Find answers, little known facts about CCC's Cotton Loan program, and a glossary of terms.
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"A" Index: is a proxy for the world price of cotton. It is an average of the cheapest five quotations from a selection of the principal upland cottons (currently 19) traded internationally. For a more detailed description visit the Cotlook, Ltd. website. In August 2004, "A" Index changed emphasis by representing offering prices based on CFR Far Eastern main ports terms.
Adjusted World Price (AWP): USDA's estimated world price adjusted for U.S. quality and location. The loan differential between qualities 31-3-35 and base quality 41-4-34 is subtracted from the prevailing world price (average of 5 lowest Far East quotes). Additionally, average transportation costs are subtracted from the world price. For certain higher qualities, the Secretary shall further reduce the AWP to reflect differences between premiums in the U.S. market and international markets (fine count adjustment).
Loan Deficiency Payment (LDP): is direct payment that producer can receive in lieu of placing cotton in CCC loan and redeeming cotton at adjusted world price (AWP).
Farm Service Agency (FSA): USDA agency responsible for administration of federal farm programs. Cotton responsibilities include the loan program and price support programs.