[Code of Federal Regulations] [Title 7, Volume 10] [Revised as of January 1, 2007] From the U.S. Government Printing Office via GPO Access [CITE: 7CFR1427.25] [Page 498-501] TITLE 7--AGRICULTURE CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE PART 1427_COTTON--Table of Contents Subpart A_Nonrecourse Cotton Loan and Loan Deficiency Payments Sec. 1427.25 Determination of the prevailing world market price and the adjusted world price for upland cotton. (a) CCC shall determine the world market price for upland cotton as follows: (1) During the period when only one daily price quotation is available for each growth quoted for Middling one and three-thirty- second inch (M 1\3/32\ inch) cotton, C.I.F. (cost, insurance, and freight) northern Europe, the prevailing world market price for upland cotton shall be based upon the average of the quotations for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe. (2) During the period when both a price quotation for cotton for shipment no later than August/September of the current calendar year (current shipment price) and a price quotation for cotton for shipment no earlier than October/November of the current calendar year (forward shipment price) are available for growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, the prevailing world market price for upland cotton shall be based upon the following: Beginning with the first week covering the period Friday through Thursday which includes April 15 or, if both the average of the current shipment prices for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe (Northern Europe current price (NEc)), and the average of the forward shipment prices for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe (Northern Europe forward price (NEf)), are not available during that period, beginning with the first week covering the period Friday through Thursday after the week which includes April 15 in which both the NEc and NEf price are available, the prevailing world market price for upland cotton shall be based upon the result calculated by the following procedure: (i) Weeks 1 and 2: ((2 x NEc) + NEf)/3. (ii) Weeks 3 and 4: (NEc + NEf)/2. (iii) Weeks 5 and 6: (NEc + (2 x NEf))/3. (iv) Week 7 through July 31: NEf. (3) The upland cotton prevailing world market price as determined under paragraphs (a)(1) or (a)(2) of this section shall hereinafter be referred to as the ``Northern Europe price (NE).'' (4) If quotes are not available for 1 or more days in the 5-day period, the available quotes during the period will be used. If no quotes are available during the Friday through Thursday period, the prevailing world market price shall be based upon the best available world price information, as CCC determines. (b) The upland cotton prevailing world market price, adjusted under paragraph (c) of this section (adjusted world price (AWP)), shall be applicable to the 2002 through 2007 crops of upland cotton. (c) The upland cotton AWP shall equal the NE price as determined under paragraph (a) of this section, adjusted as follows: (1) The NE shall be adjusted to average designated U.S. spot market location by deducting the average difference in the immediately preceding 52-week period between: (i)(A) The average of price quotations for the U.S. Memphis territory and the California/Arizona territory as quoted each Thursday for M 1\3/32\ inch cotton, [[Page 499]] C.I.F. northern Europe, during the period when only one daily price quotation for such growths is available, or (B) The average of the current shipment prices for U.S. Memphis territory and the California/Arizona territory as quoted each Thursday for M 1\3/32\ inch cotton, C.I.F. northern Europe, during the period when both current shipment prices and forward shipment prices for such growths are available; and (ii) The average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton, as quoted each Thursday in the designated U.S. spot markets. (2) The price determined under paragraph (c)(1) of this section shall be adjusted to reflect the price of Strict Low Middling (SLM) 1\1/ 16\ inch, leaf 4, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton (U.S. base quality) by deducting the difference, as CCC announces, between the applicable loan rate for an upland cotton crop for M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton and the loan rate for an upland cotton crop of the U.S. base quality. (3) The price determined under paragraph (c)(2) of this section shall be adjusted to average U.S. location by deducting the difference between the average loan rate for an upland cotton crop of the U.S. base quality in the designated U.S. spot markets and the corresponding crop year national average loan rate for an upland cotton crop of the U.S. base quality, as CCC announces. (4)(i) The prevailing world market price, adjusted under paragraphs (c)(1) through (c)(3) of this section, may be further