The United States Department of Agriculture Farm Service Agency released the 2021-crop Upland Cotton Loan Premium and Discount tables on April 15 and they contain some significant changes compared to the 2020 tables (click here to download).
The biggest change in the new charts are found in the discount schedule for Extraneous Matter, specifically for Level One and Level Two Plastic, and reflect the markets increased focus on this type of lint contamination.
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.
As typically is the case Color/ Leaf/Staple combinations that receive a discount will see increased discounts under the 2021 chart. On the positive side, however, Color/Leaf/Staple combinations that typically have a premium will see generally bigger premiums in 2021. The only departure from this trend appears in the White grades 11-31 where bales with a 35 or higher Staple and Leaf grade 5 will see smaller premiums.
Changes to premiums and discounts in the White and Light Spotted grades in other Leaf and Staple combinations tended to stay within the ranges identified above.
As noted earlier, the 2021 premiums and discounts table for Extraneous matter saw a significant increase in the discounts for bales identified as containing Plastic. Discounts for Plastic jumped the most increasing to a whopping -3130 points for Level One and -3240 points for Level Two calls.
Overall, the tables for other types of Extraneous matter, Micronaire, Strength, and Length Uniformity were unchanged as far as available premiums, but did see increased discounts for virtually all Micronaire, Length Uniformity and Strength values that typically have an associated discount.
While overshadowed by the increased discounts for Plastic, the Strength table includes what would otherwise have been viewed as significant changes as well. For 2021 growers will see significantly higher discounts for Strength readings below 25.9 grams per tex. The discount for a Strength measurement in the 24-24.9 and 25-25.9 ranges changed the most going from -320 to -460 and -270 to -410, respectively. This is an increase in the applied discount of 140 points or 1.4 cents per pound. Discounts for lower Strength readings also increased although by smaller amounts.
The following table provides comparisons between 2020 and 2021 loan values for White Grades 11-41 and Light Spot grades 12-42, Staple 34 through 38 and higher.
Complete 2021 Loan Premium and Discount tables and loan charts with calculated values based on the 2021 schedule of premiums and discounts will be posted on the Plains Cotton Growers website at: https://plainscotton.org/loan-charts/.