Cotton's Week: May 20, 2005

Cotton's Week: May 20, 2005


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NCC Joins CAFTA Support Coalition

NCC joined a coalition of textile, carpet and fiber associations in announcing strong support for the Central America Free Trade Agreement (CAFTA).

The coalition, which includes fiber and textile production, processing and handling operations in addition to textile machinery manufacturers and other product and service providers to the industry, represents more than $100 billion in annual US textile sector production and sales. Other members are:  National Council of Textile Organizations; American Fiber Manufacturers Association; Carpet and Rug Institute; Association of Nonwoven Fabrics Industry; and American Textile Machinery Association.

The coalition is asking Congressional members to endorse DR-CAFTA without delay so the US textile sector will have broader access to export markets. In ’04, the US cotton and textile industry exported more than 200,000 bales of cotton and nearly 2.5 million bale equivalents of cotton yarn and fabric to CAFTA countries.

CAFTA Is Administration Priority

President Bush assured agriculture and business representatives that CAFTA is a top priority.

During a meeting at the White House attended by NCC Chairman Woods Eastland and leaders of major agriculture and business organizations who support CAFTA, the President pledged a concerted effort to move the agreement through Congress this summer. The President was joined by US Ambassador Rob Portman; Secretary of Commerce Carlos Gutierrez; National Security Advisor Stephen Hadley; Deputy Chief of Staff Karl Rove; and, Chief Agricultural Trade Negotiator Ambassador Allen Johnson as well as other senior White House, USDA and USTR staff.

The President stressed that the CAFTA is a good deal for US agriculture and businesses as it: 1) opens CAFTA countries to US products by eliminating virtually all tariffs the first day and 2) is important as a means to spread democracy and free enterprise to our neighbors to the south.  The President, Ambassador Portman, Secretary Gutierrez and Rove acknowledged the presence of the NCC and NCTO and expressed appreciation for the support of the cotton and textile industries.

Producers Reminded of ’05 Farm Program Signup Deadline

USDA reminds producers that they have until June 1, ’05, to sign up for the ’05-crop Direct and Counter-Cyclical Payment Program (DCP). USDA will accept late-filed DCP applications through Sept. 30, ’05, if accompanied by a $100 late fee. Producers will be unable to apply for ’05 DCP payments after Sept. 30, ’05. Sign-up for the ’05 DCP began on Oct. 1, ’04.

The ’02 Farm Bill requires that producers sign annual contracts through ’07 to participate in DCP. Producers may opt out of participating in the program in any year if they choose.

Producers may sign-up online for DCP at To access the service, producers must have an active USDA eAuthentication Level 2 account, which requires filling out an online registration form at, followed by a visit to the local Farm Service Agency (FSA) office for identity verification. The online service allows producers to choose ’05 DCP payment options, assign crop shares and sign and submit their contracts electronically from any computer with Internet access. In addition to the electronic DCP service, USDA is expanding producers' options for completing their ’05 DCP contracts at an FSA office. Producers now have the option to visit any local FSA office, in addition to their administratively-assigned center as required in previous years.

The schedule of payments for the ’05 DCP is:

  • Beginning Dec. ’04: 50% advance direct payment;
  • Oct. ’05: 50% final direct payment;
  • Oct. ’05: first advance counter-cyclical payment (up to 35% of projected payment);
  • Feb. ’06: second advance counter-cyclical payment (up to 70% of projected payment less first advance);
  • Dates vary by crop (in general, 30 days following the end of the marketing year): Final counter-cyclical payment (100% of actual payment, less any advances received).

Earnest to Lead AMS Cotton

USDA selected Darryl Earnest as the new deputy administrator of its Agricultural Marketing Service cotton programs. His responsibilities include administering cotton classing services, development of standards and oversight of the Cotton Research and Promotion Program.

Earnest replaces Norma McDill who retired in January. He has been with the Cotton Program since ’90, and has served as associate deputy administrator since ’02.

CITA Rules Favorably on Safeguard Cases

The Committee for the Implementation of Textile Agreements (CITA) announced affirmative decisions in 4 threat-based textile safeguard cases. CITA determined that imports of combed cotton yarn (category 301), men’s and boys’ cotton and man-made fiber shirts-- not knit (category 340/640), man-made fiber trousers (category 647/648), and man-made fiber knit shirts and blouses (category 638/639) from China are threatening to disrupt the US markets for those products.

“Today’s announcement demonstrates this Administration’s continued commitment to America’s textile manufacturers and their employees,” said Commerce Secretary Carlos Gutierrez.

The 4 cases accepted were part of 12 filed by the US textile industry between Oct. and Dec. ’04. In late Dec. ’04, the US Court of International Trade halted CITA from taking any further action on the threat-based cases, but a ruling by the Federal Court of Appeals in late April allowed CITA to resume its consideration. CITA’s action represents the first initiation of safeguards based solely on the threat of market disruption. Of the 8 remaining threat-based cases filed in late ’04, CITA already has reached an affirmative decision on 3 - cotton knit shirts, cotton trousers and cotton & man-made fiber underwear – which also were subject to a CITA self-initiated investigation.

