Cotton's Week March 9, 2001

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Expanded Senate Support Sought for Budget Appeal

NCC and major commodity, livestock and general farm organizations asked members of Senate to join with Sens. Cochran (R-MS), Breaux (D-LA) and Hutchinson (R-AR) in letter to Senate Budget Committee chairman. Letter addresses continued financial stress in agriculture community and requests support in making adequate funds available for emergency economic assistance until conditions improve and Congress can enact new long-term policy.

Senators' letter cites rising input costs, sluggish demand and persistently low commodity prices as combining to depress farm income. Letter asks Budget Committee to provide sufficient funds for short-term assistance and for development of effective long-term farm policy.

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Tax Cut Legislation Heads for Senate

House approved $958 billion across-the-board income tax cut, sending plan on to Senate and uncertain future. Ten Democrats joined all Republican members in voting for HR 3, which is first installment of President Bush's $1.6 trillion tax cut plan. House rejected $585 billion Democratic alternative plan.

Provisions of HR 3 would, when fully implemented in '06, convert current tax brackets to four rates of 10%, 15%, 25% and 33%. Current 15% tax rate would be lowered to 12% retroactive to Jan. 1, '01; rate would go to 11% in '03 and 10% in '06. Higher rates would be reduced beginning in '02. Current 28% and 31% brackets would be phased into single 25% bracket by '06. Current 36% and 39.6% brackets would be reduced to 33% by '06. Bottom bracket would be indexed for inflation beginning in '07.

HR 3 also includes repeal of provisions that offset refundable child credit and earned income credit for purposes of applying Alternative Minimum Tax. Next legislation is expected to address Marriage Penalty relief, Estate Tax reform and Earned Income Tax Credit.

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Rep. Bonilla Will Chair
Ag Appropriations Subcommittee

Rep. Bonilla (R-TX) will chair Appropriations Committee's agriculture subcommittee following completion of committee membership and subcommittee assignments. Subcommittee includes Republican members Walsh (NY), Kingston (GA), Nethercutt (WA), Latham (IA), Emerson (MO), Goode (VA) and LaHood (IL) and Democrats Kaptur (OH), DeLauro (CT), Hinchey (NY), Farr (CA) and Boyd (FL).

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Zoellick Reviews Trade Issues
for Ways and Means

US Trade Representative Zoellick testified before House Ways and Means Committee to review Administration's views on wide-ranging trade topics. He called for prompt Congressional approval of trade promotion authority (formerly known as fast track). He acknowledged it may be necessary and reasonable to look at relationship between trade and environment and labor issues, but cautioned against one-size-fits-all solution.

During questions and answers covering range of issues, Zoellick indicated support for following through on number of trade agreements including Vietnam, Chile and Singapore. He noted there are textile issues that have to be solved with respect to Vietnam agreement. Zoellick expressed support for extension of Andean Trade Preferences Act when it expires in December and said there is "growing interest" in Free Trade Agreement with Australia.

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JCIBPC Action Addresses Bale Size, Ties, Strapping

Joint Cotton Industry Bale Packaging Committee (JCIBPC) approved several resolutions regarding bale size as well as packaging, ties and strapping in meeting in Memphis, TN.

To address concerns about increasing bale sizes, JCIBPC requested that current educational programs be updated to include recommendation that outside bulge to bulge (bale thickness) dimensions average no greater than 33 inches with outliers not to exceed 34 inches.

During meeting, chaired by Vice Chairman John Hill, Fort Mills, SC, manufacturer, committee also adopted position paper concerning recessed ties that 1) noted that non-recessed ties contribute to instances of exposed lint on bales; 2) stated that some gins may have difficulty in converting presses and urged those gins to attempt modification when it is safe and practical; and 3) urged that bales delivered under contractual requirement calling for Grade A bales not be rejected solely because ties are not recessed.

Committee adopted following plastic strapping performance language to be added to specifications as footnote to Section 1.2.3 Polyester (Polyethylene Terephthalate) Plastic Strapping for Use on Gin Standard and Gin Universal Density Bales: "While bales strapped with polyester (polyethylene terephthalate) plastic materials meet requirements for bale loan eligibility, users of polyester (polyethylene terephthalate) plastic materials should be advised that best performance is for use in gins where there are commitments of ginners to press bales in accordance with platen separation, lint distribution, tie length and moisture management recommendations as included in industry educational materials of the (JCIBPC) along with other quality assurance procedures as required by polyester (polyethylene terephthalate) plastic manufacturers. While any tying or strapping material may be damaged, polyester (polyethylene terephthalate) plastic materials are especially subject to damage due to multiple handling, re-concentration or certification, and may be subject to warehouse charges to restore bales to merchantable conditions."

JCIBPC granted experimental test programs for 10-gauge galvanized wire in 6-tie configuration. Tests involve automatically applying this configuration to bale with twist-knot and PET strapper heads applying PET plastic strapping with friction weld at bale crown.

Approval also was granted to PET plastic strapping applied by hot-blade, PE tri-ex film bag with metallocene catalyst and 9-gauge high tensile steel wire in 6-tie configuration. Approved products will be included in '01 Specifications for Cotton Bale Packaging Materials available in mid-summer.

