2008-CROP CC PAYMENT CALCULATION STILL
ON-TRACK TO TRIGGER MAXIMUM PAYMENT RATE

Friday, August 21, 2009                             by Shawn Wade

      Having closed out the 2008 Upland cotton marketing year, cotton producers across the U.S are shifting their thoughts to the upcoming USDA announcement of the Average Price Received by Growers and the final 2008-crop Counter-cyclical program payment rate.

      With June Upland cotton marketings of only 358,000 bales and no change in the price growers received for cotton from the previous month, the latest calculation of the weighted average price received by growers for Upland cotton declined slightly from the previous month.

      June marketings of 358,000 bales were 104,000 bales below the previous month. With the inclusion of the June marketing numbers, the preliminary USDA marketing total for 2008-crop Upland cotton crop is now 8.953 million bales with only the July bale totals to add to the mix. U.S. growers marketed 11.672 million bales during the same time period last year.

      According to USDA the average price received by growers for the month of June was unchanged from the previous month's 46.4 cents per pound.

      Comparing 2008-crop marketings and prices to the 2007-crop for the same time period indicates the gap between the two remains significant. Comparing prices reported in June 2008 and June 2009 continues to illustrate the impact of the past year's economic upheaval. This June's price of 46.40 cents is 17.6 cents lower than USDA's final June 2008 price of 64.00 cents.

      This month's calculation yielded an average price received of 48.58 cents using preliminary data reported through the end of June by the USDA National Agriculture Statistics Service. Based on these figures, which are still subject to revision, the Weighted Average Price Received by Growers for Upland cotton appears to be well below the Upland cotton base loan value of 52.00 cents per pound.

      As calculated with preliminary information for the first eleven months of the marketing year, the 48.58 cent Average Price Received figure would trigger an estimated Counter-cyclical payment rate of 12.58 cents, the statutory maximum allowed by the 2008 Farm Bill. Final July marketing and price figures will be released at the end of August.

      Growers wondering what to look for in regard to the final 2008-crop Counter-cyclical payment should remember that the USDA Farm Service Agency (FSA) issued a 5.03 cent advance CC payment in February of this year. The advance CC payment was equal to 40 percent of USDA's projected final payment rate of 12.58 cents.

      If, in fact, the final payment rate is announced at the maximum possible 12.58 cents, growers that received an advance CC payment should expect to receive a final CC payment equal to 7.55 cents per pound. Growers who did not receive an advance CC payment would receive the full 12.58-cent final payment rate.

      The 2008 Counter-cyclical payment rate authorized under the 2008 Farm Bill will be based on the 12-month Weighted Average Price Received by growers. For cotton the 12-month Weighted Average Price will reflect price and marketings for the 2008 marketing year. The 2008 cotton marketing year began August 1, 2008 and ended July 31, 2009.

      To calculate the Counter-cyclical payment rate you start with the 71.25-cent Upland cotton Target Price and subtract from it the 6.67-cent Upland cotton Direct payment rate and the higher of the 52.00 cent Upland cotton base loan rate or the Weighted Average Price Received by growers for the marketing year.

      The following table shows the preliminary average price received each month by farmers and the associated weighted average price based on prices and cumulative marketings from August 1, 2008 through June 2009.

Average Price Received For 2008-crop Upland Cotton
(Weighted by Marketings)

 

Marketings

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

1,144

1,144

56.50

56.50

September

95

1,239

61.10

56.85

October

578

1,817

55.50

56.42

November

978

2,795

53.10

55.26

December

781

3,576

51.90

54.53

January

1,849

5,425

46.10

51.65

February

739

6,164

41.60

50.45

March

764

6,928

41.00

49.41

April

1,205

8,133

45.30

48.80

May

462

8,595

46.40

48.67

June

358

8,953

46.40

48.58

July

na

na

45.80*

na

Source: National Agricultural Statistics Service; * = preliminary

HOLT NAMED USDA ARS GIN LAB RESEARCH LEADER

Friday, August 21, 2009                             by Shawn Wade

      The United States Department of Agriculture's Agricultural Research Service (ARS) has named Dr. Greg Holt to serve as the Research Leader for the Cotton Production & Processing Research Unit in Lubbock, Texas, effective August 16, 2009.

      Dr. Holt began his career with ARS as an Agricultural Engineer in Lubbock, Texas, in 1998. Dr. Holt earned his Ph.D. in Industrial Engineering from Texas Tech University in 2004.

      While in Lubbock, Dr. Holt's work has generated both national and international interest. Products of his research program have been accepted and successfully implemented by the cotton ginning industry to reduce particulate emissions generated during the ginning process and to transform historically unusable ginning byproducts into useful and profitable commodities.

 

REESE TECHNOLOGY CENTER TO HOST THE
57TH WTACI ANNUAL CONFERENCE SEPTEMBER 16, 2009

      The 57th Annual Agricultural Chemicals Conference, organized by West Texas Agricultural Chemicals Institute, has been scheduled for Wednesday, September 16, 2009.

      The conference will take place at the Reese Technology Conference Center located at 9801 Reese Boulevard North (West 4th Street) Lubbock, Texas.

