Cotton's Week April 13, '01

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USDA's Budget Doesn't Earmark Emergency Funds

No specific amount of money should be identified at this time for emergency assistance for farmers this year, Ag Secretary Veneman said in review of Administration's budget proposal for agriculture. Instead, Congress should take "contingency fund" approach to help agriculture producers in times of need, she said.

President Bush, in his fiscal '02 budget proposal, said "farm conditions are improving" in US but also that farmers continue to suffer "low commodity prices and higher input costs due to increasing energy costs." Nevertheless, Veneman said, it is still too early to decide if or how much emergency aid for farmers should be made available this year. "At this point, people are just now planting; it's difficult to tell what kind of emergencies may arise throughout the course of the summer.

"There was no money set aside separately in the president's budget this year. Rather, the president had this nearly $1 trillion reserve and during his address to Congress he specifically indicated that that reserve would be available for additional spending on things like defense, agriculture and other areas," said Veneman. (Members only section of NCC web site has full update on budget status.)

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April USDA Report Raises Ending Stocks to 5 Million Bales

US cotton ending stocks are projected by USDA at 5.0 million bales (480 lb.) in '00-01, up from March forecast of 4.80 million bales and well above 3.9 million bales for '99-00, in monthly World Agricultural Supply and Demand report.

US production was put at 17.2 million bales for '00-01, unchanged from previous month's forecast but above 16.9 million bales for '99-00.

Total supply is estimated at 21.1 million bales in '00-01, unchanged from prior month's forecast and slightly higher than 21.0 million in '99-00.

US exports are projected at 6.9 million bales in '00-01, unchanged from March forecast. Previous year's exports totaled 6.7 million bales.

Domestic mill use is forecast at 9.3 million bales in '00-01, down from 9.5 million bales forecast in March and well below 10.24 million for '99-00.

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Harkin, Baucus Urge Rejection of Export
Credit Guarantee Proposal

Sens. Harkin (D-IA) and ranking member of Senate Agriculture Committee and Baucus (D-MT) called on Agriculture Secretary Veneman and Treasury Secretary O'Neill to reject international proposal on export credit guarantee program. Negotiations are being conducted in Organization for Economic Cooperation and Development (OECD) on export credit guarantee programs.

US is under pressure in OECD to agree to terms that cotton industry believes would render GSM-102 program ineffective for US cotton exports. Sen. Harkin stated, "The proposed changes to the GSM export credit guarantee programs would have substantial long-term consequences for our nation's agricultural exports and very significant ramifications for future agricultural trade negotiations. The US cannot afford to accept this proposal and should instead work for a better deal, and obtain adequate concessions before changing our programs."

Concerns echo position of NCC and Co-Bank, Denver-based bank for cooperatives that is largest user of GSM-102 program.

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NCC: Bilateral Textile Agreement
Should Precede NTR for Vietnam

NCC called on US officials to negotiate bilateral textile agreement with Vietnam before US grants normal trade relations (NTR) status to country. In letter to US Trade Representative Zoellick, NCC Chairman James Echols stated that Vietnam would be highly competitive in US textile market and could negatively affect domestic mill use of cotton, already projected at 9-year low for `01.

Letter stated that bilateral textile agreement with Vietnam should provide for appropriate safeguards and reciprocal levels of market access (at comparable duty rates) for textile products. Letter warned that without bilateral textile agreement in advance of granting NTR status, US textile industry, and entire US cotton complex, would likely be faced with significant and immediate surge in imports that will further deteriorate profitability.

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Biotech Advisory Committee Meeting Scheduled

USDA announced that 4th meeting of Advisory Committee on Agricultural Biotechnology (ACAB) and first in new Bush Administration is scheduled for April 17-18. Jimmy Dodson, Texas producer and chairman of NCC Environmental Task Force, is member of committee.

Topics to be discussed will include: (1) role and activities of USDA's public plant breeding program; (2) gene flow from transgenic crops to other plants and current and potential USDA roles in addressing issues presented; and (3) developing framework for discussion of biotechnology budget priorities. There will also be several updates on current biotechnology developments, including StarLink corn situation, and ongoing USDA biotechnology related activities.

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Cotton Dust Standard Amendment Approved

Effective April 6, textile manufacturers that use batch washed cotton will be exempt from all provisions of OSHA cotton dust standard except for some medical surveillance provisions. Washing raw cotton before it is spun and woven eliminates risk of respiratory disease for workers exposed to cotton dust.

Occupational Safety and Health Administration (OSHA) published direct final rule last December, reflecting this amendment and announced that changes would be effective April 6 if no adverse comments were received in comment period. No comments were received. Industry and labor supported amendment, which adds another acceptable method for washing cotton to standard. Continuous flow system, processes that produce medical cotton and normal dyeing, scouring, bleaching and mercerization are already acceptable as washed cotton treatments.

This was OSHA's first use of direct final rule process, which can be used for non-controversial standards. Amendments follow recommendations of Task Force for Byssinosis Prevention, which includes OSHA, National Institute for Occupational Safety and Health, USDA, NCC, American Textile Manufacturers Institute and Union of Needletrades, Industrial and Textile Employees.