adjusted if it is determined that: (A) Such price is less than 115 percent of the current crop-year loan level for U.S. base quality cotton, and (B) The Friday through Thursday average price quotation for the lowest-priced U.S. growth as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe (U.S. Northern Europe price (USNE)), is greater than the average of the quotations for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe. (ii) During the period when both current shipment prices and forward shipment prices are available for growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, the USNE provided in paragraph (c)(4)(i)(B) of this section shall be determined as follows: Beginning with the week covering the period Friday through Thursday which includes April 15 or, if both the average of the current shipment prices for the preceding Friday through Thursday of the lowest-priced U.S. growth, as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe (U.S. Northern Europe current price (USNEc)), and the average of the forward shipment prices for the preceding Friday through Thursday of the lowest-priced United States growth quoted for M 1\3/32\ inch cotton C.I.F. northern Europe (U.S. Northern Europe forward price (USNEf)), are not available during that period, beginning with the first week covering the period Friday through Thursday after the week which including April 15 in which both the average of the USNEc and the average of the USNEf are available, the result calculated by the following procedure: (A) Weeks 1 and 2: ((2 x USNEc) + (USNEf))/3. (B) Weeks 3 and 4: ((USNEc) + (USNEf))/2. (C) Weeks 5 and 6: ((USNEc) + (2 x USNEf))/3. (D) Week 7 through July 31: USNEf. (iii) In determining the USNE as provided in paragraphs (c)(4)(i)(B) and (c)(4)(ii): (A) If quotes for either the U.S. Memphis territory or the California/Arizona territory are not available for any week, the available quotations will be used. (B) If quotes are not available for one or more days in the 5-day period, the available quotes during the period will be used. (C) If no quotes are available for either the U.S. Memphis territory or the [[Page 500]] California/Arizona territory during the Friday through Thursday period, no adjustment will be made. (iv)(A) The adjustment shall be based on some or all of the following data, as available: (1) The U.S. share of world exports; (2) The current level of cotton export sales and shipments; and (3) Other data CCC determines relevant in establishing an accurate prevailing world market price, adjusted to U.S. quality and location. (B) The adjustment may not exceed the difference between the USNE, as determined in paragraphs (c)(4)(i) through (c)(4)(iii) of this section, and the NE, as determined in paragraph (a) of this section. (d) In determining the average difference in the 52-week period as provided in paragraph (c)(1) of this section: (1) If the difference between the average price quotations for the U.S. Memphis territory and the California/Arizona territory, as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, and the average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton as quoted each Thursday in the designated U.S. spot markets for any week is: (i) More than 115 percent of the estimated actual cost associated with transporting U.S. cotton to northern Europe, then 115 percent of such actual cost shall be substituted in lieu thereof for such week. (ii) Less than 85 percent of the estimated actual cost associated with transporting U.S. cotton to northern Europe, then 85 percent of such actual cost shall be substituted in lieu thereof for such week. (2) If a Thursday price quotation for either the U.S. Memphis territory or the California/Arizona territory, as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, is not available for any week, CCC: (i) May use the available northern Europe quotation to determine the difference between the average price quotations for the U.S. Memphis territory and the California/Arizona territory, as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, and the average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton, as quoted each Thursday in the designated U.S. spot markets for that week, or (ii) May not take that week into consideration. (3) If Thursday price quotations for any week are not available for either, (i) Both the Memphis territory and the California/Arizona territory as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, or (ii) The average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton, as quoted in the designated U.S. spot markets, that week will not be considered. (e) The upland cotton AWP, determined under paragraph (c) of this section, and the amount of the additional adjustment determined under paragraph (f) of this section, shall be announced, to the extent practicable, at 5 p.m. Eastern Standard time each Thursday continuing through