The United States Department of Agriculture Farm Service Agency released the 2022-crop Upland Cotton Loan Premium and Discount tables on April 18th.
The consistent theme seen in the charts this year, compared to the 2021 tables, are smaller premiums and also smaller discounts — especially in the White grades 11-41 and Staple lengths 34 and longer.
The revised premium and discount tables apply to the Base Loan rate for Upland cotton, which has also been announced and remains at 52 cents per pound for the 2022 crop.
The 2022 chart also adds to the increase in discounts for plastic contamination in the discount schedule for Extraneous Matter, specifically for Level One and Level Two Plastic, to reflect the market’s continued focus on this type of lint contamination.
When prices are high like they have been during the 2021-crop marketing year, premiums and discounts in the subsequent year’s loan table tend to move toward each other. The higher overall price for cotton makes the full application of discounts or premiums less critical in establishing the sale price.
As a result of this dynamic, Color/Leaf/Staple combinations that normally receive a discount will see slightly smaller markdowns under the 2022 loan chart compared to 2021. However, premium qualifying Color/Leaf/Staple combinations will be smaller in 2022.
The 2022 premium and discount table for Extraneous Matter saw another significant increase in the discounts applied to bales identified as containing Plastic. Discounts for Plastic jumped the most — increasing to -4000 points for both Level One and Level Two plastic contamination.
Overall, the tables for other types of Extraneous Matter, Micronaire and Length Uniformity have mostly small five- to 10-point adjustments for 2022. The biggest change was in the Strength table where readings from 30 to 33.9 grams per tex (g/tex) will see smaller premiums and larger discounts.
Bales with Strength readings from 25.9 g/tex and below will receive significantly higher discounts with increases ranging from -100 to -140 points more than the previous year.
This is the second year the Upland Cotton Strength table includes significant changes as well. In 2021, growers saw higher discounts for Strength readings below 25.9 grams per tex. The discount for a Strength reading for the 24-24.9 and 25-25.9 ranges changed the most with an additional discount of 140 points, or 1.4 cents per pound, added to the existing discount level. In 2022, a similar level of change has been added again as the dis-counts for readings in the 24-24.9 and 25-25.9 ranges have been increased by 140 and 135 points, respectively. Discounts for lower Strength readings were also increased.
Comparisons of the 2022 Upland Cotton loan schedule and differences can be found on the Plains Cotton Growers website at www.plainscotton.org.