Cotton's Week April 27, '01

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Trade Policy Must Ensure US Cotton's
Competitiveness Worldwide

Citing increased competition both domestically and internationally, NCC Chairman James Echols told Senate committee that US trade policy must ensure cotton is competitive, it must open markets for both raw cotton and US-produced cotton textiles and it should work to ensure that terms of competition are fair.

In testimony before Senate Committee on Agriculture, Nutrition and Forestry regarding agricultural trade title in any new farm bill, Echols stated that cotton's marketing loan and 3-step competitiveness provisions form "cornerstone" of effective US cotton program and are central to US cotton's long-term competitiveness.

Cordova, TN, merchant told committee that industry is dealing with dual pressures of stiff international competition and strong dollar and urged Congress not to abandon effective US export programs. He cited cotton concerns with international negotiations concerning export credit guarantee program (GSM-102), which Echols called "a mainstay of US agricultural export assistance activities." He said most recent proposals would undermine GSM-102 program "while providing no corresponding reductions in subsidy programs operated by our competitors." Echols said proposal in Organization for Economic Cooperation and Development would "place the United States at a disadvantage entering another round of multilateral agricultural trade negotiations. Instead of moving to cripple this important program, we should be attempting to improve its effectiveness."

Echols also urged additional support for market promotion programs such as Market Access Program (MAP) and Foreign Market Development Program (FMD), encouraging committee to provide funding for FMD program of $35 million per year and to restore overall support for MAP program to '92 level of $200 million.

He called on Congress to 1) maintain cotton's competitiveness provisions included in US farm law; 2) ensure that existing regional trade agreements, such as CBI parity, are effectively implemented; 3) maintain effective export assistance programs; 4) ensure US/China trade agreement is not detrimentally changed and monitor China's compliance; 5) ensure that new trade agreements are favorable to US cotton; and 6) work for new WTO agreement that improves competitive position of US cotton.

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USDA Begins '00 Cottonseed Assistance Implementation

"Cottonseed Payment Application and Certification" forms (CCC Cotton A-6) were mailed to all US gins that operated during '00 season, beginning implementation of $100 million cottonseed assistance program. Eligible gins that complete and return form by May 18 deadline should receive payment of approximately $15.53 /ton of cottonseed resulting from '00 crop ginnings.

Ginners are advised to review carefully application's instructions and terms. Application requests verification of individual gin's 5-digit code number and number of running bales processed during '00 crop year, according to USDA-AMS records as of April 13, '01. Total lint pounds must be provided by gin which USDA will use to calculate tons of cottonseed based on lint-to-seed formula. Gin's bank account direct deposit information also is required.

Because forms from all eligible gins must be returned before payments are made, gins are encouraged to contact USDA (202-720-8481) or NCC (901-274-9030) if forms are not received by April 30.

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Secretary Veneman Reviews
First 100 Days with Ag Leaders

Agriculture Secretary Veneman reviewed key issues confronting USDA and actions taken on several fronts with US ag commodity and farm leaders during first 100 days of Administration. During conference call, Secretary stressed actions taken by USDA to keep foot and mouth disease from US as part of overall food safety initiative.

Secretary reiterated USDA's commitment to supporting agricultural production to enhance quality of life for rural Americans. She also discussed actions taken to open export markets, complete distribution of '00 crop disaster assistance and continue improvement of risk management programs.

In response to question by NCC President and CEO Gaylon Booker concerning current financial crisis and USDA recommendations, Secretary Veneman acknowledged that President's budget did not identify specific level of funding for emergency relief. She said it is too early for USDA to determine required level of assistance. However, she said, Administration is concerned about low commodity prices and rising input costs and will support emergency relief once magnitude of problem is known.

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House, Senate Conferees Begin
to Shape Final Budget Resolution

Following meetings with President, Republican leaders acknowledged that 10-year tax cut level in final version of budget resolution will be less than $1.6 trillion proposed by President and included in House resolution.

Conferees will also have to resolve differences between House measure that authorizes increase in discretionary spending of 4% and Senate version that provides 8% increase. One possible solution would be to provide for 4% to 6% growth and approve FY01 supplemental spending measure to increase spending for agriculture and defense. This would allow budget resolution to hold annual spending levels in range proposed by President and still address short-term needs.

