Cotton's Week: August 5, 2005

Cotton's Week: August 5, 2005


™®Trademarks of Corteva Agriscience and its affiliated companies.
ACP, CF Members Discuss Issues

The American Cotton Producers (ACP) and the Cotton Foundation met jointly in New Orleans to discuss important industry issues. The meeting was chaired jointly by ACP Chairman John Pucheu, a California producer, and Foundation President Allen Helms, Jr., an Arkansas producer and current NCC vice chairman.

Keynote speaker Hunter Morehead, from the Senate Appropriations Committee’s professional staff, reviewed recent legislation passed during the 109th Congress’ first session. He also discussed the budget process and FY06 appropriations bills’ status.  

NCC Chairman Woods Eastland emphasized the NCC’s role in addressing numerous industry issues. Allen Terhaar, NCC vice president for Foreign Operations, covered Cotton Council International’s main strategy and activities to promote US cotton usage. ACP leaders discussed NCC strategy and priorities for the budget reconciliation debate facing Congress following its August recess. NCC President/CEO Mark Lange described the interrelationship of the numerous trade issues affecting the industry. NCC Senior Vice President John Maguire thanked producer leaders for their active involvement in the successful DR-CAFTA legislation debate and stated that the NCC was providing support through letters to the editor and other means for the Cotton Belt Congressional members who supported the industry’s position.

The ACP also discussed numerous crop insurance issues and adopted new recommendations to improve the cotton insurance quality provisions. During the Foundation’s Annual Meeting, Helms was elected Foundation chairman and Craig Shook, a Texas producer and current NCC secretary-treasurer, was elected Foundation president.

Safeguard Decisions Period Extended

The Committee for the Implementation of Textile Agreements (CITA) announced that it was extending the period for making decisions on 6 pending textile safeguard cases in order to consult with domestic textile and apparel industries and Congressional members concerning whether to pursue a broader agreement with China on imports of Chinese textile and apparel products to the United States.

The period for making a decision on whether to request consultations with China regarding imports of cotton and MMF sweaters (categories 345/645/646), cotton and MMF brassieres (categories 349/649), cotton and MMF dressing gowns and robes (categories 350/650), knit fabric (category 222), men’s and boys’ wool trousers (category 447), and other synthetic filament fabric (category 620) has been extended until Aug. 31, ’05. The determination period for 2 of the cases (men’s and boys’ wool trousers – category 447 and other synthetic filament fabric – category 620) previously was extended through July 31.

CITA also published Federal Register notices on Aug. 1 announcing that safeguard requests for cotton, wool and MMF socks (categories 332/432 and 632 part), women’s and girls’ woven shirts and blouses (categories 341/641), cotton and MMF skirts (categories 342/642), cotton and MMF nightwear (categories 351/651), and cotton and MMF swimwear (categories 359-S/659-S) were accepted for review. This launched a 30-day period during which interested parties may submit comments on the request. Copies of the requests and the Federal Register notices can be found at

Background information and a timeline of China safeguard activities can be found at

Upland LDP Application Is Changed

USDA’s Farm Service Agency has established new policy and procedures for the ’05 and subsequent crop years of upland cotton for producers applying for loan deficiency payment (LDP) benefits.

Producers who indicate their intentions to receive LDP benefits on all eligible upland cotton before beneficial interest is lost may apply for a LDP after beneficial interest is lost. For such cotton, the LDP rate is based on the date that beneficial interest is lost. The new form (CCC-633 EZ) must be signed prior to the loss of beneficial interest. If signed, application for LDPs can be made at any point during the loan/LDP availability period (before or after losing beneficial interest) prior to May 31. Producers still have the right to place any eligible cotton in the loan in lieu of a LDP.

This procedure is also available for other LDP-eligible commodities. This new policy was implemented to prevent producers who may have inadvertently become ineligible for LDPs if they had lost beneficial interest before requesting such benefits. For more information, producers can contact their local FSA offices.

Fresno Site of Farm Bill Listening Session

Agriculture Secretary Mike Johanns announced that additional sessions which are part of the nationwide farm bill listening tour will include a session at the Fresno County Fairgrounds, Fresno, CA, Aug. 12, 1- 4 pm (PDT). The public is invited to attend the forums to offer comments on farm bill policy. 

"The Farm Bill Forums provide an opportunity for us to hear directly from America's farmers and ranchers,” Johanns said. “I'm learning a great deal from them. I am very pleased that our USDA team will also be hosting additional forums that will focus on conservation, rural development and nutrition. I encourage as many citizens as possible to participate in these forums as we prepare for the development of a new farm bill." 

USDA is inviting forum attendees to respond to 6 questions regarding future farm policy and participate in an open comment period for general farm bill comments.  The public also is encouraged to submit their comments via the USDA Farm Bill Forums web site at

Throughout ’05, Johanns and other senior USDA officials will participate in the Farm Bill Forums that will be held across the country. The dates, locations and times of the forums will continue to be announced as they are scheduled and posted on the USDA web site.

