The U.S. Department of Agriculture’s Farm Service Agency (FSA) announced the 2017 crop loan rate differentials for upland and extra-long staple cotton earlier this month.
The differentials, also referred to as loan rate premiums and discounts, have been calculated based on market valuations of various cotton quality factors for the prior three years. This calculation procedure is identical to that used in past years. The 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.
The 2017 crop differential schedules are applied to the 2017 crop loan rate of 49.49 cents per pound for the base grade of upland cotton and 79.77 cents per pound for extra-long staple cotton.
The 2014 Farm Bill stipulates the upland cotton loan rate ranges between 45 to 52 cents per pound, based on the simple average of the adjusted world price for the two marketing years preceding sowing of the ensuing year’s crop.
The loan rate provided to an individual cotton bale is based on the quality of each individual bale as determined by Agricultural Marketing Service classing measurements.
The tables of these loan rate differentials are available on the FSA website at https://www.fsa.usda.gov/programs-and-services/price-support/commodity-loan-rates/index.
If you have questions or need additional information, contact Erik Dohlman at (202) 720-4284 or Erik.Dohlman@wdc.usda.gov.