Cotton's Week: October 15, 2004

Cotton's Week: October 15, 2004

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President Signs Disaster Assistance Package

President Bush signed a $14.5 billion dollar disaster assistance package for this year’s hurricane victims. The crop loss disaster portion of the package provides financial assistance to producers on a farm incurring qualifying crop or quality losses (other than producers of sugarcane) due to damaging weather or related conditions for either the ’03, ’04 or ’05 crop (’05 losses must be a direct result of the ’04 hurricane season). Program benefits will not be prorated. 

USDA will administer this program in the same fashion as the ’01 agriculture disaster package. Farmers will be compensated if their losses exceed 35% of historic yields. Farmers with eligible losses of insured crops will be compensated at 65% of crop insurance market price elections; farmers with eligible losses to uninsured crops (for which crop insurance is available) will be compensated at 60% of the crop insurance market price elections and must agree to purchase crop insurance for the next 2 crop years. Benefits are limited to $80,000 per person, and those with adjusted gross incomes of greater than $2.5 million in ’03 are not eligible. The bill also limits financial assistance to no greater than 95% of what the crop’s value would have been in the disaster’s absence. 

The package’s estimated cost was offset by capping the Conservation Security Program. NCC joined 23 other commodity and farm organizations in urging Congress not to modify the farm law in order to generate spending offsets. The groups reiterated their longstanding concerns that modifications to the law would jeopardize the fragile coalition that worked for its enactment. Following House approval of the coverage with the offset, the groups urged the Conferees to retain the disaster assistance funding, but to eliminate the offset - noting that the agriculture assistance was the only provision that included an offset.

In addition to other specific agricultural assistance, the bill provides $10 million in assistance to producers and first handlers of the ’04 crop of cottonseed located in counties receiving a Presidential disaster declaration in ’04 due to hurricanes. These funds were designated as emergency spending. NCC will continue to work with USDA and affected producers as the regulations for this assistance are created by that agency.

A summary of the disaster assistance package can be viewed on the House Agriculture Committee's web site at:
http://agriculture.house.gov/info/AgDisasterAsst%2010-04.pdf (30K PDF).





Market Disruption Relief Sought Through Safeguard Petitions

The National Council of Textile Organizations, with the support of 5 other US textile, apparel and fiber producing trade organizations, has filed threat-based China textile safeguard petitions on a number of product categories.

The first petitions, filed with the Committee on Implementation of Textile Agreements (CITA), covered cotton trousers, cotton knit shirts and blouses, man-made fiber knit shirts, man-made fiber trousers, and man-made fiber and cotton shirts. Department of Commerce Under Secretary Grant Aldonas said that CITA, an interagency group chaired by the Commerce Department, can consider petitions based on threat without altering any established procedures. The coalition announced more petitions covering additional categories were expected to be filed in the coming days.

The petitions are being filed to gain protection from what US textile and apparel interests consider to be a clear threat of market disruption Chinese imports once all remaining quotas are removed on Jan. 1, '05. The relief sought is authorized by the World Trade Organization accession agreement. Signed by China in ’01, the agreement contemplates safeguard action for the US and other countries based on the threat of disruption of orderly market development by Chinese imports.

“The U.S. textile and apparel manufacturers have been assured a fair hearing in the administrative process considering the petitions,” NCC Chairman Woody Anderson said.

The coalition also confirmed that petitions would be filed to request extension of the safeguards originally placed by the US government in December ’03 on the following categories: 1) cotton and man-made fiber dressing gowns and robes; 2) cotton and man-made fiber brassieres, and 3) knit fabric.

“The categories for which petitions have been filed and those expected in the near future are vitally important to maintaining a minimum critical mass for continued textile and apparel manufacturing in the U.S.,” said NCC Vice President G. Stephen Felker, a Georgia textile manufacturer. “The experience of the U.S. sector since 2002 when selected categories of textile and apparel products had quotas eliminated demonstrates the tremendous potential for surges in imports from China.”

NCC President/CEO Mark Lange said the safeguard actions previously taken by the administration were “a response to observed import behavior.” He noted that the United States currently manufactures about 45 million dozen cotton trousers annually but imports 63 million dozen from NAFTA and the CBI, mostly made with US components. China’s quota-restrained exports of cotton trousers to the US market are at a current level of 2.8 million dozen, but based on the experience in ’02, this total is expected to jump to 19.6 million dozen in the absence of safeguard action.

“This will come at the direct expense of U.S. manufacturers and hemispheric partners using U.S. components,” Lange said. “There is no need to wait for economic damage of this magnitude to occur. The agreement permits action based on the threat of market disruption.”





FSA to Conduct CCR Seminar

Merchants interested in learning how to use the USDA Farm Service Agency (FSA) Central Cotton Redemption (CCR) system should participate in a seminar in Memphis at the Shelby County Extension Service office, 5565 Shelby Oaks Dr., on Oct. 25 at 1 pm.

The CCR system is an optional electronic method for merchants to redeem upland cotton from loans disbursed by FSA county offices. This process provides the capability of redeeming bales selected from multiple loans in multiple counties in a single electronic transaction. Payment to the Commodity Credit Corp. (CCC) is made in a single wire transfer of funds based on a CCC electronic invoice for all bales selected by the merchant for redemption.

During the seminar, USDA-FSA staff will demonstrate how to use the CCR system and how to apply to participate. There is no advance registration to attend.





USDA Projects Record US Cotton Crop

USDA projected the US ’04-05 crop to reach 21.54 million bales, up 640,000 bales from the September report. Upland production was estimated at 20.83 million bales and ELS production at 715,000 bales. Harvested area was estimated at 13.22 million acres; implying non-harvested area of 540,000 acres based on USDA’s revised June acreage report. The resulting abandonment rate is roughly 4%. The national average yield per harvested acre was estimated to be 782 pounds, 115 pounds above the 5-year average.

