E6-13501. American Pima Spot Quotations

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Notice.

SUMMARY:

This notice announces the Agricultural Marketing Service's (AMS), Cotton Program, Market News Branch changes to the American Pima Spot Quotations. The changes include combining the San Joaquin Valley and Desert Southwest Pima cotton markets into one unified American Pima Market; changing the quotation terms to Uniform-Density free (UD-free), Freight-on-Board (FOB) warehouse; and, quoting discounts for cotton fiber strength that is 37.4 grams per Tex (gpt) and lower. The changes will be reflected in both the Daily Spot Cotton Quotations and the Monthly and Annual Cotton Price Statistics that are currently published by the AMS, Cotton Program, Market News Branch. This action is necessary to more accurately reflect the overall American Pima cotton market.

DATES:

Effective August 1, 2006.

FOR FURTHER INFORMATION CONTACT:

Darryl Earnest, Deputy Administrator, Cotton Program, AMS, USDA, STOP 0224, 1400 Independence Avenue, SW., Washington, DC 20250-0224. Telephone [phone], facsimile [phone], or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

The Secretary of Agriculture is authorized under the Cotton Statistics and Estimates Act of 1927 (Act) (7 U.S.C. 473 et seq.) for the collection, authentication, publication and distribution of timely information on the market supply, demand, location, condition and market prices for cotton. The AMS, Cotton Program disseminates market information and reports from spot cotton markets under the authority of the Act and the Agricultural Marketing Act of 1946 (7 U.S.C. 1622 et seq.).

AMS, Cotton Program, Market News Branch reports American Pima cotton spot prices. The market news price reporting format has changed as the classification of American Pima cotton has changed. Current recipients of the report will only notice minor changes to the report layout as of August 1, 2006, as outlined below. The data collected and used for the report will not change.

In recent years, American Pima cotton production has shifted dramatically, and the vast majority of the American Pima cotton crop is produced in the San Joaquin Valley, California. As production has increased in the San Joaquin Valley, production has sharply decreased in the Desert Southwest in Arizona, New Mexico and the area around El Paso, Texas. In 1994, 45 percent of the American Pima cotton crop was grown in the Desert Southwest with the remaining 55 percent grown in the San Joaquin Valley. In 2005, just 11 percent of the American Pima cotton crop was grown in the Desert Southwest, with the remaining 89 percent grown in the San Joaquin Valley. In addition to the production shift, the amount of cotton traded for immediate delivery and immediate payment (referred to as a spot transaction) also decreased. By changing from two separate markets to one combined market, for reporting purposes, the spot quotations will more accurately reflect the overall American Pima cotton market.

Currently, quotation terms reflect those used in the Desert Southwest, “FOB (freight on board) warehouse, compression charges not included”). Therefore, most cotton traded had to be converted to Desert Southwest terms. With the spot quotations changed to reflect just one Pima market and the majority of the American Pima cotton now being grown and traded in the San Joaquin Valley, the quotation terms will reflect where the bulk of the cotton is grown and traded. Beginning August 1, 2006 the quotation terms for the American Pima Spot Quotations will be changed to “UD (universal density) free, FOB warehouse.”

The final change to the Pima Spot Quotations will involve reporting strength discounts. Beginning with the 2004 Crop, strength discounts were applied to American Pima cotton placed into the Commodity Credit Corporation (CCC) loan program. For the past two years the Cotton Program's Market News Branch has surveyed buyers and sellers of American Pima to determine if there were any commercial discounts being applied to Pima cotton with strength measuring 37.4 grams per Tex (gpt) and lower. Results indicated that there were measurable discounts being applied to cotton with strength 37.4 gpt and lower. All ranges quoted by Cotton Program's Market News Branch for American Pima cotton will be the same as those used by the CCC loan schedule of premiums and discounts. These CCC ranges (from lowest to highest) are 35.4 and below, 35.5-36.4, 36.5-37.4 and 37.5 and above.

Dated: August 9, 2006.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.