      Conference planners are encouraging attendees to take advantage of the WTACI's on-line registration process at: http://wtaci.tamu.edu/registration.html

      To view the complete 2009 West Texas Agricultural Chemicals Conference program on the web go to:

http://wtaci.tamu.edu/Meetingswtaci.html

      The pre-registration fee for this year's conference is $75 for registrations completed on-line or postmarked before September 1. The Day-Of-Conference registration fee for registrations postmarked or completed on-line after September 1 is $95.00 and credit cards will be accepted.

      A brochure version of the 2009 WTACI Program and Registration Form in PDF format is also available and can be downloaded at: http://wtaci.tamu.edu/pdf/09program.pdf

      Program participants for the 57th WTACI Annual Meting include: Drew DeBerry, Deputy Commissioner Texas Department of Agriculture; Justin Weaver, Meteorologist-in-Charge, National Weather Service, Lubbock; Dr. Ken Cearley, Dr. Brent Bean, Dr. Randy Boman, Dr. Kevin Bronson, Dr. Terry Wheeler, Dr. David Kerns, Brant Baugh, and Monti Vandiver - Texas AgriLife Extension Service and Texas AgriLife Research; Dr. Jesse Richardson - Research Scientist, Dow AgroSciences, Hesperia, CA; Dr. Eric Hequet - Fiber and Biopolymer Research Institute, TTU; Dr. Craig Bednarz - Crop Physiology, TTU and Texas AgriLife Research

      The WTACI program will also qualify participants to receive a number of CEU credits for holders of Certified Crop Advisor (CCA) and private pesticide applicator licenses.

 

Want the facts about the U.S. farm policy.

Get what you need at:

http://www.farmpolicyfacts.com

 

AUGUST 20 UPLAND COTTON AWP ANNOUNCEMENT

      The Department of Agriculture's Commodity Credit Corporation announced the adjusted world price (AWP) for Strict Low Middling (SLM) 1-1/16 inch (leaf grade 4, micronaire 3.5-3.6 and 4.3-4.9, strength 25.5-29.4 grams per tex, length uniformity of 79.5-82.4 percent) upland cotton (base quality), adjusted to U.S. quality and location, the fine count adjustment (FCA), the coarse count adjustment (CCA), and the loan deficiency payment rate that will be in effect from 12:01 a.m., Eastern Time, Friday, August 21, 2009, through midnight, Eastern Time, Thursday, August 27, 2009.

 

UPLAND COTTON ANNOUNCEMENT

August 20, 2009

 

 

 

Cents/lb.

Adjusted World Price (AWP)

 

 

47.45

Fine Count Adjustment (FCA) 2008 Crop

 

 

0.00

Fine Count Adjustment (FCA) 2009 Crop

 

 

0.00

Coarse Count Adjustment (CCA)

 

 

0.00

Loan Deficiency Payment Rate

 

 

4.55

 

 

 

 

This week's AWP, FCA, and CCA are determined as follows:

 

 

 

FE Price

 

 

63.82

Adjustments:

 

 

 

Avg. costs to market

 

 

- 13.07

SLM 1-1/16 inch cotton

 

 

- 3.30

Sum of Adjustments

 

 

- 16.37

ADJUSTED WORLD PRICE

 

 

 

47.45

 

2008

2009

 

Loan Schedule Premium

 

 

 

for SM 1-1/8" Cotton

1.75

1.55

 

Market Premium for SM 1-1/8" Cotton:

 

 

 

FE Fine Count Price

 

 

66.27

FE Price

 

 

- 63.82

Less Market Premium

2.45

2.45

 

(cannot be less than zero)

 

 

 

 

FINE COUNT ADJUSTMENT

 

 

 

(cannot be less than zero)

0.00

0.00

 

FE Price

 

 

63.82

FE Coarse Count Price

 

 

- 66.23

Adjustment to SLM 1-1/32 inch cotton

 

 

- 5.30

 

 

 

 

COARSE COUNT ADJUSTMENT

 

 

0.00

(cannot be less than zero)

 

 

 

                 

      The Food, Conservation, and Energy Act of 2008 provides that the AWP may be further adjusted if the Secretary determines adjustment is necessary to 1) minimize potential loan forfeitures, 2) minimize accumulation of Government stocks, 3) ensure free and competitive marketing of upland cotton, both domestically and internationally, and 4) ensure an appropriate transition between current-crop and forward-crop price quotations. No adjustment has been made this week.

      Because the AWP for the period is less than 52.00 cents per pound, which is the base quality loan rate, the loan repayment rate during this period is equal to the AWP, adjusted for the specific quality and location. The loan repayment amount will be further adjusted by the application of a storage credit, and interest will be waived.

      Because the AWP is less than the 2008-crop loan rate, cash loan deficiency payments (LDPs) will be paid to eligible producers who agree to forego obtaining price support loans with respect to the 2008 crop. The payment rate of 7.54 cents per pound is the difference between the base loan rate of 52.00 cents and the AWP.

      The next announcement of the AWP, FCA, CCA, and LDP The next announcement of the AWP, FCA, CCA, and LDP rate for upland cotton will be on Thursday, August 27, 2009, at 4:00 p.m., Eastern Time.