USDA Ends 79 Year Prohibition On Cotton
Price Forecasting In June 10 WASDE Report

Friday, June 13, 2008                                By Shawn Wade

      Since 1929 the United StatesDepartment of Agriculture has been prohibited from publishing forecasts ofcotton prices except for its own internal use. That all changed with thepassage of the Food, Conservation and Energy Act of 2008 last month, whichremoved the ban and allows USDA to resume the practice.

      USDA’s first Upland Cottonprice forecast was included in this week’s Economic Research Service’s (ERS) WorldSupply and Demand Estimates report released June 10.

      In the report USDA forecastthe 2007/2008 Upland Cotton weighted average price received by farmers at 57cents per pound, very much inline with the year-to-date weighted average pricereceived for 2007-crop Upland Cotton calculated using the monthly sales andmarketing information reported by USDA in the monthly National AgriculturalStatistics Service (NASS) Agricultural Prices report.

      The June 10 WASDE report alsoincluded a forecasted range for 2008/2009 crop cotton prices of 58-72 cents perpound with a mid-point near the 65-cent level. According to the WASDE reportthe latest information available to USDA points to future reductions in bothU.S. and world cotton stocks and a slight increase in overall cotton use thatwill be a net positive influence on 2008-crop cotton prices.

      Recent weather events on theTexas High Plains, which accounts for almost a third of all U.S. cotton acresthis year, could eventually impact these projections even further when theextent of this year’s dry conditions and related losses are quantified.

      USDA ERS provided a moredetailed accounting of the process used to arrive at the cotton price forecastin their June 11 Cotton and Wool Outlook report.

      In their explanation theagency noted that although prohibited from publishing a cotton price forecast,USDA has been forecasting cotton prices for internal use for many years withthe results documented in economic conference papers and ERS’s Cotton andWool Yearbook.

         ERSnotes that their research indicates cotton prices primarily respond to shiftsin U.S. and global cotton supply and demand, changes in China’s exports andimports, and exchange rates along with other macro-economic developments.

      In summing up how theyarrived at the cotton price forecast the agency says in its June 11 Cottonand Wool Outlookreport that, “While USDA has developed formal quantitative forecasting models,ultimately, all USDA forecasts are finalized by an interagency process thatbrings together substantially more information than any one mathematical modelor set of models.”

      For the inaugural UplandCotton price forecast USDA ERS has decided to utilize a conservative forecastrange of plus/minus 11 percent. They note that this range compares well withthe observed ranges they have seen over the past few seasons and alsocorresponds well with the ranges they see in forecast and observed prices formany other crops.

      While the 11 percent range isslightly above average compared with other field crops, USDA believes theapproach seems reasonable given errors observed in current forecasting modelsand the recent volatility of cotton market basis relationships.

      As the season continues, USDAexpects the forecast range to eventually narrow, and the agency says it will becontinually evaluating its forecasting methodology to improve the accuracy ofthe data that is published each month.

      By rescinding the ban onpublishing cotton price forecasts, Congress has made another valuable toolavailable to U.S. cotton producers who need the best available price and supplydata to make their individual risk management plans.

      Regardless of thecircumstances having a USDA derived Upland Cotton price forecast published eachmonth is a welcome addition that is long overdue.

      In discussing why the ban wasoriginally implemented, USDA noted that the 79-year prohibition was the endresult of a series of Congressional hearings investigating a September 1927USDA cotton price forecast that members of the legislative branch believedtriggered a massive market sell-off.

      Having been created during atime of legendary market turmoil, which ultimately resulted in the GreatDepression, it seems somehow fitting that the end of the ban has come at asimilarly tumultuous time for U.S. commodity markets.

 

FSA To Begin Accepting County
Committee Nominations June 15

Friday, June 13, 2008                                By Shawn Wade

      Agriculture Secretary EdSchafer announced farmer and rancher candidate nominations begin June 15 forlocal Farm Service Agency (FSA) county committees. Elections take place thisfall.

      Nomination forms for the 2008election must be postmarked or received in the local USDA Service Center byclose of business on August 1, 2008.

      To be eligible to serve on anFSA county committee, a person must participate or cooperate in a programadministered by FSA, be eligible to vote in a county committee election andreside in the local administrative area in which the person is a candidate.

      Producers may also nominatethemselves, and organizations representing minority and women may also nominatecandidates. To become a nominee, eligible individuals must sign form FSA-669A.

      The form and other valuableinformation about FSA county committee elections are available online at: (http://www.fsa.usda.gov) by clicking on News & Events,then County Committee Elections.

Continued on Page 2

      FSA county committee membersmake decisions on disaster and conservation programs, emergency programs,commodity price support loan programs and other important agricultural issues. Members serve three-year terms. Nationwide, there are more than 7,800 farmersand ranchers serving on FSA county committees. Committees consist of three tofive members who are elected by eligible local producers.

      FSA will mail ballots toproducers beginning November 3, 2008. The voted ballots are due back to thelocal county office either via mail or in person by December 1, 2008. Newlyelected committee members and alternates take office January 1, 2009.

 

NCC/PCG To Host Farm Bill
Educational Meetings June 24-25

      NCC staff will review keyprovisions of the new Food, Conservation and Energy Act of 2008 in 45educational meetings across the Cotton Belt during the weeks of June 16 andJune 23.

      High Plains regional meetingsare being conducted as part of the NCC’s Southwest region rotation and will beco-hosted by Plains Cotton Growers, Inc.

      All of the High Plainsmeetings will be held June 24-25, 2008. Locations for the High Plains meetingsare Dumas, Seagraves, Plainview, Midland, Lubbock and Lamesa.

      A complete schedule withdate, time and location for each of the High Plains meeting, as well as theinformation for similar meetings to be held in the rest of Texas, Oklahoma andKansas, is included below

      Being conducted as a serviceto NCC members, the presentations are aimed at providing the best availableinformation on the new farm bill and will conclude with a question and answerperiod. Other industry, media and agribusiness representatives also are invitedto attend.

Southwest Region Farm BillEducational Meetings

(all times local)

 

June 23

      Wellington, KS, Raymond FryeComplex, 8 am

      Weslaco, TX, TAMU CitrusCenter, 9 am

      Robstown, TX, Nueces CountyFair Grounds, 3 pm

      Hugoton, KS, Memorial Hall, 4pm;

June 24

      El Campo, TX, Civic Center, 9am

      Dumas, TX, Moore CountyCommunity Bldg, 10 am

      Seagraves, TX, CommunityBldg; 10 am

      Victoria, TX, Howard JohnsonHotel, 3 pm

      Plainview, TX, Ollie LinerCenter, 3 pm

      Midland, TX; Midland CountyHorseshoe, 3 pm;

June 25

      Uvalde, TX, Uvalde QualityInn, 10 am

      Lubbock, TX, Plains CottonCooperative Assn, 10 am

      San Angelo, TX; TexasAgri-Life Res. & Ext. Center, 10 am

      Lamesa, TX, Dawson CountyCommunity Center, 2 pm      Abilene, TX, AbileneChristian University, 3 pm;

June 26

      El Paso, TX, Wyndham Hotel,10 am

      Altus, OK, Oklahoma CottonCooperative Assn., 10 am.