Cotton's Week: November 11, 2005

Cotton's Week: November 11, 2005

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US Program Will Help Rural Africans Live Better

NCC Chairman Woods Eastland commended Secretary of Agriculture Mike Johanns and US Trade Representative Robert Portman for their efforts in developing a program to improve the conditions confronting W. African cotton producers.

The program, announced by Ambassador Portman and Secretary Johanns, results from more than a year of preparatory work involving the NCC, USDA, the US Agency for International Development (US-AID), several US land grant universities and US non-profit organizations.

“The West Africa Cotton Improvement Program is a practical, pragmatic plan that can make a real difference in these citizens’ lives,” Eastland stated. “It has the potential to improve the infrastructure that supports cotton production, ultimately returning a higher portion of sales proceeds to individual African cotton producers.”

Since early ’04, the NCC has been involved in a number of outreach activities with the W. African countries of Benin, Burkina Faso, Chad and Mali. These efforts are aimed at helping rural Africans live better.

“All of the U.S. cotton industry’s work has been in close cooperation with USDA and US-AID,” Eastland said. “The United States’ efforts will provide real and meaningful benefits for West African cotton producers. However, I want to remind cotton producers around the world that the real challenge we face is to increase demand for our product. Aggressive advertising and promotion is needed to convince consumers of cotton’s benefits over synthetic fibers. The producer-funded campaign operated in the U.S. has helped increase demand in our retail market, but more promotion worldwide is needed.”

NCC activities include visits by US industry leadership to the W. African countries and hosting delegations from W. Africa for orientation tours in the United States. NCC efforts have focused on conveying the benefits associated with: the adoption of biotechnology; more effective use of fertilizers, water management and integrated pest management; improved ginning technology; and cotton classing and grading.

NCC President and CEO Mark Lange reiterated the US cotton industry’s commitment to share its knowledge and experiences with the W. African producers. He also added that hurdles remain within these countries that will take time to overcome.

“The lingering aftermath of French colonialism is evident,” Lange noted. “The continued reliance on a monopolistic, parastatal ginning and marketing system generates lower revenue to cotton farmers. Our efforts can improve the situation but internal reform is also needed.”




Sales, Shipments Stay Healthy

Net export sales for the week ending Nov. 3 were 237,000 bales (480-lb). This brings total ’05-06 sales to about 7.7 million. Total sales at the same point in the ’04-05 marketing year were about 6.7 million bales. Total new crop (’06-07) sales are 159,100 bales.

Shipments for the week were 203,700 bales, bringing total exports to date to 3.0 million bales, compared with the 1.7 million bales at the comparable point in the ’04-05 marketing year.





US–China Sign Textile Pact

The US and China signed a broad agreement on Chinese textile imports into the United States. The agreement goes into effect on Jan. 1, ’06 and ends on Dec. 31, ’08 and places quotas on a broader range of textile and apparel products (34) than are currently subject to safeguards (19).

The quotas established under the agreement compare favorably to quotas that would have been imposed if textile safeguards were invoked. Over the life of the agreement, China can export 3.2% more of the covered products to the United States than if the safeguards were invoked on all of the covered products for all three years.

In general, US imports of Chinese goods covered by the agreement are allowed to grow by 10% to 12.5% in ’06, 12.5% in ’07, and 15% to 16% in ’08, depending on the item imported. Furthermore, in ’06, the agreement imposes tighter limits on US imports from China of “core” apparel products. The “core” apparel products are cotton knit shirts, MMF knit shirts, woven shirts, cotton trousers, MMF trousers, brassieres and underwear. Other items covered by the agreement include combed cotton yarn, cotton towels, glass fiber fabric, knit fabric, polyester filament fabric, special purpose fabric, synthetic filament fabric and thread, sweaters, socks/baby socks, swimwear and blinds.

As part of the agreement, the US promised to exercise restraint in the future use of safeguards on products that are not covered by the agreement. The agreement also contains mechanisms to allow US importers and the Chinese government to manage quotas to avoid over shipments. For example, China will manage its exports with a visa system and can borrow small amounts of quota from future years to cover over shipments.





WTO “Recalibration” Suggested

"Recalibration” entered the lexicon of the WTO as Director General Pascal Lamy stated Members would have to adjust their expectations for the Hong Kong ministerial.

The Director General had previously suggested that two-thirds of the Doha Round should be concluded by Hong Kong, but now believes that will not happen. His new goal is for the meeting to preserve what has been achieved to date and “re-create a negotiating spirit among members.”

US Trade Representative Portman and Secretary of Agriculture Johanns were involved in high level meetings with other WTO Members in Paris and Geneva before visiting Africa. Ambassador Portman indicated that little progress had been made in the effort to bridge the gap between proposals on market access and it would be difficult for the Hong Kong meeting to develop a full set of “modalities” that would lead to the completion of the Round. Secretary Johanns reiterated that the general feeling within the WTO was that the latest offer from the European Union (EU) was not sufficient in terms of market access and agreed that the Hong Kong meeting would not make the progress that had been hoped for.

Controversy within the EU over agriculture continues as French officials firmly indicate they can make no more agricultural concessions. EU Trade Commissioner Mandelson refused to give any indication that the EU could ever improve its market access offer and clearly tried to encourage the Members to take the latest EU deal in Hong Kong. Reactions from the United States, Brazil, Australia and other countries confirmed that the EU offer will not be deemed sufficient, leading to predictions that no agreement can be reached at the Hong Kong meeting.





