Friday, July 4, 2008                                    By Shawn Wade

      This weekís release of the USDA Acreage Report on June 30 created quite a few more questions than it answered for the Texas High Plains and by extension the U.S. cotton industry.

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

      That 500,000-600,000 acre question mark makes a big difference, especially when you consider that somewhere near 1 million acres will be subtracted from one of those numbers due to cotton that has been or will be failed and not harvested.

      So far a combination of excessively dry planting conditions and storm related damage resulting from hail, high winds or both have plagued most of the regionís dryland production areas and also adversely impacted some irrigated cotton as well. It seems that High Plains growers in many areas simply couldnít get the weather monkey off their back long enough to get a crop going.

      Assigning a cause to the current acreage discrepancy is nearly impossible unless you simply attribute the results to the fact that a fair number of the growers responding to the USDA Acreage survey simply werenít sure what they were going to end up doing, or were not willing to tip their hand one way or the other.

      The end result was a lot of ìI donít knowî answers and the confusing impression that the High Plains intended to plant over a million less corn, cotton and grain sorghum acres without a corresponding increase in other crops.

      With the USDA Farm Service Agency allowing an extra 30 days for growers to certify their 2008 crop acreages this year as a result of the Midwest floods, we may have to wait another 6-8 weeks before a really clear view of this yearís High Plains crop acreage is revealed.

      In the meantime we will have to see if, or by how much, the planted acreage number changes between now and the release of USDAís first 2008 Crop Production estimate in early August.

      How many acres were planted should be one of the questions asked of growers in this initial production survey and their answers may prompt a change in the projections for both High Plains and Texas cotton acres.

      With Texas projected to plant at least 4.7 million acres in 2008, accounting for more than 50 percent of expected U.S. cotton plantings, an increase in High Plains planted acreage numbers from the currently reported 2.79 million up to last yearís 3.2 million acres would be significant.

      Most estimates early on had 3.2 million acres as the bottom end for cotton acres before the June 30 report. That means the potential for a significant acreage revision in the near future exists either in the total acreage planted in the state or through reallocation of acreage within the different cotton production regions.

 

Friday, July 4, 2008                                    By Shawn Wade

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

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

      One important note for both growers and landowners to remember is that when signing up for the 2008 DCP landowners is that a new Power of Attorney form granting authority to the producer to act on behalf of the landowner may be required in order to sign-up for the 2008 DCP program.

      Producers and landowners (grantors) who previously executed FSA-211 or other Power of Attorney, authorizing an attorney-in-fact to act on their behalf for anything other than ìall current and future programs,î will need to execute a new FSA-211 or other Power of Attorney.

      Under rules established for the 2008 DCP program, USDA will compute DCP payments using base acres and payment yields established for each farm. Eligible producers will receive direct payments at rates established by the Food, Conservation and Energy Act of 2008.

      Under the 2008 DCP, eligible producers may request to receive an advance payment of 22 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.

      Growers can also elect to receive advance Counter-cyclical program payments when their availability is announced for a commodity whose estimated effective price is below its target rice (which takes into account the direct payment rate, market price and loan rate).

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

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

      FSAís eAuthentication service has strict security measures to protect participants' private information. Only authorized federal employees have access to information producers submit electronically.

2008 Crop Certification and Quality Loss Sign-up Reminder

      In addition to the start of the 2008 DCP sign-up process, which will end September 30, FSA officials are also reminding growers to remember to complete their 2008 crop acreage certification before August 15, 2008.

      FSA officials are encouraging growers to go ahead and get their 2008 crop certifications out of the way while they are completing their 2008 DCP sign-up.

      Given the fact that additional time has been granted to complete the certification process, growers are encouraged to make appointments with their county offices to complete these and any other outstanding business they may have down at their county FSA office.

      For cotton producers some of that unfinished business may well include taking a look at their 2005 and 2006 production records to see if they might qualify for Crop Disaster assistance based on reduced lint quality for cotton produced during one of those growing seasons.

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

 

Friday, July 4, 2008                                    By Shawn Wade

      The May Average Price Received by farmers for Upland cotton dropped 1.6 cents per pound from the previous month, but sluggish marketings failed to make any significant change in the Counter-cyclical Program payment rate calculation heading into the final two months of the marketing year.

      Despite a lower price for the month, adding in the May marketing and price figures resulted in a slight increase in the year-to-date Weighted Average Price Received to 56.83 cents per pound. Cumulative Upland cotton marketings through May 2008 total 10.814 million bales according to the USDA National Agricultural Statistics Service.

      The slight upward movement of the Average Price Received solidifies estimates that the final 2007 Counter-cyclical program (CCP) payment rate for Upland Cotton will fall somewhere close to the 8.9 cents per pound rate calculated through the end of May.

      Marketings and prices have essentially remained stagnant since March, when a near-catastrophic cotton market spike altered the 2007-crop marketing landscape. Through February 2008, and prior to the March upheaval, 2007-crop marketings were actually slightly ahead of the previous yearís pace by some 200,000 bales. Another positive sign for growers was the fact that the average price received was also a healthy 8.3 cents higher than during the same period in the 2006 marketing year.

      Since that time, however, the U.S. cotton market has shifted gears with neither merchants nor potential buyers wiling to look very far ahead due to their inability to confidently hedge their commitment.

      Even though prices have remained steady for the past three months the year-to-date marketings have slipped almost 2.6 million bales behind the 2006 cropís sales pace. That trend is not likely to change over the next two months.

      While not likely to impact the current 2007-crop CC calculation the market slow-down that started in mid-march could drop overall marketing year sales down to the 12 million bale level, a significant 3.75 million bales below last year.

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

      The 2007 Counter-cyclical payment rate authorized under the 2002 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 2007 marketing year. The 2007 cotton marketing year began August 1, 2007 and ends July 31, 2008.

 

Upland Cotton Average Price Received by
Growers Through May 2008

(Weighted by Marketings)

Source: National Agricultural Statistics Service; * = preliminary