Cotton's Week: August 12, 2005

Cotton's Week: August 12, 2005

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US, China to Talk Textile Trade

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.

In a related action, the Committee for the Implementation of Textile Agreements announced it would extend until Aug. 31 the period for making a decision on whether to request consultations on imports of 6 textile and apparel product categories, which were the subject of earlier safeguard actions, and announced it had agreed to accept for consideration requests for safeguards on 5 product categories including socks, women’s shirts, skirts, nightwear and swimwear.


China Releases Exchange Rate Details

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.



New Supply/Demand Estimates Released

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.

For the ’05-06 marketing year, USDA sees world production at 109.79 million bales, up 1.19 million from the July report. World mill use was raised 260,000 bales to a projected 112.02 million. Consequently, world ending stocks for ’05-06 are put at 49.81 million bales, for a 44.5% stocks-to-use ratio.


’05-06 Crop Put at 21.3 Million Bales

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.

      US Cotton Crop, ’05-06

 

PLANTED

ACRES

Thou.

HARV.

ACRES

Thou.

    YIELD PER

    HARV. ACRE

    Lb.

5-YEAR

AVG.

YIELD

Lb.

 

480-lb

BALES

Thou.



 

UPLAND

 

 

 

 

 

SOUTHEAST

3,008  

2,985 

756  

670 

4,701  

   Alabama

560  

555 

726  

646 

840  

   Florida

85  

85 

548  

547 

97  

   Georgia

1,200  

1,190 

746  

665 

1,850  

   North Carolina

810  

805 

805  

703 

1,350  

   South Carolina

260  

258 

800  

650 

430  

   Virginia

93  

92 

699  

749 

134  

MID-SOUTH

3,880  

3,830 

909  

812 

7,250  

   Arkansas

1,010  

1,000 

984  

886 

2,050  

   Louisiana

600  

590 

814  

724 

1,000  

   Mississippi

1,210  

1,190 

928  

811 

2,300  

   Missouri

430  

425 

892  

842 

790  

   Tennessee

630  

625 

852  

760 

1,110  

SOUTHWEST

6,120  

5,790 

536  

533 

6,470  

   Kansas

80  

70 

549  

461 

80  

   Oklahoma

240  

220 

633  

589 

290  

   Texas

5,800  

5,500 

532  

532 

6,100  

WEST

795  

791 

1,302  

1,345 

2,145  

   Arizona

240  

239 

1,406  

1,312 

700  

   California

500  

497 

1,304  

1,408 

1,350  

   New Mexico

55  

55 

829  

833 

95  

TOTAL UPLAND

13,803  

13,396 

737  

708 

20,566  

TOTAL ELS

266  

261 

1,333  

1,279 

725  

   Arizona

4  

960  

908 

8  

   California

230  

226 

1,381  

1,328 

650  

   New Mexico

10  

10 

1,056  

915 

22  

   Texas

22  

21 

1,029  

1,008 

45  

ALL COTTON

14,069  

13,657 

748  

718 

21,291  

Source: USDA-NASS August Crop Production Report



NCC Mid-Year Session Set

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.



’05 CSP Contracts Announced

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.

NRCS also extended the comment period on the interim final rule for CSP to Sept. 9, ’05.


W. Africa Entomology Training Set

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.



’05-06 Leadership Class Selected

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.

The program, supported by a grant to The Cotton Foundation from DuPont Crop Protection, seeks to identify potential industry leaders and provide them with developmental training.


Georgia Producers Host Southwest Peers

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.



US Cotton Exports Hit Record

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.



Prices Effective August 12-18, 2005

Adjusted World Price, SLM 11/16

39.81 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.61 cents

Marketing Loan Gain Value

12.19 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

 0

ELS Payment Rate

 0.00 cents

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

55.29 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

53.37 cents

Current US c.i.f. Northern Europe

57.90 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

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