Cotton's Week: January 7, 2005

Cotton's Week: January 7, 2005

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NCC: Technology Development and Transfer is Vital

NCC Chairman Woody Anderson told attendees at the ’05 Beltwide Cotton Conferences that research, education and technology continue to be critically important and the NCC will continue its longstanding commitment of its resources for technology-based priorities.

Some 3,630 industry members, scientists, Extension, consultants, agribusiness representatives and others gathered in New Orleans to hear the latest techniques from innovative producers across the Cotton Belt and a host of presentations on such timely topics as managing lint quality, conservation tillage implementation and insect pest management.

“The proceedings of this Conference will, no doubt, bear witness to the outstanding research programs underway and the availability of innovative technology,” Anderson said. “In order for you to apply what you learn at these conferences, it is critical that the National Cotton Council continue its efforts on the many national and international policy fronts.”

John Maguire, NCC senior vice president, Washington Operations, told conferees that even though the House has not yet made committee assignments, there will be some familiar faces and some significant changes in the Committee leadership. That includes Rep. Goodlatte’s (R-VA) continued chairing of the House Agriculture Committee and Rep. Moran chairing the General Farm Commodities subcommittee that has jurisdiction over commodity and risk management programs.

“With the departure of Representatives Stenholm and Dooley, there are no longer any cotton farmers on the committee and only three in Congress,” Maguire said.

On the Senate side, Maguire reminded conferees that Sen. Chambliss (R-GA), who so energetically represented Sun Belt agriculture during the ’96 farm bill debate, will chair the Agriculture Committee while Sen. Cochran (R-MS) moves up to chair the powerful Appropriations Committee.

Dr. Gary Adams, NCC’s vice president, Economics and Policy Analysis, said that when deciding which variety of cotton to plant, producers do so based on how that variety is expected to impact their bottom line, and that includes the resulting lint quality. He said after variety selection, producers have numerous opportunities to enhance, maintain or reduce fiber quality throughout the growing season, at harvest time and during ginning.

“Ultimately, the ‘value’ of quality in any given year will be reflected in the market through the price signals,” Adams said. “Market-price data show that the differential between 31-3-35 and 41-4-34 the past decade has exhibited an increasing trend in the premium associated with 31-3-35 with particularly strong increases over the past three years.”

He noted, however, the relationships between premiums and discounts have changed over time, and for certain traits, discounts have declined while premiums have increased.

Memphis merchant William B. Dunavant, Jr., in his market place outlook, predicted the final ’04 US crop will be about 22.8 million bales with 6.25 million bales of mill consumption and 12.2 million bales of exports.

“We have currently registered for export 8.75 million bales so China really needs to be a player this year and I think they will be,” Dunavant said.

He projected ’05 US production at 19.5 million bales, domestic consumption at 6 million bales and exports growing to 14 million – thus lowering the carryover slightly to 7.44 million.

Dunavant put ’04 world production at 115.5 million bales and consumption at 104 million, a new record. His firm puts world carryover at 46.9 million bales – a 11.3 million bale increase from one year ago. For ’05, he sees world production shrinking to 103.4 million bales, consumption rising to 106 million bales and carryover dropping to 44.2 million bales.

Dunavant said a bright spot for demand for the future is that China likely will reduce production next season by 2.25 million bales from 29 million bales to 26.75 million and Chinese consumption will continue to escalate, going from 36.5 million bales to potentially 38 million. He said because of less production in China their imports will increase from 8.2 million bales this season to 10,750,000 bales next season.





Time to Make Annual Meeting Plans

The deadline for making hotel reservations for the NCC’s ’05 Annual Meeting at the JW Marriott in Washington, DC, is Jan. 11. Go to www.cotton.org/events/amreg to reserve rooms, register for the meeting and get general meeting information.





Delinquent Borrower Guidelines Issued

USDA’s Farm Service Agency (FSA) issued clarification of guidelines on program eligibility for delinquent borrowers. In response to a request by NCC and Plains Cotton Growers, USDA-FSA has issued Notice LP-1979 (see www.cotton.org/gov/upload/LP1979.pdf to clarify the definition of “delinquent status” when determining eligibility for commodity programs.

FSA has clarified that for purposes of determining eligibility for commodity programs (and other federal financial assistance), USDA will use Treasury’s definition that a debt is in delinquent status “if the debt has not been paid within 90 days of the payment due date.”  Prior to the clarification, there was concern that a producer who was 1 day late was delinquent and ineligible for commodity programs – marketing assistance loans, cottonseed recourse loans, loan deficiency payments, etc. In areas where harvest and ginning are extremely late, producers with farm loans due in mid-January and February and unable to bring loans current due to late harvest could have been determined ineligible for the program benefits that would allow them to become current. Prior to publication of Notice LP-1979, a producer 1 day late was delinquent and, under provisions of Debt Collection Improvement Act of 1996, ineligible for program benefits.





Johanns Hearing Goes Smoothly

Following several rounds of generally friendly questions by Senate Agriculture Committee members, they voted unanimously to recommend Nebraska Gov. Mike Johanns’ confirmation by the full Senate. The hearing was chaired by Sen. Chambliss (R-GA).

In his opening statement and in response to questions, Gov. Johanns pledged to be a strong and passionate advocate for US agriculture. He pledged to work with members on a range of issues and in developing the new farm bill.

