Cotton's Week: April 8, 2005

Cotton's Week: April 8, 2005

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NCC Commends Self-Initiation of Safeguard Proceedings

The Committee for the Implementation of Textile Agreements (CITA) announced that the US government will self-initiate textile safeguard proceedings against China in 6 product categories to determine whether they are contributing to US market disruption.

NCC Chairman Woods Eastland said this “demonstrates the government’s commitment not only to improve its monitoring of textile imports, as was announced earlier, but to take responsible action based on that timely data to curb market disruption when imports are excessive.”

Self-initiation of textile safeguards is authorized by terms of China’s World Trade Organization accession agreement and expedites their implementation, more so than the process through which the industry submits petitions. Industry observers estimate that a final decision on the self-initiated petitions could be reached within 5 weeks. Provided the petitions are approved, a request for consultations with the Chinese would be made in an effort to reach agreement on the rate of imports into the US market. If agreement cannot be reached, the United States is authorized unilaterally to limit import growth from China to 7.5% above the shipment rate during the first 12 months of the most recent 14 months preceding the request for consultations.

The 6 product categories cover cotton knit shirts and blouses, categories 338/339; cotton trousers, categories 347/348; and cotton and manmade fiber underwear, categories 352/652.

According to the US government’s early monitoring data, knit shirt imports were up 1,258%; during the first quarter of ’05 compared with the same period in ’04; for trousers the increase was 1,521%; and for underwear, 308%.

CITA is expected to publish a Federal Register notice soon that will provide for a 30-day comment period, after which the agency has up to 60 days to render a final decision. If a decision cannot be reached within 60 days, CITA can extend the period but it must announce when the decision will be made.

NCC President/CEO Mark Lange joined Eastland in commending the Administration for this decisive action.

“We commend the Administration for this decisive action,” Lange said. “China has demonstrated in a number of trade categories its capability to dominate the U.S. market in a very short period of time. Self-initiation of textile safeguards is the only way that market disruption can be addressed timely and effectively. A single country’s domination of the U.S. market can damage the interests of the U.S. cotton industry, undermine regional trading arrangements and disrupt established marketing relationships with many less developed trading partners.”



NCC Supports Filing of New Safeguard Petitions

The US textile industry announced its plans to file petitions to limit imports from China on 9 other textile and apparel categories, including cotton dressing gowns, brassieres, sweaters and non-knit shirts. The categories are:

Safeguard
Category/Description
China Increase Jan. – Mar. 2005
compared to Jan. - Mar. 2004
% Change
     
340/640 – c/mmf non-knit shirts+
1,422,603
dozen
+284.12%
345/645/646 – c/mmf sweaters+
274,662
dozen
+203.71%
349/649 – c/mmf brassieres+
1,408,731
dozen
+34.53%
350/650 – c/mmf dressing gowns+
325,884
dozen
+36.86%
620 – other synthetic filament fabric+
11,814,292
square meters
+769.79%
638/639 – mmf knit shirts+
2,128,603
dozen
+331.19%
647/648 – mmf trousers+
1,597,270
dozen
+269.16%

mmf = man-made fiber
c = cotton

NCC consultant Gaylon Booker, addressing a Washington, DC news briefing on the announcement, said the NCC continues to support its domestic customers in their efforts to achieve fair and equitable terms for international trade. Booker noted that, “The import data now available as a result of the U.S. government’s improved monitoring system makes it clear that CITA made the right decision when, weeks ago, it accepted for further review the industry’s threat-based safeguard petitions. We have every confidence the government would have acted favorably on these petitions if it had not been enjoined from further consideration of them. We believe our government also will act favorably on any new petitions filed by the industry that make the case that market disruption is occurring.”



USDA Increases US, World Crops

In its April report, USDA gauged US ’04-05 cotton production at 23.08 million bales, up 70,000 bales from its March number. Mill use and exports were unchanged at 6.30 million bales and 13.20 million bales, respectively. The estimated total offtake now stands at 19.50 million bales, generating ending stocks of 7.10 million bales for an estimated ending stocks-to-use ratio of 36.4%.

The report projects world production for the ’04-05 marketing year to be 119.22 million bales, up 1.51 million bales from the March report. India accounts for the increase as their crop was raised to 18.00 million bales. World mill use was raised by 890,000 bales to 107.05 million bales. India and Turkey contributed to the increase in mill use. Also of note is that imports by China were lowered to 8.00 million bales, down 1.00 million bales from the March report. China’s stocks were adjusted lower to offset the decline in imports.

Consequently, world ending stocks are estimated to be 47.83 million bales for a stocks-to-use ratio of 44.7%.



Monsanto Completes Acquisition of Emergent Genetics’ Cotton Business

Monsanto announced the completed acquisition of Emergent Genetics’ cotton business, which the company said will give it a branded cotton seed presence that complements its germplasm development and licensing.

