Cotton Seed Program
Decision aid tool helps cotton growers determine best program options

Seed Cotton Program Enrollment Ends December 7, 2018

Seed Cotton Decision Aid tool available to help farmers choose best program

Seed Cotton Program Enrollment Ends December 7, 2018

Texas A&M’s Agricultural Food Policy Center faculty, working with USDA’s Farm Service Agency staff, developed an educational tool to help landowners, producers, and others understand how the new seed cotton program may affect FSA seed cotton program payments.

U.S. and global economic outlook and its potential future impact is impossible to fully understand, so it is important to understand that by using this decision aid tool, you

1) Agree that the results are for educational purposes only;

2) Agree that the results are not a guarantee of your future FSA program parameters or payments; and

3) Acknowledge that this tool is provided with absolutely no warranty, without even the implied warranty of fitness for a particular purpose.

Important Links:

 

John Robinson Cotton Webinar

Cotton Market and Risk Management Outlook with Dr. John Robinson, Professor and Extension Specialist/Cotton Marketing, November 15, 2018 at 3:00 PM CST, Link to register:  http://bit.ly/UAEX-Cotton-Market-Risk-Management-Outlook-Robinson

The webinar highlights the risks facing the cotton market going in to the 2019 cropping season. A combination of large planted acreage, adequate soil moisture, and likely low abandonment and above average yields may result in a strong supply response that weakens prices during 2019. Growers planning on producing cotton should consider relatively early forward pricing or hedging strategies. The webinar will also highlight available tools to assist growers in farm program and insurance decisions.

 Excerpt’s USDA FSA Seed Cotton Factsheet

USDA Farm Service Agency (FSA) Seed Cotton Fact Sheet: Seed Cotton Base Acre Allocation, Yield Update, Election and Enrollment

 The Bipartisan Budget Act of 2018 (BBA) authorizes seed cotton as a covered commodity under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs effective for the 2018 crop year. Owners of a farm with generic base acres as of September 30, 2013, and recent planting history of covered commodities, have a one-time opportunity to allocate generic base acres. The process will be multi-step to allocate generic base acres to seed cotton base acres. Steps for implementing the allocation of seed cotton are:

1.  Determine if a covered commodity was planted on the farm during the 2009 through 2016 crop years.

2.  Identify planted and considered planted (P&CP) history of covered commodities, including upland cotton, on the farm with generic base acres.

3.  Current owner(s) of the farm allocate generic base acres to seed cotton or allocate generic base to seed cotton and other planted covered commodities as applicable.

4.  Current owner(s) of the farm updates the seed cotton yield.

5.  Current producer(s) on the farm elect the applicable program for seed cotton, unless ARC-Individual Coverage (ARC-IC) was previously elected on the farm.

6.  The producer(s) on the farm enroll the farm. 

Eligibility to Allocate Generic Base Acres to Seed Cotton Base Acres

The farm must have been planted or approved prevented planted to a covered commodity (including upland cotton) at any time during the 2009 through 2016 crop years. Identifying Planting History on the Farm-- Producers will review the 2009 through 2012 planting history on farms that are determined eligible with generic base acres to ensure the planting history is complete.

Generic Base Acre Allocation Options

Generic base acres may be allocated to seed cotton base acres according to the following options:

Option 1: Allocate generic base acres on a farm to seed cotton base acres to the higher of the following:

a)  80 percent of the generic base acres on the farm - the remaining 20 percent goes to unassigned base acres for which there will be no payments.

b) The average of planted and considered planted (P&CP) upland cotton acres on the farm in crop years 2009-2012, not to exceed the total generic base acres on the farm.

Option 2: Allocate generic base acres in proportion to the 4-year average P&CP of covered commodities, including upland cotton, in crop years 2009-2012, to the total P&CP acres of all covered commodities planted on the farm.

 Seed Cotton PLC Yield Update

Owners of a farm have a one-time opportunity to update the farm’s payment yield for seed cotton with one of the following options:

Option 1: Retain the Counter-Cyclical (CC) yield for upland cotton, as listed on the farm record as of September 3, 2013, multiplied by 2.4.

Option 2: Update the upland cotton yield to 90 percent of a simple average of upland cotton yield per planted acre on the farm for each of the 2008-2012 crop years, excluding any year in which upland cotton was not planted, times 2.4.

