Cotton's Week: October 22, 2004

Cotton's Week: October 22, 2004

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Final ’03 and Advance ’04 CCP Payments Announced

USDA announced the final ’03 crop year Counter-Cyclical Program (CCP) payments for eligible commodities. The ’03 crop year final CCP rate for upland cotton is 3.93 cents/lb and final payment rates for other commodities are: $73.00 per short ton for peanuts and zero for wheat, corn, sorghum, barley, oats, soybeans and other oilseeds. The final payment rate for rice will be based on the market year average price reported by USDA’S National Agricultural Statistics Service, scheduled for release on Jan. 31, ’05.

Ag Secretary Ann Veneman also announced the availability of first partial ‘04 crop year CCP payments for wheat, corn, sorghum, barley, oats, soybeans, cotton, rice and peanuts. The ’04 crop year projected annual payment rates and the first partial payment rates, equal to 35% of the total amount, are:

 

Total
Projected
Rate

First
Partial
Rate

(‘04 Crop Year)

Commodity

Unit

--dollars per unit--

Cotton

pound

0.1373

0.0481

Wheat

bushel

0.10

0.0350

Corn

bushel

0.40

0.1400

Sorghum

bushel

0.27

0.0945

Barley

bushel

0.15

0.0525

Oats

bushel

0.016

0.0056

Soybeans

bushel

0.26

0.0910

Rice

cwt

0.90

0.3150

Peanuts

short ton

73.00

25.55



Appeal Filed in US-Brazil Dispute

The United States filed its notice of appeal in the US-Brazil cotton dispute, targeting virtually every aspect of the decision in which the original Panel found for Brazil. The US appeal focuses on the original Panel's conclusions that: 1) production flexibility payments are not properly classified as "green box" by the United States; 2) the US cotton program had violated the "peace clause"; 3) the US cotton program caused "serious prejudice" to Brazil; 4) that the US export credit guarantee program was a prohibited subsidy; and 5) that cotton's step 2 program was a prohibited subsidy.

The filing of the notice of appeal triggered an aggressive timetable for the appeal process. The United States will file all applicable papers within 10 days and all papers from all parties, including responses, will be filed prior to Thanksgiving. An oral hearing is expected in Geneva in early December with a final decision expected early in ’05. NCC Chairman Woody Anderson said, "the 14 point appeal served formal notice that the United States has serious disagreements with the original Panel's conclusions and would defend all aspects of the US cotton program.

The National Cotton Council will continue to work with the US government in defending this case."



Congress Renews Chapter 12 Status for Farmers

Before the campaign season recess, Congress agreed to extend the special federal bankruptcy protections for farmers through next spring. President Bush is expected to sign the bill. Chapter 12 of the Federal Bankruptcy Code, which allows family farmers to restructure their debts without losing their land, expired in January but had been held up by efforts to use an extension as a vehicle for the broader bankruptcy overhaul. The bill extends Chapter 12’s protections through June ’05 — and makes it retroactive to Jan. 1, ’04.  

In recent years, the Chapter 12 protections have been renewed on a 6-month basis, until Congress can pass a broader bankruptcy overhaul. A significant overhaul has been delayed for years as lawmakers have struggled to balance the needs of individuals who legitimately need help recovering from financial distress against efforts to prevent abuse of bankruptcy laws by people who could make good on their debts. The Chapter 12 renewal passage signals that the broader overhaul has died for a 4th consecutive Congress.



FSC/ETI Bill Signed Into Law

President Bush signed legislation to repeal the US export tax regime and replace it with broad-based tax relief. The current tax, known as FSC/ETI, twice has been ruled illegal by the WTO. The Conference Report of the bill was passed by both the House and Senate by a strong, bipartisan majority.

In addition to providing broad-based tax reductions for domestic manufacturers, the legislation became a vehicle for numerous other select provisions including: elimination of federal tobacco-quotas and in their place a $10.14 billion compensation package for quota owners and tobacco growers; tax credits for production of alcohol and bio-diesel fuels, as well as for energy generated from renewable resources; expansion of the current rule allowing deferral of income received for livestock sales due to drought, flood or other weather-related conditions; a host of provisions to reform and simplify the US international tax rules; and a provision to provide more equitable federal tax treatment for taxpayers in states that impose only a sales tax as opposed to state and local taxes.



Sock Safeguard Petition Filed

The federal government’s approval of a petition to apply safeguards to surging Chinese sock imports marks the 4th textile safeguard action taken against China, pursuant to the terms of the US-China WTO Accession Agreement.    

Sock imports from China have soared from less than 1 million dozen pair in ’01 to 22 million dozen pair in ’03, and to 42 million dozen pair in the most recent 12 months ending in August ’04. US sock manufacturers also have suffered under severe downward pricing pressures as the wholesale price of Chinese sock imports, which enjoy government subsidies, has dropped precipitously from an average of $9.00 in ’01 to $4.15 in ’03. Domestic sock production has dropped from 207 million dozen pair in ’01 to 166 million dozen pair in ’03.



Cast Your Ballot

NCC members are encouraged to vote in this year’s election either on Nov. 2 or by taking advantage of the early voting opportunities in their area. If you are registered and interested in voting early or voting by mail, go to www.cotton.org and click on the Helping Americans Vote Early and Absentee Voting logo. Select your state from the drop-down menu, then follow the Early/Absentee Voting instructions.