NCC Chairman James Echols sent letter to each budget resolution conferee, urging provision of at least $9 billion for '01 crop emergency economic assistance and additional $12 billion per year for subsequent years to enable Agriculture committees to develop enhanced and improved long-term farm policy. Conferees are expected to complete work week of April 30.

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USDA Budget Reviewed
for Appropriations Subcommittees

Secretary Veneman reviewed USDA budget proposal during appearances before Senate and House Agriculture Appropriations subcommittees.

Senate subcommittee chairman Cochran (R-MS) urged Secretary "to monitor closely the problems being faced by producers of food and agriculture commodities and to request full funding for assistance that may be needed to deal with emergency needs of our nation's farmers." He noted Congress provided funding for disaster assistance to be made to producers who suffered losses due to drought and other weather-related conditions.

Sen. Cochran also expressed concern about some delays in distributing funds and urged Secretary to provide information if Congress needs to address additional problems associated with last year's disaster losses.

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NCGA Proposes Income Targets,
Counter-Cyclical Payments

Recommendations presented by National Corn Growers Assn. in House Agriculture Committee hearing on farm policy would establish national income targets for each commodity and trigger counter-cyclical payments when projected income for crop falls short of target

Projected income would be calculated using USDA production estimates and average price for first 3 months of marketing year. Payments would be decoupled and would be made to producers based on farm's average crop production during period of '96-00. Production would be adjusted for major crop losses during this base period.

Proposed program also assumes Agriculture Market Transition Act payments would be continued at '02 rate and would continue to be paid on base established for '96 farm bill. Current market loan program would be replaced with 9-month recourse loan. Loan rate would be established at level so that collateral is sufficient to cover principal.

Hearings continue week of April 30, with testimony to be presented by National Farmers Union.

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March Mill Use Estimated at 8.8 Million Bales

Commerce Department estimate of cotton used by domestic textile mills in March (5-week month) was 419.52 million pounds for seasonally adjusted annualized rate of 8.8 million bales (480 lbs.). Consumption is down significantly from last year's March annualized rate of 10.19 million bales.

February (4-week month) estimate of domestic mill use was revised to 326.6 million pounds, approximately 430,000 pounds below previous estimate of 327.05 million. Seasonally adjusted annualized rate of consumption for February was 8.66 million bales, 1.46 million bales below last February's estimate of 10.12 million bales.

Preliminary April domestic mill use of cotton and revised March figures will be released by Commerce May 24.

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Rising Energy Costs Topic of Hearing

Hearing to review escalating energy costs incurred by farmers and processors was held by House Subcommittee on Conservation, Credit, Rural Development and Research. Chairman Lucas (R-OK) expressed concern that higher energy costs are putting squeeze on farmers "who are already cash-strapped because of low commodity prices." Agriculture representatives as well as energy suppliers, energy producers and utility representatives presented testimony. Second hearing is scheduled for May 2.

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Johnson Nominated to Lead
Pesticides and Toxic Substances Office

President Bush nominated Stephen L. Johnson to be EPA Assistant Administrator for Prevention, Pesticides and Toxic Substances. Johnson has served in acting capacity since January and has extensive experience in variety of EPA positions, including distinguished service as deputy director of Office of Pesticide Programs from '97-99.

As assistant administrator, Johnson will oversee EPA's activities in registration of crop protection products and biotech products. Prior to joining EPA, Johnson worked at Hazelton Laboratories and Litton Biometrics.

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Cotton Sales Lower than Previous Week

Net export sales for week ending April 19 were 41,055 bales (480 lb.), approximately 76% lower than previous week's sales, raising total '00-01 sales to almost 7.4 million. Total sales at same point in '99-00 marketing year were about 7.2 million bales. Shipments for week were nearly 124,000 bales, bringing total exports to date to almost 4.4 million bales.

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Effective April 27-May 03, '01

Adjusted World Price, SLM 1 1/16           37.82 cents*
Coarse Count Adjustment                     0.00 cents
Current Step 2 Certificate Value            1.52 cents
Marketing Loan Gain Value                  14.10 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe        51.46 cents
Forward 3135 c.i.f. Northern Europe        52.13 cents
Coarse Count c.i.f. Northern Europe        49.16 cents
Current US c.i.f. Northern Europe          53.90 cents
Forward US c.i.f. Northern Europe          56.95 cents

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