forward 5 Lowest 3135 CFR Far East
NA
Coarse Count CFR Far East
NA
Current US CFR Far East
85.90 cents
Forward US CFR Far East
NA
'11-12 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-July)
88.32 cents
**
**Aug.-July average price used in determination of counter-cyclical payment
