The U.S. Department of Agriculture’s Farm Service Agency has announced the 2014-crop loan rate differentials for upland and extra-long staple (ELS) cotton.
As in past years, the differentials – also referred to as loan rate premiums and discounts – have been calculated based upon market valuations of various cotton quality factors for the prior three 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 2014-crop differential schedules are applied to loan rates of 52.00 cents per pound for the base grade of upland cotton and 79.77 cents per pound for ELS cotton. 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.
Source – USDA