Projected cotton insurance price figured at 60 cents for areas with a sales closing date of March 15. Cotton Council joined coalition in urging protection of crop insurance.
Cotton futures finished mostly lower in traded contracts beyond maturing March Tuesday, with most-active May rising above the prior-session high before retreating to a new low for the day.
- May settled down 39 points to 56.11 cents, slumping in the late going to close just off the low of its 170-point range from up 125 points to 57.75 cents to down 45 points at 56.05 cents. It has closed lower three sessions in a row and in seven of the last eight.
- March finished up 24 points to 58.25 cents, July dipped 12 points to 56.14 cents and December fell 26 points to 55.93 cents.
- Volume slowed to an estimated 37,189 lots from 59,953 lots the previous session when spreads accounted for 20,746 lots or 35% and EFP and EFS 276 lots each. Options volume totaled 4,669 calls and 5,233 puts.
The projected cotton insurance price for producers who purchase revenue-based insurance policies in areas with a closing date of March 15 is figured at 60 cents, based on a rounded up average of the closing price of December futures during February.
This is down from 64 cents for the 2015 crop. The area involved includes the Texas High and Rolling Plains, the nation’s largest cotton patch. Projected 2016-crop insurance prices elsewhere range up to 64 cents, depending upon location and sales closing date.
The National Cotton Council, meanwhile, joined a coalition in a letter to ranking members of the House and Senate budget committees urging them to protect crop insurance. The coalition included commodity, conservation, crop insurance and lending organizations.
The letter reminded the committeesΆ leadership that an overreliance on savings from agriculture in the future would undermine rural economies, which already have faced a 54% decline in net farm income in recent years.
The 2014 farm bill places greater emphasis on risk management, the letter said, and in doing so protects taxpayer interests.
Farmers spend about $4 billion per year of their own money to purchase insurance from the private sector. Beyond that, farmers across the nation on average must incur losses of almost 30% before their insurance coverage starts to provide assurance.
The farm bill comprises just 2% of the federal budget, and the entire farm safety net constitutes less than a third of 1% of the overall budget. Yet the bill still makes a significant contribution to deficit reduction beyond the contributions through sequestration, the letter says.
In fact, the Congressional Budget Office now projects that crop insurance will come in $6 billion under budget over the fiscal 2014-2023 period covered by the 2014 farm bil1.
The bipartisan budget agreement reached by Congress at the end of 2015 included $3 billion in cuts to crop insurance, but the cuts later were rescinded after an outcry from the agricultural community.
Futures open interest jumped 7,278 lots Monday to 202,886, with MarchΆs down 46 lots to 375 and MayΆs up 4,465 lots to 125,798. Cert stocks grew 1,352 bales to 69,670. Awaiting review were 6,606 bales at Memphis.
