JUNE30 USDA PLANTED ACREAGE REPORT
PROVIDES MORE QUESTIONS THAN ANSWERS

Friday, July 4, 2008                                    By Shawn Wade

      Thisweek’s release of the USDA Acreage Report on June 30 created quite a few morequestions than it answered for the Texas High Plains and by extension the U.S.cotton industry.

      ForHigh Plains cotton the question is did we plant the 3.2-3.4 million acres thatwere expected or did we, in fact, only plant what the USDA survey reported,some 2.79 million acres.

      That500,000-600,000 acre question mark makes a big difference, especially when youconsider that somewhere near 1 million acres will be subtracted from one ofthose numbers due to cotton that has been or will be failed and not harvested.

      Sofar a combination of excessively dry planting conditions and storm relateddamage resulting from hail, high winds or both have plagued most of the region’sdryland production areas and also adversely impacted some irrigated cotton aswell. It seems that High Plains growers in many areas simply couldn’t get theweather monkey off their back long enough to get a crop going.

      Assigninga cause to the current acreage discrepancy is nearly impossible unless yousimply attribute the results to the fact that a fair number of the growersresponding to the USDA Acreage survey simply weren’t sure what they were goingto end up doing, or were not willing to tip their hand one way or the other.

      Theend result was a lot of “I don’t know” answers and the confusing impressionthat the High Plains intended to plant over a million less corn, cotton andgrain sorghum acres without a corresponding increase in other crops.

      Withthe USDA Farm Service Agency allowing an extra 30 days for growers to certifytheir 2008 crop acreages this year as a result of the Midwest floods, we mayhave to wait another 6-8 weeks before a really clear view of this year’s HighPlains crop acreage is revealed.

      Inthe meantime we will have to see if, or by how much, the planted acreage numberchanges between now and the release of USDA’s first 2008 Crop Productionestimate in early August.

      Howmany acres were planted should be one of the questions asked of growers in thisinitial production survey and their answers may prompt a change in theprojections for both High Plains and Texas cotton acres.

      WithTexas projected to plant at least 4.7 million acres in 2008, accounting formore than 50 percent of expected U.S. cotton plantings, an increase in HighPlains planted acreage numbers from the currently reported 2.79 million up tolast year’s 3.2 million acres would be significant.

      Mostestimates early on had 3.2 million acres as the bottom end for cotton acresbefore the June 30 report. That means the potential for a significant acreagerevision in the near future exists either in the total acreage planted in thestate or through reallocation of acreage within the different cotton productionregions.

 

2008DCP SIGNUP UNDERWAY; USDA REMINDS
GROWERS OF OTHER SIGN-UP DEADLINES

Friday, July 4, 2008                                    By Shawn Wade

      OnJune 25, Agriculture Secretary Ed Schafer announced that signup for the 2008Direct and Counter-cyclical Payment Program (DCP) would begin immediately andcontinue until September 30, 2008.

      Producerscan fill out their 2008 DCP contract at any USDA Service Center. Producers canalso sign-up online. Through the online sign-up process producers can choosepayment options, assign crop shares and sign and submit their contracts fromany computer with Internet access. They can also view and print submittedcontract options for their records as well.

      Oneimportant note for both growers and landowners to remember is that when signingup for the 2008 DCP landowners is that a new Power of Attorney form grantingauthority to the producer to act on behalf of the landowner may be required inorder to sign-up for the 2008 DCP program.

      Producersand landowners (grantors) who previously executed FSA-211 or other Power ofAttorney, authorizing an attorney-in-fact to act on their behalf for anythingother than “all current and future programs,” will need to execute a newFSA-211 or other Power of Attorney.

      Underrules established for the 2008 DCP program, USDA will compute DCP paymentsusing base acres and payment yields established for each farm. Eligibleproducers will receive direct payments at rates established by the Food,Conservation and Energy Act of 2008.

      Underthe 2008 DCP, eligible producers may request to receive an advance payment of22 percent of the direct payment for each commodity associated with the farm.USDA will issue advance direct payments as soon as practical after enrollment.Final direct payments will be issued after October 1, 2008.

      Growerscan also elect to receive advance Counter-cyclical program payments when theiravailability is announced for a commodity whose estimated effective price isbelow its target rice (which takes into account the direct payment rate, marketprice and loan rate).

      Theonline, electronic DCP (or eDCP) service saves producers time, reducespaperwork and speeds contract processing at USDA Farm Service Agency offices.It is available to all producers who are eligible to participate in DCP and whoobtain eAuthentication accounts. The electronic service is available by goingto http://www.fsa.usda.gov/edcp and clicking on "Access eDCP Service."

