NEWS
Farm Service Agency
Public Affairs Staff
1400 Independence Ave SW
Stop 0506, Room 3624-South
Washington, D.C. 20250-0506
Release No. 1633.04
Program Announcement
Stevin Westcott (202) 720-4178
stevin_westcott@wdc.usda.gov
USDA ANNOUNCES PREVAILING WORLD MARKET PRICE, LOAN
DEFICIENCY PAYMENT RATE, AND USER MARKETING CERTIFICATE
PAYMENT RATE FOR UPLAND COTTON
WASHINGTON, July 22, 2004 -- The Department of
Agriculture's Commodity Credit Corporation today announced
the prevailing world market price, adjusted to U.S.
quality and location (adjusted world price or 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 80-82 percent) upland cotton
(base quality), the coarse count adjustment (CCA), the
loan deficiency payment rate, and the user marketing
certificate (Step 2) payment rate that will be in effect
from 12:01 a.m., Eastern time, Friday, July 23, 2004,
through midnight, Eastern time, Thursday, July 29, 2004.
Cents/lb.
Adjusted World Price (AWP) ................ 40.30
Coarse Count Adjustment (CCA) ............. 0.00
Loan Deficiency Payment Rate .............. 11.70
User Marketing Cert. Rate (Step 2)......... 10.39
This week's AWP and CCA are determined as follows:
Forward NE Price ...................... 54.98
Adjustments:
Avg. U.S. spot market location ... -11.47
SLM 1-1/16 inch cotton ............ �3.25
Avg. U.S. location ................ 0.04
Sum of Adjustments ....................... �14.68
ADJUSTED WORLD PRICE ...................... 40.30
Forward NE Price ......................... 54.98
NE Coarse Count Price .................... �52.98
Adjustment to SLM 1-1/32 inch cotton ..... �5.45
COARSE COUNT ADJUSTMENT (Cannot be less than zero) 0.00
The Farm Security and Rural Investment Act of 2002
provides that the AWP may be further adjusted if: 1) the
AWP is less than 115 percent of the current crop year loan
rate for base quality upland cotton, and 2) the USNE price
exceeds the NE price. Because this week's forward USNE
price does not exceed the forward NE price, a further
adjustment cannot be made.
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 2003-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 2003 crop. The payment
rate of 11.70 cents per pound, is the difference between
the base loan rate of 52.00 cents and today�s AWP. May 31
was the last day producers could receive an LDP on 2003-
crop cotton.
Step 2 payments are provided this week because, for
four consecutive weeks, the USNE price has exceeded the NE
price, and the AWP has not exceeded 134 percent of the
loan rate for upland cotton. Relevant data for the Step 2
program follow:
AWP as %
Fri/Thur of 2003 USNE
Period Base Loan USNE NE Less Step 2 Dates
Week Ending Rate Price Price NE Price Rate Applicable
.......... cents/lb ...........
1 07/01/04 87.0 71.85 61.30 10.55 10.55 (07/02-07/08)
2 07/08/04 80.8 69.40 58.50 10.90 10.90 (07/09-07/15)
3 07/15/04 78.0 66.80 57.15 9.65 9.65 (07/16-07/22)
4 07/22/04 77.5 67.25 56.86 10.39 10.39 (07/23-07/29)
NOTE: The next announcement of the AWP, CCA, LDP
rate, and user marketing certificate payment rate for
upland cotton will be on Thursday, July 29, 2004, at 5
p.m., Eastern time.
Further program information is available from Steve
Neff, (202) 720-7954, e-mail steve_neff@wdc.usda.gov.
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NOTE: Farm Service Agency (FSA) news releases and media
advisories are available on the World Wide Web at FSA's
home page: http://www.fsa.usda.gov.
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