Cotton's Week: April 13, 2006

Cotton's Week: April 13, 2006

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NCC Leaders Get WTO Update

NCC Chairman Allen Helms, President/CEO Mark Lange and Senior Vice President John Maguire met with Ambassador Richard Crowder, USTR chief agricultural negotiator and Jason Hafemeister, USTR senior agricultural negotiator.

The USTR officials provided the NCC representatives with an update on WTO agricultural negotiations, including a forward looking perspective of expected activity in Geneva. US negotiators are continuing to press for a market access outcome in keeping with the aggressive US proposal tabled in October.

Both USTR and USDA will have negotiators in Geneva in late April and early May when WTO agricultural negotiations are expected to resume. The NCC will have industry and staff leadership in Geneva during the negotiations.





ACP Addresses Critical Issues
The initial ’06 meeting of the American Cotton Producers (ACP), chaired by Louisiana producer Jay Hardwick, was held in Little Rock where producer leaders discussed a wide range of industry issues.

Darryl Earnest, deputy administrator, USDA-AMS Cotton Program, updated the ACP on the current classing fees, international standards activities and on reorganization changes within the cotton program.

NCC Senior Vice President John Maguire provided a detailed Washington report that included a review of the federal budget, appropriations, proposed disaster assistance, the status of immigration reform and Congressional action regarding new farm legislation. Specifically, he reported on action taken by the Senate Appropriations Committee on a supplemental spending bill which includes crop and economic loss assistance provisions (see 4/7 CW) and said the Senate would debate this bill upon its return from the Easter recess. He also outlined the main factors that will influence the next farm bill debate which he stated would begin in earnest in Spring ’07. The main factors influencing the debate include budget, WTO, Administration input, specialty crops inclusion, the ’06 mid-term elections, new coalitions of environmental, conservative, liberal and conservation groups, and renewable energy program proposals. 

Gary Adams, NCC vice president of Economics and Policy Analysis, updated the status of the WTO negotiations including concerns being expressed by agriculture and cotton specifically regarding whether an agreement could be reached by the WTO members that would be favorable to this sector.

Monsanto representatives discussed the status of Bollgard and Bollgard II re-registration. They also reviewed the research conducted that led Monsanto to ask EPA to amend the refuge requirement for Bollgard II from a structured to a natural refuge. The ACP provided comments and recommendations to the NCC’s Environmental Task Force on these issues for their consideration at their upcoming meeting in May.

A USDA official provided updates on the status of several cotton flow issues under consideration by the Department including the request for comments on loan cotton storage, shipping performance standards and loan cotton re-concentration. He reported that USDA still is reviewing the NCC’s recommendation on high moisture bales and that a decision was still several weeks off but that the Department’s intentions were for a policy to be in place for the ’06 harvest. In other business, producer leaders heard a presentation from Cotton Incorporated, prepared in cooperation with NCC, on the cotton industry’s campaign to promote the sustainability of US cotton.




Textile Imports from China Fall

Apparel and textile imports from China fell 10.4% in February versus a year earlier – the first such decline since September ’01.

Nevertheless, China was still by far the largest supplier of apparel and textiles to the United States with shipments of 1.1 billion square meter equivalents, worth $1.5 billion, in February. Apparel imports from the country retreated 25.9% for the month, while textile imports experienced a downturn of 1.6%.





USDA Extends CRP Sign-Up and Re-Enrollment/Extension Acceptance

Secretary of Agriculture Mike Johanns announced an extension of the sign-up deadlines for both the Conservation Reserve Program (CRP) and the special CRP re-enrollment and extension opportunities until April 28. The deadline for both opportunities was originally April 14.

After the CRP general sign-up ends on April 28, the Farm Service Agency (FSA) will evaluate offers based on cost and the Environmental Benefits Index (EBI) factors of wildlife, water, soil, air and enduring benefits. Accepted offers will become effective Oct. 1, ’06.

In addition, subject to a compliance review, CRP participants with contracts expiring on Sept. 30, ’07, now have until April 28 to apply for special re-enrollment or extension opportunities offered by FSA.

Participants ranking in the EBI's top one-fifth can re-enroll their land in a new 10-year contract. For lands with restored wetlands, FSA offered the opportunity for a new 15-year contract. FSA offered the second one-fifth group the opportunity for a five-year extension; the third one-fifth a four-year extension; the fourth one-fifth a three-year extension; and the remaining participants a two-year extension.

FSA county offices are now beginning to notify CRP participants with contracts expiring in ’08-10 of their re-enrollment and extension opportunities. The deadline for participants to respond is June 30, ’06.





Briefing Targets Lubbock Gin Lab

A press briefing held on April 7 in Lubbock focused on the USDA Cotton Ginning Laboratory’s contributions. Under the Bush Administration’s currently proposed FY07 budget, the ginning lab facilities in Lubbock and Las Cruces would be eliminated, leaving the gin lab at Stoneville, MS, to serve the entire Cotton Belt.

Speakers at the briefing included Steve Verett, president of the Lubbock Chamber of Commerce; Rickey Bearden, chairman of Plains Cotton Growers, Inc.; Ron Craft, president of the Texas Cotton Ginners Assoc. (TCGA); and Russ Kuhnhenn, president, National Cotton Ginners Assoc.