Peacock Named to EPA Deputy Post

Marcus Peacock, who was nominated by President Bush to become EPA's Deputy Administrator on June 1, was confirmed by the Senate on July 28. He has been the associate director for Natural Resources, Energy, and Science at the Office of Management and Budget (OMB) where he and his staff are responsible for reviewing the budget and policies of the natural resources, energy, and science agencies of the federal government, including EPA.

Peacock also has served as the government-wide lead for the Budget and Performance Integration initiative of the President’s Management Agenda.  Prior to his position at OMB, he served as the Subcommittee staff director on the House’ Oversight and Emergency Response Subcommittee of the Committee on Transportation and Infrastructure. In this position, he managed oversight hearings and legislation in the 106th Congress related to the activities of EPA, the Dept. of Transportation, and the Federal Emergency Management Agency. He holds a BS degree in industrial and systems engineering from the U. of Southern California, and a MS in Public Policy from Harvard.

Mid-South Producers Hosting Far West Peers

Mid-South cotton producers will host their Far West peers on Aug. 7-11 as part of the ’05 National Cotton Council/FMC Producer Information Exchange (P.I.E.) program.

Now in its 17th year, the P.I.E. program is managed by the NCC’s Member Services staff and supported by a grant to The Cotton Foundation from FMC Corp.

The Far West producers will spend Aug. 7-9 in Louisiana where they will tour sugar mill, sawmill and cotton operations. On the 9th the group will visit Tanner & Co. in Frogmore where they will hear a presentation on precision agriculture. They will spend Aug. 10-11 in the Mississippi Delta and get briefings on Delta cotton production and the work at the Stoneville Research Complex before touring the Delta Branch Experiment Station. They also will tour farms in WashingtonCounty, visit with NCC Chairman Woods Eastland at Staplcotn and see Ray Makamson’s farm in Indianola.

CCI Sees More Linters Exports to China

Discussions between a ’05 COTTON USA Linters Trade Team and participants from Chinese mills suggest a future increase in US linters exports.

During meetings between industry officials andleading Chinese linters importers on July 22-30 in China, the team investigated:  linters consumption, US linter quality, the import process and current/future plans. The mills visited by the team report US linters as having consistent quality, reliable delivery and competitive pricing. The mills appreciate that US linters are clean and absent of whole seeds, unlike linters from other international sources, such as Uzbekistan and Turkey. Contrary to previous reports, end users stated that they could handle the larger-sized US bales without any problems. The team emphasized that the quality of US linters supplied directly from oil mills would continue to match samples sent. 

Other team findings include: 1) it appears the demand for linters is growing and China will need US linters, 2) a consolidation in the Chinese industry is occurring; only a few plants are growing, while numerous smaller plants are going out of business, 3) plants near large cities are seeing large increases in labor/environmental costs and are being forced to close or relocate to more rural areas; and 4) export potential, however, could be constrained due to strong US prices, increased domestic demand and continued reductions in US crush capacity.

Team members were: Danny Brown, executive vice president of Planters Cotton Oil Mill, Inc.; Robert Lacy, vice president of PYCO Industries, Inc. and the ’05 president of the National Cottonseed Products Assoc.; Rose Lam, CCI’s trade servicing manager and international administration manager for China/SE Asia; and Jean Ma of Yuan Associates, a CCI consultant in China.

Cotton Shipments Stay Strong, Sales Lag

Net export sales for the week ending July 28 were 37,200 bales (480-lb). This brings total ’04-05 sales to about 16.2 million. Total sales at the same point in the ’03-04 marketing year were about 15.0 million. Total new crop (’05-06) sales are 1.8 million bales.

Shipments for the week were 440,000 bales, bringing total exports to date to almost 13.8 million bales, compared with the 13.6 million at the comparable point in the ’03-04 marketing year.

No ELS Payment in Week Ahead

USDA announced there will be no ELS competitiveness payment for the week ending Aug. 11 due to the absence of any quotes for Egyptian or Central Asian competing growths.

The rates are now determined using the Commodity Credit Corp.’s new formula for calculating the ELS competitiveness payment. The new formula replaces the American Pima spot quotes with the Northern European American Pima (NEAP) quote as published by Cotlook. Additionally, because the current lowest foreign quotes (LFQ) and the NEAP are reported for the same geographical region, there no longer will be a transportation adjustment calculation. Only the current quality differentials will continue to be used to adjust the LFQs to bring the different growths to equal standards.

Under the new formula, competitiveness payments can resume no sooner than early September.

Prices Effective August 5-11, 2005

Adjusted World Price, SLM 11/16

40.47 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

3.65 cents

Marketing Loan Gain Value

11.53 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate


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

55.95 cents

Forward 3135 c.i.f. Northern Europe

 No Quote

Coarse Count c.i.f. Northern Europe

54.18 cents

Current US c.i.f. Northern Europe

59.35 cents

Forward US c.i.f. Northern Europe

 No Quote

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

42.84 cents


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

Error in element (see logs)