COTTONSEED SUPPLY & DEMAND OUTLOOK

USDA PROPOSES TO EXPAND IMPORTS FROM BSE MINIMAL-RISK NATIONS

WHAT'S NEW @ COTTONSEED.COM

US CATTLE ON FEED UP 2%

SUMMARY OF US COTTONSEED CRUSHINGS & STOCKS

ATTACHE' REPORTS

MOVING?

COTTONSEED SUPPLY & DEMAND OUTLOOK - Cottonseed crushings totaled just under 224,000 tons in November, according to NCPA’s latest monthly survey. That compares to the 255,000 tons crushed the previous month and 297,000 tons crushed in November 2005. Crushings for the Aug-Nov period have reached 844,000 tons compared to 980,000 tons a year ago, according to NCPA’s monthly report. Receipts of cottonseed at oil mills over that time frame stand at 2.39 million tons vs 2.81 million tons last year…..For marketing year (Oct-Sep) 05-06, cottonseed exports totaled 522,000 metric tons, compared to 362,000 metric tons shipped in 04-05. The largest single destination was Mexico with over 400,000 mt. Next was Korea with slightly more than 80,000 mt, then Japan with 11,000 mt. Cottonseed meal exports topped 128,000 mt with just over 119,000 mt shipped to Mexico. Last year, Mexico took in 83,000 mt of US meal. Germany imported nearly 3,800 mt of US cottonseed meal compared to 6,800 mt a year ago. Cottonseed oil exports were up slightly at just above 30,000 mt, compared to 26,000 mt in MY 04-05. Mexico was the largest single destination with nearly 10,500 mt, followed by Canada with 9,600 mt and Korea with 8,300 mt. See NCPA’s web site for more details.

USDA PROPOSES TO EXPAND IMPORTS FROM BSE MINIMAL-RISK NATIONS - The USDA announced last Friday a proposal to expand the list of allowable imports from countries recognized as presenting a minimal risk of introducing Bovine Spongiform Encephalopathy (BSE) into this country. The action would expand an earlier rule published by the Animal and Plant Health Inspection Service (APHIS) in Jan. 2005, addressing the issue of importing certain live ruminants and ruminant products, including cattle under 30 months of age, from those countries. At this time, only Canada is recognized by the U.S. as a minimal risk nation. The new proposal would allow importation of (1) live cattle and other bovines born after March 1, 1999; (2) meat products from cattle born on or after that date; (3) blood and blood products derived from bovines, collected under certain conditions and (4) casings and part of the small intestine derived from bovines. APHIS conducted a risk assessment for all commodities considered under the proposal and concluded that the risk of BSE infectivity was very minimal. The rule will be published in the Federal Register on January 9, 2007. Comments will be considered through March 12, 2007. To comment, send an original and three copies by postal mail or commercial delivery to Docket No. APHIS-2006-0041, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, Md. 20737-1238. If you wish to comment using the Internet, go to the Federal eRulemaking portal at http://www.regulations.gov, select "Animal and Plant Health Inspection Service" from the agency drop-down menu; then click on "Submit." To access the entire proposal and/or obtain information about the risk assessment, environmental study and economic analysis, click the link http://www.aphis.usda.gov/

WHAT'S NEW @ COTTONSEED.COM - Marketing year 2005-06 (Oct-Sep) export data for cottonseed and cottonseed products have been compiled by NCPA from US Census data and are available in the Statistics section of cottonseed.com. October 2006 data was most recently released with November 2006 data set for release later this week…..Weekly cottonseed crushings are trending lower than their five-year average, as the chart below shows. However, the margin has narrowed as the season has progressed…..Weekly export data from USDA-FAS are also available in the NCPA Statistics section…..Watch for updates from the Beltwide Cotton Conferences, set for this week in New Orleans. News and other information will be available in the Member News & Updates section of the web site.

US CATTLE ON FEED UP 2% - Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 12.0 million head on December 1, 2006. The inventory was 2 percent above December 1, 2005 and 6 percent above December 1, 2004. This is the highest December 1 inventory since the series began in 1996. Placements in feedlots during November totaled 1.89 million, 8 percent below 2005 but 8 percent above 2004. Net placements were 1.81 million. This is the second lowest placements for the month of November since the series began in 1996. During November, placements of cattle and calves weighing less than 600 pounds were 555,000, 600-699 pounds were 565,000, 700-799 pounds were 404,000, and 800 pounds and greater were 365,000. Marketings of fed cattle during November totaled 1.80 million, 6 percent above 2005 and 10 percent above 2004. This is the second highest fed cattle marketings for the month of November since the series began in 1996. Other disappearance totaled 83,000 during November, 9 percent below 2005 and 23 percent below 2004. (Source: USDA– NASS, 12/22/2006)

SUMMARY OF US COTTONSEED CRUSHINGS & STOCKS

ATTACHE' REPORTS - The US Ag Trade Office in Kuala Lumpur reports that the Malaysian Palm Oil Board (MPOB) has indicated total crude palm oil (CPO) production declined 13% to 1.4 MMT in October 2006. Output in Peninsular Malaysia dropped by 3.2% while East Malaysia’s production fell 4.7%. Compared to October 2005, output during October 2006 was only marginally lower. CPO output is expected to experience a seasonal drop of 14% to 15% in the Oct-Dec quarter, bringing the total CPO output for CY 2006 to around 15.7 MMT. Aided by stronger soy oil future prices at CBOT and the seasonal downtrend in CPO output, the monthly average CPO price soared from RM1,515/MT in October to RM1,709/MT in November 2006. CPO future price for Feb 2007 surged to a 30-month high of RM1,922/MT by Nov 27. For comparison, the average CPO price for November 2005 was RM1,420/MT. The Refined/Bleached/Deodorized (RBD) Palm Oil FOB average price also rose from US$441/MT in October to US$486/MT in November. A drop in CPO production and an increase in exports contributed to a 11.5% drop in carryout stocks to 1.6 MMT at the end of October. A lower forecast of COP production in the Oct-Dec quarter should keep stocks at the above level till the end of December 2006. Exchange Rate: US$1.00 = RM3.652 (Oct 31,2006); RM3.627 (Nov 29,2006)

MOVING? - Please send all change of address information to: National Cottonseed Products Association, 104 Timber Creek Drive, Suite 200, Cordova, TN  38018, or email to info@cottonseed.com.

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© National Cottonseed Products Association, Inc.

January 9, 2007