U.S. cotton growers' biggest customers are now overseas, and those customers' quality standards are getting tougher and tougher to meet.
That was the message Mike Watson, vice president of Cotton Incorporated, Cary, N.C., told cotton producers and others at the Cotton Focus 2005 meeting held recently in Jackson, Tenn.
“The world has changed in ways we never could have predicted just a few years ago and in a pace we can't really comprehend,” Watson said.
At about the same time that many countries, such as China, are catching up with U.S. industrial modernization, the global production of cotton is at an all-time high. Consequently, Watson said, foreign cotton buyers — especially textile manufacturers — can afford to be picky about cotton quality and — equally important — at whatever prices they are willing to pay for it.
“Last year, this country exported 14 million bales. Over the next five years we might be selling more cotton to China than we consume in the textile mills in this country,” Watson said. “That is not an unreasonable scenario.
“Will it happen? We don't know. Could it happen? Absolutely.”
Referring to pictures of closed U.S. textile mills, Watson said while cotton consumption is higher than ever before, domestic purchasing and use are low.
“Look at the big drop-off in domestic consumption of your cotton,” he told the audience. “Is this because people are not buying cotton products? No. The consumer today is buying more cotton than ever before.
“What is happening is that we are shipping cotton to overseas mills that are making products and sending them back here.”
Based on estimates, he said, there are about 151 million bales of cotton in the world after the most recent crop. But, the consumption levels are projected to reach about 104 million bales, yielding a stock of about 47 million bales.
Watson said the world is “awash with cotton,” yet no one has to purchase it from U.S. growers, as many may have had to in past years.
“If you don't use it in the textile mills and you don't put it on a ship to export it, guess where it ends up?” he asked.
He then pointed to warehouse pictures.
“No matter what the quality of cotton, all cotton eventually finds a home,” he said, “it's just a question of at what price.”
He said foreign cotton buyers tend to hold off purchases of cotton with a fixed price between the higher end and the lower end. That also contributes to large quantities of cotton stored in warehouses.
Foreign cotton customers' standards now just don't pursue cotton quantity, they want quality and now pay closer attention to micronaire, color, leaf, staple length and uniformity. Watson said such scrutiny has emerged just as textile technology has improved globally.
“Some of the most modern equipment I have ever seen is in China,” he said.
Watson advised the audience to make sure that contamination in their cotton production be kept at the lowest possible levels.
“The No. 1 controllable quality issue in cotton is contamination, you have to keep it out. This kind of thing gives you a bad reputation in international markets,” he said.
“Fortunately we (U.S.) have had a good reputation on quality, there are people who buy products from us because we have some of the least contaminated cotton in the world. But, we have to continue to work on keeping this contamination out.”
Watson said that in certain countries such as China, where labor costs are inexpensive, textile operations commonly hire pickers to sort through cotton by hand to get rid of any contamination.
He said while cotton growers across the country are reveling in an extraordinary cotton crop, the record amount is only part of the equation to financial success.
“Don't let your guard down, you're competing internationally and they are not buying cotton from you, you have to sell it to them,” he said.