Following USDA's release of the 2004 Upland Cotton Loan Premium and Discount tables, High Plains' cotton growers will find several things to be happy about as they prepare for the 2004 growing season.
Overall the new tables present a mixed bag for producers, but the majority of the improvements lie in the portion many producers have set their sights on through the rapid adoption of varieties that produce longer and stronger fiber.
The good news is that across the board loan rates for White Grades (11-71) with Staple lengths of 32 or better will start off higher in 2004. In just about every case, producers landing cotton in these categories gain ground through either higher premiums or lower discounts.
Developing the final 2004 schedule of premiums and discounts, and maintaining the appropriate relative relationships between qualities within the structure of the loan table, was a little bit of a challenge according to USDA officials.
Most of that challenge was the result of the 2003 marketing year creating some unusual results when the previous loan table and the Spot market averages for the first seven months of the 2003 marketing year were averaged to begin the process.
As is often the case, the initial formula derived table didn't suggest uniform changes and required some final adjustments to keep things in line.
Premiums and discounts tables for other High Volume Instrument (HVI) measured cotton quality components also proved to be a mixed bag in the end. Changes range from no adjustments to the premium and discount table for Length Uniformity to multiple changes in the table for micronaire.
In the 2004 micronaire table producers will see cotton with staple lengths of 32 and shorter get higher discounts for low mike readings from 2.7-3.4 as well as a slightly lower premium for mike readings from 3.7-4.2 in 2004.
Cotton with Staple lengths of 33 and longer will see a slightly larger micronaire premium for bales with readings of 3.7-4-2 while mike readings of 2.7-3.4 will change anywhere from plus 5 to minus 15 points from the 2003 table.
Strength discounts, trended upward with slightly lower discounts for readings 25.4 g/tex and lower. Strength readings from 25.4 g/tex through 29.4 will have no premium in 2004, while readings above 29 will receive slightly lower premiums compared to 2003, ranging from 30 to 60 points.