Emergent Genetics, Inc., with Stoneville Pedigreed and NexGen cotton seed brands, is the third largest US cotton seed company, holding about 12% of the US cotton seed market. A Monsanto news release said the company and Emergent believe this decision is good for cotton growers because it will provide more cotton variety choices and do so more quickly.

“We are committed to a broad licensing approach to offer customers a wide selection of varieties and trait technologies,” said Kerry Preete, US crop production lead for Monsanto. “In addition to Emergent Genetics, we will broadly license our trait technologies through other seed companies for grower access to traits in the varieties of their choice.”



Applications Sought for Gin Schools

Registration is underway for the ’05 Ginner Schools, and can be done online at the National Cotton Ginners Assoc. (NCGA) web site at www.cotton.org/ncga/ginschool.

Slots are still available at the Western Ginning School to be held at the Southwest Ginning Lab in Las Cruces, NM, May 17-19; and the Stoneville Ginning School to be held at the USDA Ginning Lab in Stoneville, MS, June 14-16.

NCC Vice President of Ginner Services and NCGA’s Executive Vice President Bill Norman said the schools offer 3 course levels plus a continuing education curriculum for those ginners who have completed course level work.

Level 1 offers courses ranging from introduction to cotton ginning and the industry to electricity in the gin. Level 2 courses range from purpose and operating principles of individual gin machines to management tips. Level 3 offerings range from review of functions of a ginning system to cottonseed handling systems. The continuing education course offers safety, gin stand operation for quality and efficiency, lint cleaner operation for quality and efficiency, moisture control, gin management issues, gin operation assessment, and a review ongoing gin lab projects.

Questions about the schools should be directed to the Western school’s Ed Hughs, (505) 526-6381, to the Stoneville school’s Stanley Anthony, (662) 686-3093, or to Norman at (901) 274-9030.

The just-completed Southwest Ginners School in Lubbock was attended by 110 students from 9 states. School cooperators are NCGA, NCC, Cotton Incorporated, USDA-ARS, Cooperative State Research, Education and Extension Service and select land grant universities.



’05 PIE Tour Dates Set

The NCC has set dates and locations for the ’05 Cotton Foundation Producer Information Exchange (PIE) Program. Cotton producers from the Mid-South will see California operations July 16-21; Southeastern producers will travel to the Southwest July 23-28; Far Western producers will view farms in Louisiana and Mississippi Aug. 6-11; and Southwestern producers will tour Alabama, Georgia and Florida Aug. 13-18.

The PIE enables cotton producers to observe cotton production and talk to their peers in regions different than their own. Participants gain new perspectives in such areas as land preparation, planting, fertilization, pest control, irrigation and harvesting.

Upon completion of the ’05 tours, about 750 US cotton producers will have participated in PIE, which has been funded since its ’89 inception by grants from FMC Corp. to the Foundation.



Transition Period for AWP Calculation Near

USDA will begin blending of the current and forward “A” Index quotes for calculation of the adjusted world price (AWP) for the week ending April 21. The 6-week blending process is used to transition the AWP from old crop to new crop.

For the weeks ending April 21 and April 28, the formula is 2 times the current quote plus the forward quote divided by 3. For the weeks ending May 5 and May 12, the formula is the current quote plus the forward quote divided by 2. For the weeks ending May 19 and May 26, the formula is the current quote plus 2 times the forward quote divided by 3. For the week ending June 2 and thereafter until the end of the ’04-05 crop year, the forward “A” will be used exclusively in calculating the AWP.



Shipments, Sales Stay Healthy

Net export sales for the week ending March 31 were 196,300 bales (480-lb). This brings total ’04-05 sales to about 12.1 million. Total sales at the same point in the ’03-04 marketing year were slightly more than 12.7 million. Total new crop (’05-06) sales are 651,200 bales. Shipments for the week were 365,000 bales, bringing total exports to date to 7.8 million bales, compared with the 8.3 million at the comparable point in the ’03-04 marketing year.

Of the 12.1 million bales of ’04/05 sales, China is the largest buyer with 16%, followed by Mexico (15%), Turkey (14%), Indonesia (9%) and Thailand (7%).



Prices Effective April 8-14, 2005

Adjusted World Price, SLM 11/16

41.78 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

3.43 cents

Marketing Loan Gain Value

10.22 cents

Import Quotas Open

2

Step 3 Quotas (480-lb. bales)

 240,286

ELS Payment Rate

 80.49 cents

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

56.97 cents

Forward 3135 c.i.f. Northern Europe

60.05 cents

Coarse Count c.i.f. Northern Europe

55.20 cents

Current US c.i.f. Northern Europe

60.40 cents

Forward US c.i.f. Northern Europe

64.80 cents

 
2004-05 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

42.96 cents

**

**August-July average price used in determination of counter-cyclical payment

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