“Every election is important, but this year's is even more so,” NCC Chairman Woody Anderson said. “Help keep agriculture's friends in office, working on behalf of this industry. A lot is at stake for our country and for agriculture. Please exercise your right to vote.”



Early Beltwide Housing Deadline Oct. 25

NCC and Cotton Foundation members can make advance hotel reservations until Oct. 25 for the ’05 Beltwide Cotton Conferences scheduled Jan. 4-7 at the Marriott and Sheraton Hotels in New Orleans. An online request form is available at www.cotton.org/bwhousing for credit card payments only. Once information is submitted, NCC will confirm receipt and membership status in separate e-mails. Acknowledgement from the Beltwide Housing Bureau will follow within 3 weeks after submitting a reservation.

Plans for the Cotton Production Conference general session are firming up. In addition to industry issues and Washington reports by NCC Chairman Woody Anderson and NCC Senior Vice President John Maguire, other Jan. 5 general session presentations include a panel moderated by NCC Vice President Dr. Gary Adams that will cover the impact of agronomics, harvest preparation and ginning on lint quality and producer income. Anderson will moderate a panel on “Conservation Tillage: Making It Work” and Memphis merchant William B. Dunavant, Jr. will provide his marketplace insights.

On Jan. 6, Dr. Frank Carter, NCC senior scientist, pest management, will talk about new chemistry and biotech products in the pipeline; a trio of entomologists will give tips on managing emerging insect pests ranging from stink bugs to lygus/whiteflies; Cotton Incorporated President/CEO Berrye Worsham will discuss how that organization’s research/promotion effort; and producers from each of the 4 Cotton Belt regions will share innovative farming/marketing practices.



SCG Helping Overseas Market Development

Southern Cotton Growers’ (SCG) directors agreed, for the third consecutive year, to donate 20% of dues received to Cotton Council International (CCI).

SCG President Sam Spruell said the $88,433.32 contribution in ’04-05 will support CCI’s COTTON USA program and 1) its emphasis on cotton fiber exports, which boosts US cotton offtake and underpins New York Board of Trade prices and 2) its focus on value-added products of US mills, which is especially beneficial to SCG members.

“The value added emphasis has become increasingly important with passage of regional trade pacts in Central American and Andean countries,” the Alabama producer noted. 

Each private sector (i.e., SCG) dollar that CCI allocates to the COTTON USA program generates $3 to $4 in public support, based on current public funding for the Market Access Program and Foreign Market Development program.

“In other words, Southern Cotton Growers' donation equates to $350,000 in additional funds for overseas market development,” Spruell said. “I can think of no better service-to-member initiative for the cotton producers in the six states that comprise the Southeast region. Aside from increasing leverage for public money, Southern Cotton Growers donation for the COTTON USA program will have the additional advantage of serving as a challenge to all other organizations to step forward and boost their support for CCI’s market development initiatives.”



Guidance Sought on Clean Water Permitting

The NCC and other agricultural interests continue to press the EPA for final guidance that clarifies that proper applications of pesticides do not require National Pollutant Discharge Elimination System permits. Environmental press articles and EPA sources indicate such guidance will be finalized before year’s end.

The Senate Environment and Public Works (EPW) committee, chaired by Sen. Inhofe (R-OK), continues to request the finalization of such guidance. The NCC continues to work with the EPA and EPW to help ensure clarification of this issue and prevent employment of these permits to lawful pesticide applications under FIFRA.



Brazilian Senate Approves Biotech Products

The Brazilian Senate approved a bill (PLC 9) recently that would allow for the commercial production of biotech crops. The bill was approved earlier in a different form by Brazil’s lower house, which now will receive the new bill to approve the changes made to the measure. Under PLC 9, the policies governing biotech products would be established by a new agency called the National Bio-Security Council (NBSC).

Additionally, distribution of biotech seed would be regulated by a permitting process overseen by the National Technical Commission for Bio-security, which would be a division of NBSC. The Senate version streamlines the permitting process for distribution of biotech seed by removing authority from the Agriculture, Health, and Environmental ministries. The Senate also extended a presidential decree made last year to allow a 1-year planting of biotech soy to last until the end of the ’04-05 planting season.



Sales, Shipments Stay Healthy

Net export sales for the week ending Oct. 14 were 219,000 bales (480-lb.), resulting in total ’04-05 sales of almost 6.3 million. Total sales at the same point in the ’03-04 marketing year were approximately 4.9 million bales. Total new crop (’05-06) sales are 178,800 bales.

Shipments for the week were 116,400 bales, bringing total exports to date to 1.4 million bales, below the 1.6 million at the comparable point in the ’03-04 marketing year.


Let Your Voice Be Heard: Vote!

Prices Effective Oct. 22-28, 2004

Adjusted World Price, SLM 1 1/16

37.62 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

0.00 cents

Marketing Loan Gain Value

14.38 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

 0

ELS Payment Rate

31.48 cents

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

52.68 cents

Forward 3135 c.i.f. Northern Europe

No quote

Coarse Count c.i.f. Northern Europe

 50.53 cents

Current US c.i.f. Northern Europe

 54.50 cents

Forward US c.i.f. Northern Europe

 No quote

 
2003-04 Weighted Marketing-Year Average Farm Price  
 
Final Marketing-Year Average Price

61.80 cents

 


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