• By Keith Edmiston •
The U.S. Department of Agriculture Farm Service Agency released the 2021 crop Upland Cotton Loan Premium and Discount tables April 15. The biggest changes are in extraneous matter for plastics with level 1 and 2 both over 3,000 points.
This discount is expected to increase to 4,000 points in 2022. Needless to say, we have to be serious about plastic contamination!
This is an issue that can be avoided in many cases, especially during harvest and the subsequent handling and transport of modules. With the acceptable prices for December cotton, we want to ensure we avoid severe penalties for quality, especially those that can be avoided.
Smaller increases to low fiber strength are also included in this years chart. You can download the tables by clicking here.
The revised premium and discount tables apply to the base loan rate for Upland cotton, which has also been announced and remains 52 cents per pound for the 2021 crop. The Cotton Incorporated Cotton Loan Calculator will be updated by July to include this 2021 loan chart information.
The loan rate provided to an individual cotton bale is based on the quality of each individual bale as determined by USDA’s Agricultural Marketing Service classing measurements.
These differentials are important to cotton producers because they are used to derive the actual loan rate for each bale of cotton – above (premium) or below (discount) the average per pound loan rate, depending on the grade or quality of the cotton. The actual loan rate is significant because it is used to determine any marketing loan gains and loan deficiency payments.
USDA’s Commodity Credit Corporation adjusts cotton loan rates by these differentials so that cotton loan values reflect the differences in market prices for color, staple length, leaf, extraneous matter, micronaire, length uniformity and strength.
Dr. Keith Edmiston is North Carolina State University Extension cotton specialist. He may be reached at keith_edmisten@ncsu.edu