Seed Cotton Program Election

Following the generic base acre allocation and yield update by a current owner(s) on the farm, the current producer(s) on the farm will have a one-time opportunity to unanimously elect either ARC or PLC for the seed cotton base acres resulting from the generic base acre allocation. If the generic base acre allocation results in other covered commodity base acres on the farm, those covered commodities are subject to the program election previously made at the beginning of the 2014 Farm Bill. Farms with an ARC-IC election will continue in ARC-IC, which would include any seed cotton base acres allocated to the farm. A farm failing to make an election will be considered to have elected PLC for seed cotton.

 

Market expectations for the week of November 12, 2018  

  •   U.S. 10-Year Treasury. Yield Sideways, Range 3.00 to 3.32 – Scenario No.1: U.S. 10-Year Treasury slightly lower if global equities bearish. Scenario No. 2: U.S. 10-Year Treasury  slightly   higher if global equities strengthen. The intermediate yield trend is higher. (November 9, 2018 – 3.19) Charts (A1-A4)
  • U.S. Dollar. Corrective Pullback Then Higher - The U.S. Dollar moves sideways to down correcting some of its upside gains against the Euro over the next few weeks. Beyond the expected near-term correction, dollar strength could be a major headwind for U.S. exports into the middle of next year. (November 9, 2018 – 96.73) (Possible Upside 110) Charts (A5-A13)
  • $SPX 500. Sideways to Up – Big Picture: more price strength than weakness. Seasonality is working in favor of this market. Possible rally into year-end, but caution is advised since the herd tends to favor this expectation. Charts (A14-A18) 
  • Global Equities. Sideways – Near term ongoing policy discussions between the U.S. and its economic and trading partners likely limit upside potential of many of these markets. The Global Equity Index (EFA), Emerging Markets (EEM), and Frontier Markets (FM) mostly sideways over the next several weeks. The strongest and most stable index will likely be the global index, followed by the emerging market index, and the frontier index will likely be the weakest index over the next several weeks. Possible rally into year-end, but caution is advised since the herd tends to favor this expectation. Charts (A19-A29)
  • $WTIC Oil. Bearish, Corrective Price Action Likely - $WTIC oil prices have potential downside weakness to the $58 per barrel area. Political dynamics and fundamental crosscurrents are challenging, so just follow the price action. (November 9, 2018 - $60.19), Charts (B6-B9)
  • Soybeans. Sideways, Defining a Trading Range - Soybeans (November 9, 2018 - $8.87 per bushel) to-date have not been able to overcome heavy resistance. Until soybean prices hold above $9.00 per bushel, I remain more concerned about the downside to $8.12 or lower than the upside. Charts (B10-B13)
  • Corn. Neutral to Bearish - This market needs to end the week of November 12, 2018, above $3.80 per bushel for me to start embracing the bullish case. (November 9, 2018 - $3.70 per bushel). Charts (B14-B17)
  • Wheat. Neutral to Bearish - Wheat prices need to end the week of November 12, 2018, above $5.15 per bushel to indicate the bearish trend is not gaining momentum. (November 9, 2018 - $5.02 per bushel) Charts (B14-B17)
  • Long Grain Rice. Neutral – January rice holding above $10.22 per cwt. would be positive for potential additional upside price strength. That said, global deflationary forces coupled with fundamentals continue to weigh heavily on this market without significant new business. (Chart B18-B20)
  • Cotton. Neutral, Global Deflation Forces Weighing Heavy on Cotton Prices - Key consideration: If cotton can finish the week of November 12, 2018, above December 77.86 cents per pound, this market still has potential to regain upside price momentum, given today’s global economic setting. Finishing the week of November 12, 2018, below 77.86 cents per pound would likely indicate additional price weakness lies ahead (November 9 – 78.09-cents per pound). Charts (B21-B24)
  • Livestock. Appears Correcting Upside Price Gains - Lean Hogs, Feeder Cattle and Live Cattle remain bullish.  
  • Gold and Silver. Neutral to Bearish - Gold and silver could find some near-term price support especially if the dollar continues to correct its upside move.  

UA Video

Dr. Thomson on New Technologies for Rice Breeding with a Focus on CRISPR Gene Editing, Dr. Michael Thomson, Texas A&M AgriLife Research, Video Link: https://www.uaex.edu/farm-ranch/economics-marketing/food-agribusiness-webinars/

Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected]

 DISCLAIMER-FOR-EDUCATIONAL-PURPOSES-ONLY

TAGS: Outlook Cotton
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish