Cotton's Week: April 22, 2005

Cotton's Week: April 22, 2005


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US to Comply with Brazil Ruling

As part of the dispute settlement process, the United States formally notified the WTO that it would comply with the Panel decision.

While notifying its intent to comply, the US trade official did not include any specifics and noted that the “United States will need a reasonable period of time in which to implement” any changes. It also was reported that Under Secretary of Agriculture J.B. Penn called compliance “complex” with a lot of stakeholders who need to be consulted in the process. He did note that the most critical issues involved the Step 2 program and the Export Credit Guarantee program on which the Panel placed a July 1 date for change. He also indicated that the United States had more time to consider other aspects of the ruling.

The NCC continues to discuss the ruling with the Administration and Congress.

EU Trade Policy Shift Targets Cotton

European Commissioner for Trade Peter Mandelson, speaking in Bamako, Mali, stated the EU has changed its policy concerning a comprehensive, all embracing deal in agriculture. He singled out cotton for a separate, early harvest calling on WTO member countries to negotiate new disciplines on cotton separately and on a faster pace than other commodities.

The new European negotiating position drew swift and strong reactions from: Congressional members, the US Trade Representative nominee and the NCC.

Senate Agriculture Committee Chairman Chambliss (R-GA) stated that the European position “runs counter to the need to produce a comprehensive agreement that will benefit all member countries. As Senate Agriculture Committee Chairman, I do not support this approach and will urge the United States Trade Representative to reject this divisive tactic.”

Sen. Lincoln (D-AR) raised the issue with US Trade Representative nominee Robert Portman during his confirmation hearing before the Senate Finance Committee, referring to the European position as unrealistic and an attempt to negotiate each commodity separately.

Rep. Portman (R-OH) responded that he continues to support a “single undertaking” approach which is designed to conclude a broad agreement embracing all sectors. He committed to working with Congress to ensure that "we don't have an early harvest and, in fact, we harvest these products together" in the Doha Round. Other members of Congress, including Rep. Neugebauer (R-TX), also issued statements opposing the new European position.

NCC Chairman Woods Eastland welcomed the support from Washington officials warning that "any move away from the single undertaking approach in the Doha Round will seriously damage whatever confidence the U.S. cotton industry currently has in the WTO system."

Currency Reform Stance Lauded

The Coalition for a Sound Dollar commended President Bush and Treasury Secretary John Snow for their statements asserting that China must act now on currency reform. The Coalition comprises more than 100 industry and agricultural associations, including the NCC, representing more than 90% of America’s exports.

The Coalition said the next step is for the Treasury Department, in its report to Congress due later this month, to cite China publicly for manipulating its currency and immediately proceed to initiate negotiations on an expedited basis.

In an interview with CNBC, President Bush pressed China to take an interim step toward a market-based currency. Treasury Secretary Snow told the House Financial Services Committee, “Reform of the currency exchange regime in China is one of the highest priorities for our international economic policy... The Chinese are now ready to adopt a more flexible exchange rate, they have sufficiently prepared their financial system to live in a world of greater flexibility and need to take action now.”

The Coalition said other major Asian trading partners like Japan, South Korea and Taiwan are looking over their shoulders at China and are reluctant to allow their currencies to be entirely market determined as long as China continues to peg the yuan to the US dollar.

“For U.S. manufacturers and farmers who have been hurt by the undervalued currencies of China, Japan, South Korea and Taiwan, this tougher line with the Chinese government is good news,” a Coalition spokesperson said. “While this doesn’t address all countries in the region that are manipulating their currencies by a variety of means, China is the lynchpin and needs to reform its practices. The Coalition for a Sound Dollar strongly urges the Treasury Department to cite China for currency manipulation and initiate negotiations on an expedited basis for the purpose of ending the currency manipulation."

USDA Releases ’05 Loan Schedule

USDA has released the loan schedules for the ’05 upland and extra long staple (ELS) cotton crops.

After consultations and presentations at various industry meetings, the traditional minimum spread in premiums/discounts between staple 33 and staple 32 was reduced from 150 points to 100 points to better reflect prevailing market valuations. The ’05 schedule reflects a 1-to-1 averaging of differentials from the ’04 schedule with market-price differentials for the Aug. ’04-Feb. ’05 period. Of note is the fact that the ’05 schedule continues the recent trend of increasing premiums for 31-3-35 cotton relative to the 41-4-34 base grade, with the premium reaching 430 points in the new schedule.

The ’05 loan schedule is applicable to CCC loan rates of 52.00 cents per pound (the same as ’04) for the base grade of upland cotton and 79.77 cents per pound (also unchanged) for ELS cotton. Tables of upland and ELS cotton differentials and schedules of loan rates for individual qualities for ’05 ELS are available on the Farm Service Agency (FSA) Price Support Division web site: Loan rates for the base grade of upland cotton at each approved warehouse location also may be found on the site.

Ag Worker Amendments Not Included

The Senate held procedural votes on a pair of amendments aimed at revising the H2-A Visa program for agricultural workers. Neither amendment garnered the 60 votes necessary to be included in the supplemental spending bill.

