Interviews
ACSA marketing loan proposals
13 Jan '07
4 min read
A related proposal would allow the holder of the CCC Form 605 Option to Purchase, who has purchased an option from the producer to repay his price support loan, to market thecotton prior to redemption. The holder of the 605 would be required to provide the CCCa form of surety that protects the CCC's collateral interest in the cotton. This change in policy would move cotton to market while assurance is provided to both the producerand the CCC that the outstanding loan and all charges are paid.
VOLUME XLI, To make the marketing loan more competitive, the current formula used to determine theloan premiums and discounts would be modified for the first time since 1982 to bringabout an equal balance in loan values across the cotton belt. The current formula isunfairly weighted and results in premiums higher than justified by current marketconditions.
The proposal would correct this imbalance by giving proportional weight, byvolume, to each of the seven growth areas spot market prices. The ACSA proposal would also correct another flaw in the current formula by not using the full premium from theprevious year since it bears no relationship to the current market demand and the pricesthat consuming mills will pay for cotton. Another change in the loan payment formulation would eliminate location differentials, which provide cotton in the Eastern region of the cotton belt with higher loan values than those received in other producing regions.
As a result, some Eastern producers receivealmost 3½ cents more per pound in their initial loan advance than producers in the FarWest and 2 cents more than producers receive in West Texas. This change reforms an outdated policy established over fifty years ago to offset the cost of shipping cotton to textile mill consuming markets located in the Southeast. Domestic consumption, theexport trade, and shipping patterns have significantly changed and require that thisoutdated policy be discontinued as the bulk of the U.S. cotton now moves off the WestCoast to our export customers in the Far East. The proposal for FOB truck loan terms would reflect the true net value of loan collateraland show the producers all the charges related to the movement of cotton into and out ofa warehouse.
VOLUME XLI, To make the marketing loan more competitive, the current formula used to determine theloan premiums and discounts would be modified for the first time since 1982 to bringabout an equal balance in loan values across the cotton belt. The current formula isunfairly weighted and results in premiums higher than justified by current marketconditions.
The proposal would correct this imbalance by giving proportional weight, byvolume, to each of the seven growth areas spot market prices. The ACSA proposal would also correct another flaw in the current formula by not using the full premium from theprevious year since it bears no relationship to the current market demand and the pricesthat consuming mills will pay for cotton. Another change in the loan payment formulation would eliminate location differentials, which provide cotton in the Eastern region of the cotton belt with higher loan values than those received in other producing regions.
As a result, some Eastern producers receivealmost 3½ cents more per pound in their initial loan advance than producers in the FarWest and 2 cents more than producers receive in West Texas. This change reforms an outdated policy established over fifty years ago to offset the cost of shipping cotton to textile mill consuming markets located in the Southeast. Domestic consumption, theexport trade, and shipping patterns have significantly changed and require that thisoutdated policy be discontinued as the bulk of the U.S. cotton now moves off the WestCoast to our export customers in the Far East. The proposal for FOB truck loan terms would reflect the true net value of loan collateraland show the producers all the charges related to the movement of cotton into and out ofa warehouse.
Popular News
Leave your Comments
Editor’s Pick
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
