7 CFR Part 27 - COTTON CLASSIFICATION UNDER COTTON FUTURES LEGISLATION

The Agricultural Marketing Service (AMS) is proposing to amend the regulatory language to designate which bona fide cotton spot markets will be used to determine actual commercial differences in value for various grades above or below the basis grade in the settlement of World cotton futures contracts on the Intercontinental Exchange (ICE). Designating bona fide cotton spot markets for the World cotton futures contract in the regulatory language will allow for AMS to collect spot market price data and publish spot quotes for the settlement of these specific contracts.

The Agricultural Marketing Service (AMS) is amending its regulations to provide for a set of standardized formulas by which fees are calculated. The fees are calculated using formulas to account for all costs incurred by AMS in providing these services. Each year, fees will be announced in a notice in the Federal Register by June 1 and take effect at the start of the fiscal year, crop year, or as required by specific laws. This action provides greater transparency to the customers we serve as to how the fees are derived. The standardized formulas will be used to calculate fees that AMS charges for providing voluntary grading, inspection, certification, auditing and laboratory services for a variety of agricultural commodities including meat and poultry, fruits and vegetables, eggs, dairy products, and cotton and tobacco. The fees will also apply to those persons requesting such services including producers, handlers, processors, importers and exporters. Fees charged for inspection of fruits, vegetables, and specialty crops subject to the Agricultural Marketing Agreement Act of 1937 are also affected by this rule. Provisions of this rule do not supersede rates established by Memoranda of Understanding, Marketing Orders, or by cooperative agreements already in place. Furthermore, the cotton program will continue to consult with its industry before rates are established.

The Agricultural Marketing Service (AMS) is amending regulations to allow for the addition of an optional cotton futures classification procedure—identified and known as “registration” by the U.S. cotton industry and the Intercontinental Exchange (ICE). In response to requests from the U.S. cotton industry and ICE, AMS will offer a futures classification option whereby cotton bales may be certificated for the purpose of an exchange's cotton futures contract using Smith-Doxey data to verify that submitted bales meet more restrictive quality requirements and age parameters established by that exchange. AMS anticipates that the futures classification option will be available in time for the implementation of ICE's Cotton Resolution No. 2, which is scheduled to commence with the March 2014 contract month.

The Agricultural Marketing Service (AMS) proposes regulatory amendments that would allow for the addition of an optional cotton futures classification procedure—identified and known as “registration” by the U.S. cotton industry and the Intercontinental Exchange (ICE). In response to requests from the U.S. cotton industry and ICE, AMS proposes to offer a futures classification option whereby cotton bales may be certificated for the purpose of an exchange's cotton futures contract using Smith-Doxey data to verify that submitted bales meet more restrictive quality requirements and age parameters established by that exchange. The implementation of ICE's Cotton Resolution No. 2 is scheduled to commence with the March 2014 contract month. It is anticipated that AMS would make the futures classification option available December 2013.

The Agricultural Marketing Service (AMS) is amending the regulation that specifies which states compose bona fide cotton spot markets in order to assure consistency with the revised Cotton Research and Promotion Act. Updated bona fide spot market definitions allow for published spot quotes to consider spot prices of cotton marketed in Kansas and Virginia. AMS is also amending references to the “New York Cotton Exchange” to read the “Intercontinental Exchange.”

The Agricultural Marketing Service (AMS) is proposing to amend the regulation that specifies which states compose bona fide cotton spot markets in order to assure consistency with the revised Cotton Research and Promotion Act. Updated bona fide spot market definitions will allow for published spot quotes to consider spot prices of cotton marketed in Kansas and Virginia. AMS is also proposing to amend references to the “New York Cotton Exchange” to read the “Intercontinental Exchange.”

The Agricultural Marketing Service (AMS) is amending the procedures for determining the official leaf grade for Upland and Pima cotton. The leaf grade is a part of the official classification which denotes cotton fiber quality used in cotton marketing and manufacturing of cotton products. Previously, the leaf grade was determined by visual examination and comparison to the Universal Cotton Standards for Leaf Grade that serves as the official cotton standards by qualified cotton classers. Amended procedures replace the classer's leaf determination with the instrument leaf measurement made by the High Volume Instrument (HVI) system, which has been used in official cotton classification for Upland Cotton since 1991.