CITA now will request consultations with the Chinese government and will limit imports from China to a level that is 7.5% above the amount of imports from China entered during the first 12 months of the most recent 14 months preceding the month in which the request for consultations was made. The safeguard level will be prorated to correspond to the number of days left in the year as of the date of the request for consultations.

Panel Moves FY06 Spending Bill

The House Agriculture Appropriations Subcommittee, chaired by Rep. Bonilla (R-TX), approved the FY06 spending measure and sent it to the full Committee for consideration during the week of May 23. The bill provides $16.8 billion in discretionary spending, the same level enacted in FY05.

During the markup, members adopted an amendment by Rep. Kingston (R-GA) that will prohibit future sales of crop insurance policies with a premium discount. Members expressed concern that discounts favored large producers and said the amendment will provide time for further program analysis and any necessary adjustments. Existing ’05 policies will remain in force.

The bill includes a provision to delay implementation of country-of-origin labeling for meat and meat products beyond the current deadline of Sept. ’06. Agriculture Committee Chairman Goodlatte (R-VA) has introduced legislation to repeal mandatory labeling and replace it with a voluntary program. The subcommittee also approved a provision to prohibit agencies from using funding to produce prepackaged news stories without including notification that the story was funded or prepared by a federal agency. Funding for individual projects remains  confidential until the bill is reported by the full committee.

Hood Talks to Earth Observation Conference

NCC Advisor Kenneth Hood joined Secretary of Agriculture Mike Johanns and Vice Admiral USN (Ret) Conrad C. Lautenbacher, Jr., Ph.D., Under Secretary of Commerce for Oceans and Atmosphere and administrator of National Oceanic & Atmospheric Administration, in a seminar – “AGRIBUSINESS IN THE 21ST CENTURY - Putting Earth Science to Work for America.” The US Chamber of Commerce Space Enterprise Council presented the session in Washington, DC.

Hood, a Mississippi producer and founder of InTime, a crop input management services firm, was joined by business leaders representing John Deere, Monsanto, Bunge, the National Corn Growers Assoc. and DigitalGlobe. The panelists underscored how the emerging Global Earth Observation System of Systems, now supported by nearly 60 countries, can revolutionize the face of agribusiness in the 21st century.

CFTC Nomination Forthcoming

President Bush indicated his intention to nominate Reuben Jeffery as chairman of the Commodities Futures Trading Commission (CFTC) and if confirmed by the Senate will serve the remainder of a 5-year term ending April 13, ’07. Commissioner Sharon Brown-Hruska has served as acting chairman since July ’04 when she replaced James Newsome.

Jeffery serves as special assistant to the President and senior director for international economic affairs at the National Security Council. He served in the Defense Department and worked for Goldman, Sachs and Company in Paris, London and New York.

Producers Notified of Possible Advanced CCP Repayment

Producers should have received or will soon receive a letter from USDA’s Farm Service Agency (FSA) notifying them of 2 options that can be used in the event that repayment of all or a portion of the advanced ’04 counter-cyclical payments (CCP) is required. The letter, sent to all recipients of CCPs, is part of FSA’s notification process that also was used for the ’03 crop.

Final determination of the possibility of repayments will be made after marketing year completion. In the case of wheat, barley and oats, that determination will be in July ’05; for peanuts, Sept. ’05; corn, sorghum, soybeans and upland cotton in Oct. ’05, and rice, in Feb. ’06.

In the case of upland cotton, producers who have elected to take the first 2 advance payments have received 9.61 cents. Based on data for the first 9 months of the marketing year, the market year average price is estimated at about 43 cents per pound, well below the base loan rate of 52 cents per pound. Year-to-date data suggest that any repayment for cotton is extremely unlikely. Furthermore, if prices hold at current levels, the total CCP for the ’04 crop will be at the maximum level of 13.73 cents.

Sales, Shipments Steady

Net export sales for the week ending May 12 were 317,100 bales (480-lb). This brings total ’04-05 sales to slightly more than 14.0 million. Total sales at the same point in the ’03-04 marketing year were about 13.5 million. Total new crop (’05-06) sales are 889,100 bales.

Shipments for the week were 278,600 bales, bringing total exports to date to 9.9 million bales, compared with the 10.3 million at the comparable point in the ’03-04 marketing year.

Prices Effective May 20-26, 2005

Adjusted World Price, SLM 11/16

41.89 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

4.08 cents

Marketing Loan Gain Value

10.11 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

78.49 cents

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

55.82 cents

Forward 3135 c.i.f. Northern Europe

57.72 cents

Coarse Count c.i.f. Northern Europe

55.37 cents

Current US c.i.f. Northern Europe

59.90 cents

Forward US c.i.f. Northern Europe

61.85 cents

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

42.81 cents


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

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