’05-06 Crop Estimate Raised

In its November report, USDA projected the ’05-06 US cotton crop to reach 23.16 million bales, up 440,000 bales from the October report. Upland production was estimated at 22.5 million bales and ELS production at 644,000 bales.

Harvested area was estimated at 13.7 million acres, implying non-harvested area of 511,000 acres based on USDA’s acreage number. The resulting abandonment rate is roughly 3.6% for the ’05-06 crop. The national average yield per harvested acre was estimated to be 813 pounds, 95 pounds above the 5-year average. (See table below for state and regional estimates.)

US mill use was unchanged while exports increased 200,000 bales to 16.20 million bales resulting in total offtake for ’05-06 of 22.20 million bales. Ending stocks for ’05-06 are projected to be 6.50 million bales for a stocks-to-use ratio of 29.3%.

Meanwhile, USDA now puts US ’04-05 cotton production at 23.25 million bales. Estimated mill use was raised 40,000 bales to 6.52 million bales, based on the latest estimate from the Census Bureau, while exports were unchanged at 14.41 million bales. As a result, the ’04-05 estimated total offtake increased 50,000 bales to 20.93 million bales. That generates an ending stocks value of 5.54 million bales and estimated stocks-to-use ratio of 26.5%.

U.S. Cotton Crop, 2005-06

 

PLANTED

ACRES

Thou.

HARV.

ACRES

Thou.

YIELD PER

HARV.

ACRE

Lb.

5-YEAR

AVG.

YIELD

Lb.

480-

POUND

BALES

Thou.

UPLAND

 

 

 

 

 

SOUTHEAST

3,029  

3,005 

788  

670 

4,934  

   Alabama

550  

545 

766  

646 

870  

   Florida

86  

85 

700  

547 

124  

   Georgia

1,220  

1,210 

793  

665 

2,000  

   North Carolina

815  

810 

812  

703 

1,370  

   South Carolina

265  

263 

785  

650 

430  

   Virginia

93  

92 

730  

749 

140  

MID-SOUTH

3,940  

3,890 

922  

812 

7,470  

   Arkansas

1,050  

1,040 

1,015  

886 

2,200  

   Louisiana

610  

600 

928  

724 

1,160  

   Mississippi

1,200  

1,180 

854  

811 

2,100  

   Missouri

440  

435 

960  

842 

870  

   Tennessee

640  

635 

862  

760 

1,140  

SOUTHWEST

6,215  

5,790 

682  

533 

8,221  

   Kansas

75  

70 

555  

461 

81  

   Oklahoma

240  

220 

742  

589 

340  

   Texas

5,900  

5,500 

681  

532 

7,800  

WEST

730  

723 

1,256  

1,345 

1,892  

   Arizona

240  

239 

1,305  

1,312 

650  

   California

435  

433 

1,275  

1,408 

1,150  

   New Mexico

55  

51 

866  

833 

92  

TOTAL UPLAND

13,914  

13,408 

806  

708 

22,517  

TOTAL ELS

270  

265 

1,166  

1,279 

644  

   Arizona

4  

960  

908 

8  

   California

230  

226 

1,211  

1,328 

570  

   New Mexico

11  

11 

916  

915 

21  

   Texas

25  

24 

900  

1,008 

45  

ALL COTTON

14,184  

13,673 

813  

718 

23,161  

Source: USDA-NASS November Crop Production Report. 





Slight Increase Seen in World Production

For the ’05-06 marketing year, USDA’s November report sees world production at 111.71 million bales, up 270,000 bales from the October report. World mill use was raised 1.47 million bales from the October report to a projected 114.40 million bales. Consequently, world ending stocks on July 31, ’06 are projected to be 50.18 million bales, for a stocks-to-use ratio of 43.9%.

The report lowered the ’04-05 world production estimate 20,000 bales to 120.41 million bales. The beginning stocks estimate was lowered 20,000 bales to 40.60 million resulting in a world supply of 161.01 million bales. Estimated world mill use was lowered 90,000 bales to 108.66 million. The estimated world ending stocks for ’04-05 are now pegged at 50.83 million bales for a corresponding stocks-to-use ratio of 46.8%.





Eminent Domain Bill Passes House

Bi-partisan legislation introduced in July ’05 by, Rep. Bonilla (R-TX), the Strengthening the Ownership of Private Property (STOPP) Act (HR 3405), will prevent governments from taking property from one private party and giving it to another private party. When abuses occur, the STOPP Act will prevent localities and states from receiving federal economic assistance on all economic development projects, not just those projects upon which abuses occur. 

Rep. Bonilla's legislation only affects the taking of private property from one private entity to another. The legislation still allows local governments to use eminent domain for its original conception, which is to build new highways, schools, airports or other projects that benefit the public.

Earlier this year, the Supreme Court issued a narrow 5-4 decision in the case Kelo v City of New London regarding the public use provision of the Fifth Amendment’s Taking Clause. The Court moved to give local governments broad power to seize property to generate tax revenue.

Rep. Bonilla’s bill was merged with another bill and had more than 40 Cotton Belt Members as co-sponsors.





Prices Effective November 11-17, 2005

Adjusted World Price, SLM 11/16

41.68 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.79 cents

Marketing Loan Gain Value

10.32 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

 0

ELS Payment Rate

12.94 cents

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

57.16 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

54.42 cents

Current US c.i.f. Northern Europe

59.95 cents

Forward US c.i.f. Northern Europe

No Quote

 
2004-05 Weighted Marketing-Year Average Farm Price  
 
Final Marketing Year Average Price

41.60 cents

 




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