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House, Senate Vote to Rescind Ergonomics Standard

In voting to reverse Occupational Safety and Health Administration's ergonomics standard, House and Senate employed for first time Congressional Review Act (passed unanimously in '96) to kill federal regulation. President is expected to sign measure.

Business groups have argued that regulation, strongly backed by organized labor and promulgated by Clinton Administration in November and made effective Jan. 16 so that new Administration could not review it, is too complex, overly burdensome, too costly and too generous in compensation to injured employees.

Labor Secretary Chao has indicated department intends to revisit issue and work toward creating workable ergonomics standard. Sen. Breaux (D-LA), who supported rescinding rule, indicates he intends to offer legislation to address issue fairly.

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Insecticides Reduced in Runoff from Bt Cotton

Runoff water from Mississippi fields planted with genetically enhanced cotton was virtually free of insecticides during 4-year Agricultural Research Service study.

To measure pesticide runoff, scientists planted Bt cotton near Beasley Lake in Sunflower County, one of 3 watersheds within ARS' Mississippi Delta Management Systems Evaluation Area project. Because Bt cotton produces its own insect-inhibiting toxin, less pyrethroid insecticide is needed to control budworm and bollworm infestations.

From '96 through '99, runoff samples were analyzed for insecticides from both Bt cotton and non-Bt cotton fields. They looked especially for pyrethroids and organophosphates because of their widespread use throughout 7,000-square-mile, cotton-producing area.

Fewer pyrethroid applications needed on Bt cotton sites reduced amount of pesticides released into environment. While runoff from non-Bt cotton sites contained very slight amounts of pyrethroid insecticides, runoff from Bt cotton sites had almost none at all.

Team found only insignificant amounts of organophosphate insecticides used to control boll weevils in runoff from either Bt or non-Bt cotton sites. Scientists concluded that there are no detrimental environmental effects from either pyrethroid or organophosphate insecticides in runoff from any of watershed sites sampled during study.

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Supreme Court Ruling Preserves EPA Standards

Supreme Court unanimously rejected claims that EPA must consider costs in setting national ambient air quality standards and ruled that Clean Air Act (CAA) does not unconstitutionally delegate authority to agency. Ruling preserves EPA's '97 standards for particulate matter (PM) and ground level ozone for time being.

In July '97, EPA amended these 2 rules, which impact cotton industry segments, making them more severe (PM2.5 standard was added to PM10 standard). In '97, appeals court invalidated standards, and in '00, EPA appealed to Supreme Court.

Supreme Court decision also remanded PM and ozone standards back to District of Columbia Court of Appeals to determine if EPA's reasoning was sound in setting these standards. Under CAA, according to Supreme Court, agency is required to set air standards at level that is "requisite"-neither higher nor lower than needed-to protect public health. DC appeals court can still overturn both standards, which will take at least one year to decide.Recently passed appropriations bill bars EPA from implementing new rules until June. EPA also is expected to finish required 5-year review of these standards by July '02, which could result in further changes.

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FCA Proposal Gets House Ag Committee Review

House Agriculture Committee reviewed proposal by Farm Credit Administration (FCA) to make national charters available to Farm Credit System (FCS) member lender associations. Committee Chairman Combest (R-TX) cautioned FCA representatives that "...Ag Committee expects FCA to exercise its authority to make certain that system institutions always operate in a safe and sound manner."

FCA's proposal would broaden current system allowing member lenders to function on national basis. Critics say this would allow FCS members to expand into credit cards, auto loans and other consumer services. Since FCS members have unique relationship with federal government, member banks generally have lower-cost access to capital market. FCS is network of borrower-owned lending institutions serving all 50 states and Puerto Rico. Institutions primarily provide credit to farmers and ranchers.

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US, World Mill Use Lowered

In its March report, USDA lowered '00-01 US mill use 200,000 bales to 9.5 million, while export estimate was reduced 100,000 bales to 6.9 million. These changes result in 300,000-bale reduction in total offtake to 16.4 million. With total supply maintained at 21.2 million bales, US ending stocks were raised 300,000 bales to 4.8 million, for ending stocks-to-use ratio of 29.3%, which would be highest since '92 marketing year.

USDA lowered world mill use estimate 260,000 bales to 91.84 million, largely due to decrease in expected US mill use. World production was raised 100,000 bales to 88.16 million due to increase in expected Australian production. Estimate of world ending stocks for '00-01 was raised 400,000 bales to 37.67 million, for corresponding ending stocks-to-use ratio of 41.0%.

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Export Sales Almost 108,000 Bales for Latest Week

Net export sales for week ending March 1 were slightly under 108,000 bales (480-lb.), raising total '00-01 sales to about 6.17 million, down from 6.69 million at this point in '99-00 marketing year. Shipments for week were about 190,000 bales, bringing total exports to date to 3.31 million.

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Effective Mar. 9-15, '01

Adj. World Price, SLM 11/16........43.46 cents*
Coarse Count Adjustment............0.00 cents
Current Step 2 Certificate Value...3.74 cents
Marketing Loan Gain Value..........8.46 cents
*No Adjustment Made Under Step I

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Five-Day Average

Current 3135 c.i.f. N. Eur........57.31 cents
Forward 3135 c.i.f. N. Eur...........No Quote
Coarse Count c.i.f. N. Eur........54.12 cents
Current US c.i.f. N. Eur..........62.30 cents
Forward US c.i.f. N. Eur.............No Quote

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