the last Thursday of July, 2008. In the event that Thursday is a non-workday, the determination will be announced, to the extent practicable, at 8 a.m. Eastern Standard time the next work day. (f)(1)(i) The AWP, as determined under paragraph (c) of this section, shall be subject to further adjustments as provided in this section regarding all qualities of upland cotton eligible for loan except the following upland cotton grades with a staple length of 1\1/ 16\ inch or longer: (A) White Grades--Strict Middling and better, leaf 1 through leaf 6; Middling, leaf 1 through leaf 6; Strict Low Middling, leaf 1 through leaf 6; and Low Middling, leaf 1 through leaf 5; (B) Light Spotted Grades--Strict Middling and better, leaf 1 through leaf 5; Middling, leaf 1 through leaf 5; and Strict Low Middling, leaf 1 through leaf 4; and (C) Spotted Grades--Strict Middling and better, leaf 1 through leaf 2; and (ii) Grade and staple length must be determined under Sec. 1427.9. If no such official classification is presented, the [[Page 501]] coarse count adjustment shall not be made. (2) The adjustment for upland cotton provided under paragraph (f)(1) of this section shall be determined by deducting from the AWP: (i) The difference between the NE, and (A) During the period when only one daily price quotation for each growth quoted for ``coarse count'' cotton, C.I.F. northern Europe, is available the average of the quotations for the corresponding Friday through Thursday for the three lowest-priced growths of the growths quoted for ``coarse count'' cotton, C.I.F. northern Europe; or (B) During the period when both current shipment prices and forward shipment prices are available for the growths quoted for ``coarse count'' cotton, C.I.F. northern Europe, the result calculated by the following procedure: Beginning with the first week covering the period Friday through Thursday including April 15 or, if both the average of the current shipment prices for the preceding Friday through Thursday for the three lowest-priced growths of the growths quoted for ``coarse count'' cotton, C.I.F. northern Europe (Northern Europe coarse count current price (NECCc)), and the average of the forward shipment prices for the preceding Friday through Thursday for the three lowest-priced growths of the growths quoted for ``coarse count'' cotton, C.I.F. northern Europe (Northern Europe coarse count forward price (NECCf)), are not available during that period, beginning with the first week covering the period Friday through Thursday after the week including April 15 in which both the Northern Europe coarse count current price and the Northern Europe coarse count forward price are available: (1) Weeks 1 and 2: (2 x NECCc) + NECCf)/3; (2) Weeks 3 and 4: (NECCc + NECCf)/2; (3) Weeks 5 and 6: (NECCc + (2 x NECCf))/3; and (4) Week 7 through July 31: The NECCf, minus: (ii) The difference between the applicable loan rate for an upland cotton crop for M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton and the loan rate for an upland cotton crop for SLM 1\1/16\ inch, leaf 4, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton. (iii) The result of the calculation as determined under this paragraph shall hereinafter be referred to as the ``Northern Europe coarse count price.'' (3) Regarding the determination of the Northern Europe coarse count price under paragraph (f)(2)(i) of this section: (i) If no quotes are available for one or more days of the 5-day period, the available quotes will be used; (ii) If quotes for three growths are not available for any day in the 5-day period, that day will not be considered; and (iii) If quotes for three growths are not available for at least 3 days in the 5-day period, that week will not be considered, in which case the adjustment determined under paragraph (f)(2) of this section for the latest available week will continue to be applicable. (g) If the 6-week transition period from using current shipment prices to using forward shipment prices in the determination of the NE under paragraph (a)(2) of this section, and the Northern Europe coarse count price under paragraph (f)(2)(i)(B) of this section do not begin at the same time, CCC shall use either current shipment prices, forward shipment prices, or any combination thereof to determine the NE and/or the Northern Europe coarse count price used in the determination of the adjustment for upland cotton under paragraph (f)(1) of this section and determined under paragraph (f)(2) of this section to prevent distortions in such adjustment. (h) The AWP determined under paragraph (c) of this section, shall be subject to further adjustments to a value no less than zero, as CCC determines, based upon the Schedule of Premiums and Discounts and the location differentials applicable to each warehouse location as announced under the loan program for an upland cotton crop. Subpart B [Reserved] [[Page 502]]