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Imports Not Affected by Thailand Ban
on Planting of Biotech Crops

Thai government announced ban on all current field trials for ag biotechnology research. Resolution was announced in response to demands by Assembly of the Poor (AOP), local farmers group, Greenpeace and Thai non-governmental organization GreenNet.

There were initial press reports that Thai government had issued ban on imports of biotech enhanced (BE) corn, soybeans and cotton, but it has been determined that this report was erroneous and imports will continue. However, current ban on import of BE planting seed remains in effect.

Currently, there are no field trials being conducted in Thailand using BE material, while few requests have been made for laboratory tests. Latest Bt cotton field trials were completed in January. Since then, no further approval has been granted for field trials of any BE crops, despite request from American seed company for field testing of BE corn variety.

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Federated Fined for Children's Sleepwear
Flammability Standard Violations

Consumer Product Safety Commission (CPSC) announced that Federated Department Stores, Inc., of Cincinnati, OH, has agreed to pay $850,000 civil penalty to settle CPSC charges that it knowingly sold flammable/non-complying cotton garments as children's sleepwear.

"This is the largest fine in CPSC's history against a retailer for violating a federal law," said CPSC Chairman Ann Brown. Federated, which denies CPSC's charges, includes Bloomingdale's, Macy's, Lazarus, Stern's, Rich's, Burdines, Goldsmith's and The Bon Marche.

CPSC charged that garments sold by Federated did not meet federal safety standards, putting children at risk of serious burns. Charge also stated that on numerous occasions, from September `99 through January `00, Federated sold, offered for sale or imported about 600,000 loose-fitting, untreated, 100% cotton garments that were marketed, promoted or designed as children's sleepwear or robes. Garments were sold on racks in children's sleepwear departments/sections with or next to garments specifically labeled as sleepwear.

Federated intends to change method of selling children's sleepwear by implementing innovative program that includes: 1) denoting all children's sleepwear on sales floor so that it is clearly and easily distinguished from playwear and underwear and 2) implementing comprehensive children's sleepwear training program for Federated employees.

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Final Solvent Extraction Standard
for Vegetable Oil Production Published

EPA promulgated national emission standard (66 FR 19006) for hazardous air pollutants (NESHAP) for solvent extraction for vegetable oil production. This final rule requires all existing and new solvent extraction facilities using n-hexane, like cottonseed oil mills, that are major sources to meet emission standards reflecting application of maximum achievable control technology (MACT). Final MACT rule limits number of gallons of solvent loss per ton of seed processed and is 12-month rolling average.

There are standards for 2 sizes of cottonseed oil extraction mills: 1) 0.5 gal/ton for oil mill that processes 120,000 tons or more/year of cottonseed and other listed seeds; and 2) 0.7 gal/ton for oil mill that processes less than 120,000 tons of cottonseed and other listed seeds/year. Effective date of standard is April 12, and facility has 3 years from that date to comply. First reporting date would be after 12 months of data are obtained after compliance date (April 12, `05 at earliest).

Joint effort of NCC and National Cottonseed Products Assn. (NCPA) in this rulemaking led to these standards for cottonseed that should be achievable by compliance date. Without joint effort, there would have been one standard for cottonseed at level that many cottonseed oil mills likely could not meet.

In related development, EPA proposed (66 FR 16317) extensive changes to "General Provisions" (40 CFR part 63, subpart A) for MACT standards. Final Vegetable Oil MACT Rule for solvent extraction facilities extensively cross references current version of part 63. NCC and NCPA are part of coalition developing comments to EPA on how agency should "tailor" proposed revisions to suit needs of Vegetable Oil MACT.

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Biotech Industry Offers Legislation to Boost Biomass Fuels

Biotech industry is drafting legislation to respond to nation's energy crisis that could offer a boost to development of biotechnology enhanced crops and enzymes. Legislation would encourage increased burning of agricultural and forestry wastes for electricity generation using enzymes to convert wastes into high-energy biomass fuels.

Bill is being drafted by Biotechnology Industry Organization (BIO) and should be completed in about 6 weeks. Among other things, legislative plan would create and fund biotech research centers at universities across US to develop crops with higher sugar and starch content as well as cheaper, more efficient enzymes to break ag wastes into fuel.

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Cotton Sales Improve

Net export sales for week ending April 5 were 183,540 bales (480-lb.), almost 65% higher than previous week's sales, raising total `00-01 sales to almost 7.2 million bales. Total sales at same point in `99-00 marketing year were 7.04 million bales. Shipments for week were almost 173,000 bales, bringing total exports to date to almost 4.2 million bales.

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Effective April 13-19, '01

Adjusted World Price, SLM 1 1/16 .....      37.66 cents*
Coarse Count Adjustment .................... 0.00 cents
Current Step 2 Certificate Value ..........  1.50 cents
Marketing Loan Gain Value ...............   14.26 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe ........51.30 cents
Forward 3135 c.i.f. Northern Europe ....... 52.29 cents
Coarse Count c.i.f. Northern Europe ....... 48.95 cents
Current US c.i.f. Northern Europe ..........54.05 cents
Forward US c.i.f. Northern Europe ..........57.90 cents

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