Full Senate action on Johanns’ nomination could come shortly after Congress reconvenes on Jan. 20.





House/Senate Assignments Progress

The Senate has completed Committee assignments for the first session of the new Congress. Some decisions on size of House committees and member assignments have been made, but are not complete.

The Senate Agriculture Committee will have 20 members – 11 Republicans and 9 Democrats as compared to 11 and 10 in the last Congress. Joining Chairman Chambliss (R-GA) are Republican Sens. Lugar (IN), Cochran (MS), McConnell (KY), Roberts (KS), Talent (MO), Thomas (WY), Santorum (PA), Coleman (MN), Crapo (ID), Grassley (IA) and Democratic Sens. Harkin (IA – ranking member), Leahy (VT), Conrad (ND), Baucus (MT), Lincoln (AR), Stabenow (MI), Nelson (NE), Dayton (MN) and Salazar (CO).

In the House there has been agreement reached to reduce the Committee’s size by reducing Republican seats by 1 and Democratic seats by 3. Rep. Peterson (D-MN) was selected by his colleagues to serve as ranking Democrat in place of former Rep. Stenholm. Rep. Nunes (R-CA) has been appointed to serve on the Ways and Means Committee; Rep. Ross (D-AR) has been appointed to the Energy and Commerce Committee; and Rep. Thompson (R-CA) also has been assigned to the Ways & Means Committee. Mississippi Rep. Bennie Thompson has been selected by his colleagues to serve as ranking Democrat on the Homeland Security Committee. House Committee assignments will be completed when Congress returns Jan. 20.





Zoellick Gets New Appointment

US Trade Representative Ambassador Robert Zoellick has been nominated as Deputy Secretary of State to join Secretary-nominee Condoleezza Rice if she is confirmed, as expected, by the Senate later this month. Zoellick formerly has served as Undersecretary for Economic Affairs at State and as Counselor for Secretary of Treasury James Baker.

Prior to the President’s announcement, Zoellick was widely considered to be a leading candidate to replace World Bank President James Wolfensen when he retires this summer. Zoellick is widely credited with jump-starting the stalled WTO Doha round and for negotiating numerous bilateral free trade agreements as well as completing work on the CAFTA.

Individuals considered as potential successors to Zoellick include:  Josette Shiner, Deputy USTR; Allen Johnson, Agriculture Trade Ambassador; Gary Edson, former economic advisor to the President; Rep. Jim Kolbe (R-AZ); Grant Aldonas, Undersecretary of Commerce; and Robert Kimmit, former USTR.





China Safeguard Injunction Issued

The US Court of International Trade (CIT) issued an order enjoining the Committee for the Implementation of Textile Agreements (CITA) from further consideration of China safeguard petitions that were based on the "threat" of market disruption. US textile and apparel organizations had submitted 9 petitions alleging a threat of market disruption from imports from China.

A US importers association filed suit in the CIT seeking the preliminary injunction. The suit alleged that CITA did not have authority to consider "threat-based" safeguard petitions and, more broadly, that CITA did not have authority to implement the China safeguard provisions. In granting the injunction, the opinion stated that "by being forced to move production to less efficient factories in other countries ... plaintiff's members face the real possibility that they may not be able to deliver products to their customers in a timely manner, which will impair their goodwill and business reputation." 

Several US textile mills filed an amicus brief in the case in response to the motion for a preliminary injunction in order to provide the court with a better understanding of all of the entities that could be affected by this case. In its brief, which was not referenced by the Court, the US textile mills stated that the importer plaintiffs allege "that inconvenience and a change in suppliers constitutes irreparable harm. [US textile mills] face job losses, plant closures, and dramatic, permanent reductions in their business should CITA not be able to conduct its thorough investigations..." 

It is presently unclear whether the US Justice Department will appeal the injunction.

NCC Chairman Anderson stated that the NCC "strongly disagreed with the Court's granting of the preliminary injunction and believes the decision should be overturned." He said preventing CITA from concluding its investigations "undermines the orderly process put in place in the original WTO accession agreement and agreed to by China. The plaintiffs are seeking to deny the US textile industry any opportunity for a fair hearing by CITA. The Council is urging that the Department of Justice will take all available steps to overturn this ruling."





Textile/Fiber Leaders Plan DC Summit

Industry leaders from a coalition of textile and fiber organizations will meet in Washington on Jan. 25, a day prior to the Global Alliance for Fair Trade in Textiles (GAFTT) joint meeting. GAFTT is the international coalition promoting the tenets of the Istanbul Declaration and includes 96 textile and apparel trade groups from 54 countries.

The textile leadership meeting on the 25th is a follow-up of meetings held in January ’04 and June ’03. The primary objective is to reaffirm the industry’s intention to continue working in a unified manner and to plan trade policy strategy for the year ahead.

On the following day, a third meeting of GAFTT is scheduled. That conference will include a morning strategy meeting, a press conference and an afternoon briefing for embassy, Congressional and US government officials.





Prices Effective January 7-13, 2005

Adjusted World Price, SLM 1 1/16

34.00 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

4.59 cents

Marketing Loan Gain Value

18.00 cents

Import Quotas Open

2

Step 3 Quotas (480-lb. bales)

 245,504

ELS Payment Rate

46.99 cents

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

49.04 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

47.13 cents

Current US c.i.f. Northern Europe

53.63 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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