Cotton Market Woes: Industry-wide Concerns
Merit Prompt Attention By The CFTC

Friday, March 14, 2008                              By Shawn Wade

      Lubbock-basedPlains Cotton Growers, Inc. has sent a letter to the Commodity Futures TradingCommission requesting immediate assistance to restore order to the cottonfutures market and help reestablish the ability of that marketplace to be aviable price discovery mechanism for the cotton industry.

      “Formonths the markets for many soft commodities, including cotton, have been increasinglytargeted by speculative market interests looking to diversify their portfolios,”says PCG Executive Vice President Steve Verett. “Speculative interest is animportant component of any commodity market that facilitates its primaryfunction of being a price discovery mechanism. Unfortunately the events of thepast two weeks have clearly illustrated that too much of a good thing can alsocause bad things to happen.”

      Verettnotes that the situation has been problematic for virtually every segment of thecotton industry, including producers that quickly found themselves unable tosell current crop cotton or contract 2008 cotton acreage.

      “Thecotton market is essentially a ship without a rudder at this point,” saysVerett. “Everyone recognizes that steps need to be taken to restore balance tothe market and reconnect it to the actual buying and selling of cotton in theworld marketplace.

      “Asthe regulatory agency charged with overseeing the U.S. cotton futures market,we have asked the CFTC to move quickly to assist the industry in this endeavorand restore confidence in it as a viable price discovery and risk managementtool.”

      It ishard to imagine the cotton industry facing such a watershed situation whencotton prices seem headed in exactly the direction cotton producers and manyallied industry members have been waiting to see – UP.

      Unfortunatelyfor those that found themselves in the eye of this unexpected storm, marketfundamentals and a suddenly positive supply/demand outlook didn’t initiate themarket’s recent action. Instead, the rapid upward leap was fueled by the WallStreet equivalent of pumping pure nitrous oxide into the carburetor of yourfavorite 20-year old farm truck. In the end You get to go really fast forlittle while, but eventually the wheels just fall off and you find yourselfstuck in a ditch.

      Hardesthit have been cotton merchants and others who held what they thought wererelatively stable market positions but instead found themselves riding thecrest of a market tsunami.

      In theend a complicated and unanticipated confluence of events created the currentmess that is the New York cotton futures market.

      Restoringthe cotton futures market to a functional price discovery and risk managementmechanism will require the assistance of the CFTC to augment what is already anindustry-wide effort to find lasting solutions and create an even better marketplace for the cotton trade.

 

Congressman Randy Neugebauer
Added To PCG Annual Meeting Line-up

Friday, March 14, 2008                              By Shawn Wade

      PlainsCotton Growers, Inc. is pleased to announce that Congressman Randy Neugebauerhas agreed to participate in the organization’s 51st Annual Meetingon April 4, 2008 in Lubbock.

      PCG’smeeting will be held in the Banquet Hall of the Lubbock Memorial Civic Centerin conjunction with the Texas Cotton Ginners Association Convention and TradeShow April 3-4, 2008 in Lubbock. PCG’s Annual Meeting will begin at 8:30 a.m.with registration, and the program will start promptly at 9:00 a.m.

      Keynotespeaker for this year’s PCG meeting is Washington, DC-based political andagricultural analyst Jerry Hagstrom. Hagstrom, who is a Special Correspondentfor the National Journal’s Congress Daily, has been asked to present histhoughts on the political landscape heading into the 2008 presidentialelection, what direction agriculture and trade policy might take under a newpresident and how these changes might impact implementation of a new farm bill.

      JoiningNeugebauer and Hagstrom on the program will be John Miller, founder ofSouthwest Agribusiness Consulting of College Station, Texas. Miller willpresent his thoughts on the outlook for commodity and energy prices and themarket forces that will shape the 2008 production season. Rounding out the meatof the PCG annual meeting program will be an update on the farm bill.

      CurrentPCG president Mike Hughes, of Lamesa, will preside over the meeting which willalso include PCG Executive Vice President Steve Verett’s report on the statusof PCG operations and activities and Plains Cotton Improvement CommitteeChairman Dale Swinburn’s review of the activities of the Plains CottonImprovement Program.

      Additionalinformation about the PCG Annual Meeting and a final program will be availableto attendees prior to the meeting.

 

Plains Cotton Growers, Inc.

51st Annual Meeting

 

Friday, April 4, 2008
Lubbock Mem. CivicCenter • 8:30 a.m.

 

Featuring:

Rep. Randy Neugebauer

Jerry Hagstrom

Political and Agricultural Analyst& Reporter,

Washington, DC

 

John Miller
Southwest AgribusinessConsulting, Inc.

 

High Plains BMP Workshop Set for April 2

Friday, March 14, 2008                              By Shawn Wade

      Harvesting,irrigation and pest management methods will be discussed at two free BestManagement Practices training seminars being offered by Texas AgriLifeExtension Service and the National Cotton Council.

