USDA Announces 2018 Loan Rate Differentials

By Cotton Grower Staff|April 17, 2018

USDA’s Farm Service Agency (FSA) has announced the 2018-crop loan rate differentials for upland and extra-long staple cotton.

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, with the exception of a reduced discount applied to color white, leaf 8 upland cotton.

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 2018-crop differential schedules are applied to 2018-crop loan rates of 52.00 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 that the upland cotton loan rate range between 45-52 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.