US mill use was unchanged at 6.10 million bales and exports increased 100,000 bales to 12.30 million resulting in total offtake for ’04-05 of 18.40 million. Ending stocks for ’04-05 are projected to be 6.70 million bales for an ending stocks-to-use ratio of 36.4%.

By region, the Southeast crop is estimated at 4.24 million bales. In the Mid-South expected production is 6.37 million bales while the Southwest upland crop is an estimated 7.69 million bales. Upland production in the West is an estimated 2.53 million bales. The ELS crop is an estimated 715,000 bales.

U.S. Cotton Crop, 2004-05

 

PLANTED
ACRES
Thou.

HARV.
ACRES
Thou.

YIELD PER
HARV.
ACRE
Lb.

5-YEAR
AVG.
Y
IELD
Lb.

480-Lb.
BALES
Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

2,962  

2,907 

700  

626 

4,241  

   Alabama

550  

535 

673  

608 

750  

   Florida*

90  

88 

480  

532 

88  

   Georgia

1,290  

1,260 

667  

647 

1,750  

   North Carolina

730  

725 

781  

628 

1,180  

   South Carolina

220  

218 

731  

560 

332  

   Virginia

82  

81 

836  

692 

141  

MID-SOUTH

3,470  

3,425 

893  

748 

6,370  

   Arkansas

930  

920 

976  

809 

1,870  

   Louisiana

500  

490 

764  

699 

780  

   Mississippi

1,100  

1,090 

925  

754 

2,100  

   Missouri

390  

385 

860  

753 

690  

   Tennessee

550  

540 

827  

683 

930  

SOUTHWEST

6,210  

5,781 

639  

482 

7,694  

   Kansas*

100  

86 

737  

465 

132  

   Oklahoma

210  

195 

645  

532 

262  

   Texas

5,900  

5,500 

637  

480 

7,300  

WEST

866  

857 

1,414  

1,295 

2,525  

   Arizona

238  

236 

1,322  

1,277 

650  

   California

560  

557 

1,508  

1,352 

1,750  

   New Mexico

68  

64 

938  

785 

125  

TOTAL UPLAND

13,508  

12,970 

771  

657 

20,830  

TOTAL ELS

255  

253 

1,357  

1,206 

715  

   Arizona

3  

960  

894 

6  

   California

220  

219 

1,414  

1,255 

645  

   New Mexico

11  

11 

916  

893 

21  

   Texas

21  

20 

1,032  

928 

43  

ALL COTTON

13,763  

13,223 

782  

667 

21,545  

Source: USDA-NASS October Crop Production Report.

 

*NCC estimates for harvested acres and yield per harvested acre based on August Crop Production Report.







Sales, Shipments Steady

Net export sales for the week ending Oct. 7, ’04 were 110,400 bales (480-lb.), resulting in total ’04-05 sales of almost 6.1 million. Total sales at the same point in the ’03-04 marketing year were about 4.2 million bales. Total new crop (’05-06) sales are 173,900 bales.

Shipments for the week were 95,300 bales, bringing total exports to date to 1.3 million bales, below the 1.5 million at the comparable point in the ’03-04 marketing year.





World Cotton Production Estimate Raised

For the ’04-05 marketing year, USDA projected world production of 109.67 million bales, up 2.42 million bales from the September report. World mill use was raised 550,000 bales from the September report to a projected 101.40 million bales. Consequently, world ending stocks for ’04-05 are projected to be 41.95 million bales, for a stocks-to-use ratio of 41.4%.

USDA’s October report also raised ’03-04 world production estimates 180,000 bales to 94.51 million bales. The beginning stocks estimate increased 130,000 to 36.74 million bales resulting in a world supply of 131.25 million. Estimated world mill use also increased 60,000 bales to 98.91 million. The projected world ending stocks on July 31, ’04 is now pegged at 33.48 million bales. This has a corresponding stocks-to-use ratio of 33.8%.





NASS Releases ‘03 Cotton MYA Price

USDA’s National Agricultural Statistics Service (NASS) announced that the Marketing Year Average (MYA) price for ‘03 upland cotton is 61.8 cents per pound. Under the current farm bill, the MYA price is used in the determination of the counter-cyclical payment (CCP). With a target price of 72.4 cents and a direct payment of 6.67 cents, the MYA price implies a total CCP rate of 3.93 cents. In October ’03, USDA issued an advance payment of 2.01 cents. For producers who took the advance payment, the final CCP installment will be 1.92 cents.

At press time, USDA had not issued a release confirming these payment rates. However, an announcement concerning the final ’03 CCP is expected any day. In addition, USDA will be announcing the advance CCP rate for ’04 cotton. In a letter to the Secretary, NCC has requested that the advance payment rate be set at the maximum of 4.81 cents.


Let Your Voice Be Heard: Vote!

Prices Effective October 15-21, 2004

Adjusted World Price, SLM 1 1/16

37.69 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

0.00 cents

Marketing Loan Gain Value

14.31 cents

Import Quotas Open

 3

Step 3 Quotas (480-lb. bales)

 356,008

ELS Payment Rate

29.08 cents

*No Adjustment Made Under Step I
 
Five-Day Average
 
Current 3135 c.i.f. Northern Europe

52.75 cents

Forward 3135 c.i.f. Northern Europe

 No quote

Coarse Count c.i.f. Northern Europe

50.10 cents

Current US c.i.f. Northern Europe

52.85 cents

Forward US c.i.f. Northern Europe

 No quote

 
2003-04 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-July)

61.80 cents

**

**August-July average price used in determination of counter-cyclical payment. Final MYA Farm Price scheduled to be released later this month.



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