USDA’s Commodity Credit Corporation has announced the 2019 crop loan rate differentials for upland cotton and extra-long staple cotton.
The differentials – also known as premiums and discounts on loan rates – were calculated based on market assessments of various cotton quality factors for the previous three years. This calculation procedure is identical to that used in previous years, with two exceptions:
- A reduced discount is applied to white, 8-sheet upland cotton, and a new category of foreign plastics has been added for upland cotton.
- The extra long staple strength discount ranges have changed from previous years.
The 2019 crop differential rates apply to the 2019 crop loan rates of 52.00 cents per pound for upland cotton base grade and 95.00 cents per pound for extra long staple cotton.
The 2018 Farm Bill states that the loan rate for upland cotton ranges from 45 to 52 cents per pound based on the simple average of the adjusted world price for the two marketing years before planting the following year’s harvest. The loan rate for an individual cotton bale is based on the quality of each individual bale as determined by the USDA Agricultural Marketing Service’s grading metrics.
The Commodity Credit Corporation adjusts cotton loan rates based on these differentials so that cotton loan values reflect market price differences for color, staple length, sheets, foreign material, micronaire, uniformity of length and strength.
The 2019 rates are posted on the Farm Service Agency website. If you have any questions or need additional information, contact Erik Dohlman at (202) 720-4284 or email Erik.Dohlman@wdc.usda.gov.
Based on information provided by USDA
USDA announces 2019 cotton loan rate differentials