Cotton's Week: August 12, 2005

According to a statement issued by the Office of the US Trade Representative, USTR Special Textile Trade Negotiator David Spooner will lead a US interagency team on Aug. 16-17 to open negotiations with the Chinese government on a comprehensive textile trade agreement. According to Spooner, the US will seek a long term solution by taking a more comprehensive approach to textile trade with China.

Earlier this year, China and the EU reached agreement to limit growth in China’s exports to the EU in 10 product categories to between 8% and 12.5 % annually through ’07. The US-China meetings originally were set to facilitate consultations on textile safeguards the US imposed under terms of China’s accession to the WTO.

According to the USTR statement, the Administration has consulted with Congress and industry stakeholders and heard a clear call for a comprehensive textile agreement with China. Rep. Hayes (R-NC), credited with casting the swing vote that enabled DR-CAFTA to pass, repeatedly has urged the Administration to pursue an agreement with China.

China’s Central Bank Governor Zhou Xiaochuan announced further details regarding the new exchange rate regime. The bank official said the shares of trade in goods and services should be the fundamental consideration in the selection of the basket currencies and the weights assigned to the currencies in the basket. Based on that criterion, the US dollar, the euro, the yen and the Korean won will be the major currencies in the basket.   

While exact weights for each currency were not announced, some analysts estimate that the dollar will carry a weight of 50% or more. Weights on the euro and yen could range between 10% and 20%.

The central bank also announced that banks would be allowed to trade yuan currency forwards and swaps with each other in the onshore inter-bank market and that it would allow more financial and import-export businesses to participate in the spot foreign exchange market.

In its August report, USDA gauged US ’04-05 production at 23.25 million bales. Projected mill use was unchanged from the July report at 6.25 million bales. Exports were raised 700,000 bales to 14.0 million. As a result, projected total offtake went up 700,000 bales to 20.25 million generating an ending stock value on July 31, ’05 of 6.50 million bales and a stocks-to-use ratio of 32.1%.

For ’05-06, USDA projected the US crop at 21.29 million bales, up 1.49 million from the July report but 2 million below last year’s record. US exports were raised 500,000 bales to 15.00 million and US mill use was unchanged from the July report at 5.8 million bales resulting in total ’05-06 offtake of 20.8 million bales, ending stocks of 7.00 million bales and a 33.7% ending stocks-to-use ratio.

USDA’s August crop report projects a 21.3 million bale ’05-06 US crop. Upland production was estimated at 20.6 million bales and ELS production at 725,000 bales. Harvested area was estimated at 13.7 million acres, implying non-harvested area of 412,000 acres based on USDA’s revised acreage report. The resulting abandonment rate is roughly 2.9% for the ’05-06 crop. The national average yield per harvested acre was estimated to be 748 pounds, 30 pounds above the 5-year average. State and regional data for upland and ELS are presented in the following table.

David Kirk Kavanaugh, professional staff member of the Trade Subcommittee of the House Ways and Means Committee, will address the NCC’s Board of Directors’ Mid-Year Meeting set for the San Diego Marriott in La Jolla, CA, Aug. 18-19.

Included in the Aug. 18 open session will be NCC Chairman Eastland’s update on industry issues and reports from Cotton Council International President Gary Taylor and Bruce Heiden, chairman of the Committee for the Advancement of Cotton. Vice Presidents Gary Adams and John Maguire will provide economic and Washington updates; and NCC Counsel Bill Gillon will discuss trade issues. The Board’s executive session, which will feature Kavanaugh’s report, convenes on Aug. 19.

Agriculture Deputy Secretary Chuck Conner recently announced that USDA will offer 12,700 Conservation Security Program (CSP) contracts for ’05 across the nation. The contracts translate into more than a $1 billion long-term commitment to conservation over the next 10 years.

The CSP contracts offered cover about 9 million acres of private land in the 220 watersheds nationwide. USDA expects to fully invest the $202 million provided by Congress for this fiscal year. Environmental enhancement activities offered by applicants include improving soil quality, water quality, wildlife habitat management, nutrient and pest management, air quality management, and on-farm energy management.

Following the process outlined in the Federal Register notice of March 25, ’05, applications will be offered according to the published enrollment categories, in order, until the funding is exhausted. The number of applications and projected contract cost accepted by state for each tier of conservation accomplishments is: AL (64) $956,481; AR (589) $10,563,637; AZ (159) $2,461,851; CA (386) $6,096,373; FL (38) $521,820; GA (129) $2,823,758; KS (765) $9,177,815; LA (24) $191,224; MS (34) $526,173; NC (147) $1,558,097; NM (75) $1,158,852; OK (136) $659,228; SC (65) $525,324; TN (16) $49,846; TX (84) $6,476,076; and VA (166) $1,330,487.

The third segment of a 4-part program to assist the W. African countries of Mali, Burkino Faso, Chad and Benin with adoption on technologies will be held Aug. 15-27.

Participants from each country will undergo a week of classroom training on cotton integrated pest management in a cooperative effort between NCC and Tuskegee U. Included will be visits to research stations in the Stoneville, MS area and in St. Joseph, LA. The entomology program, funded by USAID and the NCC, will follow recently completed programs in cotton classing, and soils and fertility. The 4th session is being planned for on-site instruction on ginning technology.

The NCC’s Leadership Development Committee announced the ’05-06 Cotton Leadership Class members are: Producers - Heath Watson, Mayesville, SC; Jeff Hux, Sikeston, MO; Toby Robertson, Robstown, TX; Kevin Nelson, Tulia, TX; and Tim Cox, Blythe, CA; Ginner - Steve Bullard - BCT Gin Co., Morven, GA; Warehouser - Will Coley, Savannah Warehouse Services, LLC, Savannah, GA; Merchant - Forester Adams, Joseph Walker & Co., Columbia, SC; Marketing Cooperative - Jason Ward - Staplcotn Cooperative Assoc., Greenwood, MS; and Manufacturer - Mitch Hensley, Ramtex, Inc., Ramseur, NC.

Georgia cotton producers will host peers from Texas, Oklahoma and Kansas on Aug. 14-18 as part of the ’05 NCC/FMC Producer Information Exchange (PIE) program.

The Southwestern producers will tour individual farms near Savannah, the Savannah Cotton Warehouse and the Port of Savannah. The group also will travel to Tifton for reports on ginning, quality and variable rate pivot irrigation.

Other activities in Georgia include tours of Chickasha Oil Mill in Tifton, Southeast Ag Expo field plots and diversified crop production on the Robinson Farm in Moultrie as well as stops at the McLendon and Webb cotton and peanut farms in Leary and Hook and Hannah Environmental Resources in Dawson. The tour concludes with a visit to the Georgia Cotton Commission in Perry.

Crop year ’04 US exports of 14.0 million bales (480-lb) establish a new record. Outstanding sales of almost 2.2 million bales on July 31 were carried forward. Combined with the week ending Aug. 4, net export sales of 290,700 bales and ’05-06 sales of 1.8 million bales made in the previous marketing year brings total ’05-06 sales to about 4.3 million. Total sales at the same point in the ’04-05 marketing year were slightly more than 4.6 million.

Total new crop (’06-07) sales are 105,500 bales. Shipments for the week were 147,500 bales, bringing total exports to date to 147,500 bales, compared with the 173,000 bales at the comparable point in the ’04-05 marketing year.