      Themeetings will be held from 9 a.m. to 4:30 p.m. April 1 at Moore CountyCommunity Building in Dumas and from 8:30 a.m. to 4:30 p.m. April 2 at ReeceTechnology Center in Lubbock, according to Randy Boman, AgriLife Extensioncotton agronomist in Lubbock. Presenters will be from AgriLife Extension, TexasAgriLife Research and Texas Tech University.

      Extensionand research personnel from various states, as well as crop consultants fromacross the Cotton Belt, worked together to produce a set of best managementpractices, said Bill Robertson, Cotton Council manager. This was done with theoverall goal of helping cotton growers increase the efficiency and cost effectivenessof their production systems.

      Twopapers generated as a result of this collaboration – “The First FortyDays” and “Fruiting to Finish” – will be utilized during the workshops togenerate in-depth discussions of variety selection, pest management and harvestpractices, such as stripper versus picker harvesting.

      Continuingeducation units will be offered for certified crop advisors and for those whoneed credits from Texas, Oklahoma, Kansas and New Mexico departments ofagriculture, he said.

      Seatingis limited, Robertson said. Those planning to attend should RSVP toBMP@cotton.org and provide information concerning the meeting they want toattend, along with an e-mail address and phone number.

      Lunchwill be provided at both workshops, he said. Bayer CropScience sponsored thetwo papers and will sponsor the workshops. For more information, contact Bomanat 806-746-6101 or r-boman@tamu.edu, or Robertson at BMP@cotton.org.

 

Wantthe facts about the U.S. farm policy. Get what you need at:

www.farmpolicyfacts.com

 

2007-CROP HIGH PLAINS COTTON QUALITY SUMMARY

 

 

Week Ending March 13, 2008:

 

Office

Bales

Color

Leaf

Staple

Lamesa

40,941

11-21

2.79

35.57

Lubbock

23,089

11-21

2.87

35.78

 

Mike

Strength

Uniformity

Bark

Lamesa

4.11

29.07

80.28

29.4%

Lubbock

3.86

29.82

80.10

18.1%

 

 

Season Totals To Date:

 

Office

Bales

Color

Leaf

Staple

Lamesa

1,523,841

21+

2.46

35.97

Lubbock

3,785,810

21+

2.49

36.01

 

Mike

Strength

Uniformity

Bark

Lamesa

4.18

29.63

80.77

9.3%

Lubbock

4.05

29.53

80.61

3.7%

Source: USDA AMS Cotton Division

 

Cotton Inc To Offer Free Cotton Marketing
Workshop; Reserve Your Spot Today

      Get your calendars out andplan to attend this year’s “Cotton Price Risk Management and Pricing StrategiesSeminar” sponsored by Cotton Incorporated, in cooperation with Plains CottonGrowers, Inc.

      The free seminar is designedto help producers develop and sharpen their individual cotton marketing skillsand develop market-based strategies for managing price risk for the 2008 marketingseason.

      This year’s workshop will beheld on Wednesday, April 2, 2008 at the Holiday Inn Hotel & Towers, locatedat 801 Avenue Q in Lubbock. The workshop will run from 8:30 a.m. through 5:00p.m. Lunch will be provided to all workshop participants.

      Workshop topics include: “Whyare options on cotton futures critical to your business?”; “What can options dofor you and how?”; and, “Actionable hedging strategies.”

      Instructors for this year’sseminar will be retired Texas A&M Extension Economist Dr. Carl Anderson andMr. Mike Stevens of Swiss Financial.

      The program will also includea 2008 Production Cost Outlook by Dr. John Robinson of Texas A&MUniversity; a Market Outlook by Cotton Marketing Specialist Dr. O.A. Cleveland;a presentation on hedging Counter-cyclical payments by Kelli Merritt, fromCropMark, Inc., in Lamesa; and a session on practical application of the skillsand information provided during the workshop by Cotton Specialist Mike Stevens.

      For information about theconference contact Jeanne Reeves at Cotton Incorporated (919-678-2370) or ShawnWade at Plains Cotton Growers, Inc. (806-792-4904).

      Registration is required forthe conference and participants can register by telephone or email. Telephoneregistrations should be directed to Kay Wriedt (919-678-2271). Emailregistrations should be addressed to: kwriedt@cottoninc.com

 

PCG’s2008 Seed Cost Calculator

      An updated version of the2008 Plains Cotton Growers Seed Cost Calculator is now available. Growersinterested in comparing prices for their 2008 planting seed options candownload the calculator at http://www.plainscotton.org.

      The 2008 version includes 129conventional, Roundup Ready, Roundup Ready FLEX, Liberty Link, Bollgard andBollgard II and Widestrike varieties, as well as numerous stacked gene versionsof these technologies that will be available for sale in West Texas in 2008.Should information on additional varieties become available, an update to thespreadsheet will be developed and posted on PCG's website.

      The PCG calculator is aninteractive Microsoft Excel spreadsheet that allows producers to calculate anestimated cost per acre, for both seed and technology, based on publishedsuggested retail prices.