The amendments, offered by Senate Agriculture Committee Chairman Chambliss (R-GA) and Sen. Craig (R-ID), were to the supplemental spending bill for operations in Iraq and Afghanistan. Both amendments would streamline the H2-A program to make the program more appealing and easier to use for agricultural employers.

One of the main differences between the competing amendments concerned the adjustment of status for illegal workers already in the United States.

Chairman Chambliss’ amendment would allow employers to petition for their employees to be granted what would be known as a blue card. If the individual met strict qualifications and cleared a background check, the card would allow them to work here for 3 years.

Sen. Craig’s amendment would offer illegal workers already here a conditional temporary worker status. After completing working in agriculture for 3-6 years, they then could apply for permanent legal status.

Producers Convey Budget Concerns

A group of Texas and New Mexico producers met with their Congressional members/staff in Washington, DC, to convey their concerns about the congressional budget resolution being negotiated. The 14-member contingent, representing various regional cotton associations, also stressed the importance of annual appropriations projects that benefit the cotton industry. The group emphasized the need to maintain federal cost-share for boll weevil eradication and to increase funding for pink bollworm eradication efforts.

The producers also were briefed by NCC staff and met with officials at various USDA agencies.

CSP Signup Window Narrows

Signup for the new Conservation Security Program (CSP) is underway and extends until May 27 for farmers in one of ’05’s 220 eligible watersheds. Due to limited funding, the rotational sign-up opportunity to apply comes about once every 8 years.

Privately-owned pastureland, rangeland, vineyards, vegetables, orchards and nurseries join the commodity crops in CSP eligibility. Land must be in compliance with Highly Erodible Land and Swampbuster provisions. Land already enrolled in USDA easement programs is not eligible. Applicants may be owners or managers who have control of the land for the life of the contract. Eligibility requires that applicants to share in production risk and be entitled to a share of the profits. Cash rent landowners are not eligible.

Applicants should assess their eligibility by answering questions related to soil and water quality for the land they wish to enroll. A self-assessment workbook can be obtained online at or at a Natural Resource Conservation Service (NRCS) office. Applicants must schedule an appointment with NRCS and take the completed assessment as well as 2 years of records to document their answers.

Leadership Class Applications Sought

Industry members interested in applying for the ’05-06 Cotton Leadership Class are encouraged to visit to review program curriculum, eligibility requirements and download the application. Contact NCC’s Member Services at 901-274-9030 or your local Member Services Representative for additional information.

The Cotton Leadership Program strives to identify potential industry leaders and provide them developmental training during 5 week-long sessions across the Cotton Belt. The class, comprised of 4 producers and a participant from each of the other 6 industry segments, visits with industry leaders and observes production, processing and research facilities. They also meet with lawmakers and government agency representatives during a visit to Washington, DC, and attend the NCC’s annual meeting and its mid-year board of directors meeting.

The program, initiated in ’83, is supported by a grant to The Cotton Foundation from DuPont Crop Protection.

Public TV Series to Celebrate Agriculture

America’s Heartland, a new weekly public television show that celebrates the miracle of American agriculture and the farm and ranch families that help make it possible will begin airing in September. The magazine-style, half-hour program will profile the people, places and products of US agriculture and focus on Americans’ love for the land, fascination with food and the bedrock American values of family, hard work and independence that make the US agricultural system the world’s finest. The goal is help viewers better understand the nation’s farm and ranch families and the challenges and opportunities they face as they produce food and fiber for Americans and people in other countries.

The show’s flagship supporters are Monsanto Company, the American Farm Bureau Federation and the show’s producer, KVIE, the public television affiliate in Sacramento, CA. Collaborating are NCC, American Soybean Assoc., National Corn Growers Assoc., United Soybean Board and US Grains Council.

“American farmers play an important role in the stewardship of the land and foods we eat -- it is important that they are recognized by non-farming communities for their hard work and devotion,” said Kerry Preete, Monsanto’s vice president of US crop production. “America’s Heartland will provide metropolitan audiences an important opportunity to learn more about the story beyond the grocery store shelves and usher in a greater respect for farmers’ and ranchers’ contributions.”

The series will be distributed to each of more than 300 public television stations by America’s Public Television, the single largest provider of programming to public television stations. A peek of the series and an introductory trailer can be viewed at

Sales, Shipments Remain Strong

Net export sales for the week ending April 14 were 280,500 bales (480-lb). This brings total ’04-05 sales to about 12.6 million bales. Total sales at the same point in the ’03-04 marketing year were slightly more than 13.1 million. Total new crop (’05-06) sales are 667,500 bales.

Shipments for the week were 443,800 bales, bringing total exports to date to 8.6 million bales, compared with the 9.1 million at the comparable point in the ’03-04 marketing year.

Prices Effective April 22-28, 2005

Adjusted World Price, SLM 11/16

42.06 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

4.59 cents

Marketing Loan Gain Value

9.94 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

 79.09 cents

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

56.26 cents

Forward 3135 c.i.f. Northern Europe

59.23 cents

Coarse Count c.i.f. Northern Europe

55.89 cents

Current US c.i.f. Northern Europe

60.85 cents

Forward US c.i.f. Northern Europe

64.30 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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