Higher 2011 Cotton Prices Complicate
Crop Insurance Decision Process

Friday, February 25, 2011                          By Shawn Wade

      At the close of Friday's market activity on the New York-based InterContinental Exchange (ICE) it appears that the December 2011 contract may have finally regained some of its footing after a week of downward pressure.

      That stabilization appears to have also solidified expectations about where the Base insurance price will fall for the 2011 crop of Upland cotton produced on the High Plains of Texas and in other areas that have a March 15 sales closing (insurance cancelation) date.

      Many growers in areas with the March 15 sales closing date have been holding off on making their final crop insurance coverage decisions until the USDA Risk Management Agency (RMA) announces the 2011 Base price.

      Through February 25, the USDA RMA website projects the average price to be $1.22 per pound with market results for February 28th still to be added to the calculation. With just one more day of trading to add, though, it appears unlikely that the average will move off the current average.

      As described in the January 28 edition of this newsletter, the 2011 Base price for Yield and Revenue protection policies is being established according to the 2011 Commodity Exchange Price Provisions (CEPP). To download the Cotton CEPP file go to: http://www.rma.usda.gov/policies/2011/11-cepp-cotton.pdf

      Under the CEPP the Base price for cotton in areas with a March 15 sales closing date will be established by averaging each trading day's closing value of the new crop (i.e.- 2011) December Cotton futures contract traded on the InterContinental Exchange during the month of February 2011.

      The resulting average will ultimately constitute the 2011 Base price and be used to establish coverage under the Yield protection plan for the insurance period, as well as establishing the minimum level of protection provided through the Revenue protection plan of insurance.

      With such a dramatic difference between the base price at which cotton will be insured in 2011, versus what it was insured for the previous year, growers have been reluctant to finalize their 2011 crop insurance coverage. Activity in crop insurance agency offices throughout the High Plains region will pick up dramatically early next week after RMA announces the Base insurance price on March 1st or 2nd.

      As they go about the process of finalizing their 2011 insurance plans, growers are also reminded of the availability of the new Cottonseed (Pilot) Endorsement, an optional endorsement that they can use to insure the cottonseed they produce alongside their cotton lint.

      The Cottonseed Endorsement was developed by Lubbock-based Plains Cotton Growers, Inc. and is designed to provide growers a cost effective way to insure the value of the cotton seed they produce each year.


      To purchase coverage under the Cottonseed Endorsement a grower (Upland or Extra Long Staple) must select a qualifying buy-up policy of insurance (Yield or Revenue) under the new Combo plan provisions for cotton. The cottonseed endorsement will not be available to growers who purchase CAT, GRIP or GRP cotton policies.

      Under the endorsement cottonseed is insured against yield losses that might occur during the growing season. There is NO revenue component attached to the Cottonseed Endorsement.

      Yield coverage is established using the grower's approved APH (actual production history) cotton lint yield, a national cottonseed price (which has been set by USDA RMA at $0.09 per pound, or $180 per ton, for the 2011 growing season) and the same level of coverage that applies to their cotton lint policy.

      For additional information about the the Cottonseed (Pilot) Endorsement producers are encouraged to contact their insurance agent or crop insurance provider to learn how the new provisions and the Cottonseed Endorsement will impact their 2011 risk management decisions.



CCI FAX – February 18, 2011

U.S. Cotton Promoted at Trade Shows in Paris

      CCI and Cotton Incorporated jointly exhibited at Texworld and Premiere Vision trade shows in Paris. Supima joined in a section of the joint booth at Texworld. Approximately 70,000 visitors from more than 100 countries attended the two shows, a 6.5 percent increase compared to last year.

      Texworld and Premiere Vision represent the largest combined exhibition of the world's leading apparel manufacturers. CCI, Cotton Incorporated and Supima conducted meetings with new business contacts representing mills, manufacturers, brands and retailers. Key discussion topics at the "Promoting U.S. Cotton" booths included the cotton supply chain and the soaring prices of cotton.

      The booths were designed as a meeting point for all segments of the cotton industry. Producers, buyers, retailers and representatives of the press found a comprehensive range of information on U.S. cotton there. The stands focused on sourcing support, the COTTON USA marketing and licensing program and related developments in the field of consumer behavior, as well as the latest fashion trends and technical innovations. COTTON USA staff helped buyers and manufacturers looking for cotton garments and cotton yarn suppliers identify new business contacts.

      CCI, Cotton Incorporated and Supima also supplied information on sustainable cotton cultivation in the United States, global developments in the cotton and procurement sectors and other relevant topics. A "Colors and Surface Forecast" presentation by Cotton Incorporated gave visitors the opportunity to learn more about fashion trends for Fall/Winter 2013.

      Many COTTON USA licensees' manufacturers exhibited at both shows and their presence was promoted at the CCI and Cotton Incorporated booths. Several new companies approached CCI to inquire about becoming COTTON USA licensees.


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2010 Crop Quality Report

      The following is a summary of the cotton classed at the Lubbock and Lamesa USDA Cotton Division Cotton Classing Offices for the 2010 production season.


Current Week:









21+ - 91.3%

31 - 1.4%















Season Totals To Date:









21+ - 83.9%

31 - 11.1%





21+ - 84.3%

31 - 12.1%


















Source: USDA AMS


2011 Production Conference & Meeting Dates


Meeting - Location:

Feb 28

Southwest Peanut Conference - Yoakum County

March 1

Sorghum Conference - Groom

March 1

Peanut Production Workshop - Quail

March 2

Cotton, Sorghum, Wheat & Irrigation Meeting - Silverton

March 3

Wheat Production Meeting - Abernathy

March 4

Crops Conference - Coliseum, Muleshoe

March 28

Cotton Production Workshop - Lamesa

March 29

Sorghum Production Workshop - Lamesa

March 29

Beef Marketing Workshop - Miami

March 30

Rolling Plains Ag Conference - Snyder

March 31

Beef Cattle Meeting - Lipscomb County

March 31

Beef Herd Health Workshop - Perryton Expo, Perryton

Source: Texas AgriLife Extension