USDA Amends Regulations on Procedures for Classification of Foreign-Growth Cotton
The Department of Agriculture’s Agricultural Marketing Service has issued a direct final rule amending its regulations pertaining to administrative and operational procedures for the classification of foreign-growth cotton. This rule will be effective as of April 11 without further action or notice unless significant adverse comment is received by March 11, in which case the rule will be withdrawn.
In November 2015 the Intercontinental Exchange began offering world cotton futures contracts under which cotton grown outside the U.S. is allowed to participate in a U.S. commodity exchange for the first time. This contract is intended to serve as a price discovery and risk management vehicle for a broad set of cotton traded internationally.
Anticipating that cotton merchants may want to use AMS cotton quality determinations to establish foreign-growth cotton as tenderable against this contract, both IMS and the U.S. cotton industry asked AMS to make any regulatory amendments necessary to better accommodate the classification of foreign-growth cotton. This rule will therefore clarify existing language, update terms and practices described to comply with today’s industry norms and current cotton classification technologies, and establish procedural safeguards to assure that foreign-growth cotton is classified according to the same rigor as U.S.-grown cotton.