The participants emphasized the gin lab’s significance to the High Plains cotton industry and its contributions to important cotton harvesting/processing research.

TCGA President Ron Craft told the news media that technology developed and ongoing at the Lubbock ginning lab is too valuable to lose. “Research at this facility is vital to agricultural producers and ginners,” he said. “Air quality, emissions and particulate matter studies are important. We also need to maintain research in seed separation and fiber quality preservation. We need new and better ways to improve ginning.”

NCGA President Russell Kuhnhenn said that NCGA “strongly recommends that Congress restore funding to the two cotton ginning labs.” He noted that closing the two labs would damage not only the Southwest and Far West cotton industry but also would have repercussions across the Belt. The labs work on regional as well as Beltwide problems, he said.

“They (two gin labs) are working on moisture sensors throughout the ginning process,” Kuhnhenn said. “They also are trying to find a more accurate means to measure particulate matter and ways to address these issues.”




Survey Sheds Light on BWCC

A NCC-conducted survey of ’06 Beltwide Cotton Conferences (BWCC) attendees generated numerous suggestions for helping to plan the ’07 conferences set for Jan. 9-12 at the New Orleans Marriott and Sheraton Hotels.

The survey sought attendee input on topics, both broad and specific, for consideration by NCC staff and Beltwide planning committees. Respondents to the survey requested general topics ranging from fiber quality and risk management to specific topics ranging from solar energy for irrigation to short season production systems for the northernmost Cotton Belt regions.

Along with topic, speaker and venue evaluation, the survey also provided NCC staff with valuable information on conferees’ profiles, reasons conferees attend and which sessions they attended. The survey, which garnered a statistically significant 28% response rate, also generated a wide range of comments on all aspects of the forum.

“This input on the conferences’ structure, programming and other variables will assist our planning team in making decisions that will lead to improved Beltwide Cotton Conferences,” said Bill Lovelady, the BWCC Steering Committee chairman.

“The goal is to make this forum highly useful and enjoyable for U.S. cotton producers as well as all other conferees. I am pleased with the endorsement attendees gave the Production Conference and other Beltwide programs. We are determined to make sure all Beltwide participants discover the information they have come to expect at future conferences, particularly the upcoming New Orleans event.”





’05 Production Put at 23.9 Million Bales

In its April report, USDA gauged US ’05-06 cotton production at 23.90 million bales. Mill use increased 100,000 bales to 6.00 million bales and exports were raised 200,000 bales to 17.00 million bales. The estimated total offtake now stands at 23.00 million bales, generating ending stocks of 6.50 million bales. The estimated ending stocks-to-use ratio is 28.3%.

For the ’06-07 crop year, USDA projects a US crop of 21.00 million bales. Mill use is set at 5.60 million bales while exports are expected to reach 17.00 million bales. The estimated total offtake would be 22.60 million bales, resulting in ending stocks of 4.90 million bales.

USDA’s report shows world production for the ’05-06 marketing year at 113.58 million bales, up 240,000 bales from the March report. World mill use was raised 780,000 bales to 116.93 million bales. Consequently, world ending stocks are estimated to be 52.91 million bales for a stocks-to-use ratio of 45.2%.

For the ’06-07 crop year, the report projects world production to be 117.00 million bales, and mill use at 122.50 million bales. That would put world ending stocks at an estimated 49.41 million bales.




Shipments Hit Yearly High

Shipments for the week ending April 6 were 579,600 bales (480-lb.) – a marketing year high, bringing total exports to date to 10.2 million bales, compared with the 8.1 million bales at the comparable point in the ’04-05 marketing year.

With approximately four months remaining in the marketing year, weekly shipments must average roughly 412,000 bales to reach the USDA projection of 17.0 million bales. Over the last two months, shipments have averaged about 440,000 bales per week.

Net export sales were 138,100 bales bringing total ’05-06 sales to about 15.4 million bales. Total sales at the same point in the ‘04-05 marketing year were slightly more than 12.3 million bales. Total new crop (’06-07) sales are 442,900 bales.





Step 3 Import Quota to be Opened

Competitiveness provisions will trigger a Step 3 quota based on price conditions for the week ending April 14.

When the Friday through Thursday weekly average US northern Europe price, adjusted for the value of the cotton market user certificate (Step 2), exceeds the northern Europe price ("A" Index) for four consecutive weeks, a special Step 3 import quota is triggered.

The quota is estimated to be about 114,000 bales (480 lb.), equal to one week of upland cotton mill use based on the most recent three months’ seasonally adjusted data. The quota would be established as of April 20 and applies to upland cotton purchased no later than mid-July and entered into the US no later than the middle of October.





Prices Effective April 14-20, 2006

Adjusted World Price, SLM 11/16

42.57 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

 3.12 cents

Marketing Loan Gain Value

 9.43 cents

Import Quotas Open

 1

Step 3 Quotas (480-lb. bales)

113,839

ELS Payment Rate

0.00 cents

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

57.98 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

56.00 cents

Current US c.i.f. Northern Europe

61.10 cents

Forward US c.i.f. Northern Europe

 No Quote

 
2005-06 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

47.51 cents

**

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



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