      Toaccess the service, producers must have an active USDA eAuthentication Level 2account. To get a Level 2 account, producers must complete an onlineregistration form at http://www.eauth.egov.usda.gov and then visit the local USDAService Center to verify their identity.

      FSA’seAuthentication service has strict security measures to protect participants'private information. Only authorized federal employees have access toinformation producers submit electronically.

2008 Crop Certification andQuality Loss Sign-up Reminder

      Inaddition to the start of the 2008 DCP sign-up process, which will end September30, FSA officials are also reminding growers to remember to complete their 2008crop acreage certification before August 15, 2008.

      FSAofficials are encouraging growers to go ahead and get their 2008 cropcertifications out of the way while they are completing their 2008 DCP sign-up.

      Giventhe fact that additional time has been granted to complete the certificationprocess, growers are encouraged to make appointments with their county officesto complete these and any other outstanding business they may have down attheir county FSA office.

      Forcotton producers some of that unfinished business may well include taking alook at their 2005 and 2006 production records to see if they might qualify forCrop Disaster assistance based on reduced lint quality for cotton producedduring one of those growing seasons.

      FSAbegan taking applications for Quality Losses under the 2005-2007 Crop LossAssistance program June 23. No end date was announced for the Quality Lossprogram, but growers with records available should be able to work with theircounty FSA office to determine if they might be eligible for assistance based onreduced lint quality during one of those production years.

 

MAYAVERAGE COTTON PRICE LOWER; SLIGHTLY
CHANGES CALCULATED 2007 CC PAYMENT

Friday, July 4, 2008                                    By Shawn Wade

      TheMay Average Price Received by farmers for Upland cotton dropped 1.6 cents perpound from the previous month, but sluggish marketings failed to make anysignificant change in the Counter-cyclical Program payment rate calculationheading into the final two months of the marketing year.

      Despitea lower price for the month, adding in the May marketing and price figuresresulted in a slight increase in the year-to-date Weighted Average PriceReceived to 56.83 cents per pound. Cumulative Upland cotton marketings throughMay 2008 total 10.814 million bales according to the USDA National AgriculturalStatistics Service.

      Theslight upward movement of the Average Price Received solidifies estimates thatthe final 2007 Counter-cyclical program (CCP) payment rate for Upland Cottonwill fall somewhere close to the 8.9 cents per pound rate calculated throughthe end of May.

      Marketingsand prices have essentially remained stagnant since March, when anear-catastrophic cotton market spike altered the 2007-crop marketinglandscape. Through February 2008, and prior to the March upheaval, 2007-cropmarketings were actually slightly ahead of the previous year’s pace by some200,000 bales. Another positive sign for growers was the fact that the averageprice received was also a healthy 8.3 cents higher than during the same periodin the 2006 marketing year.

      Sincethat time, however, the U.S. cotton market has shifted gears with neithermerchants nor potential buyers wiling to look very far ahead due to theirinability to confidently hedge their commitment.

      Eventhough prices have remained steady for the past three months the year-to-datemarketings have slipped almost 2.6 million bales behind the 2006 crop’s salespace. That trend is not likely to change over the next two months.

      Whilenot likely to impact the current 2007-crop CC calculation the market slow-downthat started in mid-march could drop overall marketing year sales down to the12 million bale level, a significant 3.75 million bales below last year.

      The followingtable shows the average price received each month by farmers and the associatedweighted average price based on prices and cumulative marketings from August 1,2007 through the end of May 2008.

      The 2007Counter-cyclical payment rate authorized under the 2002 Farm Bill will be basedon the 12-month Weighted Average Price Received by growers. For cotton the12-month Weighted Average Price will reflect price and marketings for the 2007marketing year. The 2007 cotton marketing year began August 1, 2007 and endsJuly 31, 2008.

 

UplandCotton Average Price Received by
Growers ThroughMay 2008

(Weighted by Marketings)

 

Marketings

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

1,762

1,762

44.90

44.90

September

373

2,135

52.00

46.14

October

949

3,084

55.20

48.93

November

1,464

4,548

57.00

51.53

December

1,529

6,077

59.20

53.46

January

1,839

7,916

60.70

55.14

February

1.339

9,315

61.90

56.16

March

488

9,803

60.50

56.37

April

486

10,289

62.10

56.64

May

525

10,814

60.50

56.83

June

n/a

n/a

59.20*

n/a

Source:National Agricultural Statistics Service; * = preliminary