In a marketing year where cotton futures spent much of the season trading from below 60 cents, Calcot members learned at the cooperative’s 89th annual meeting on Sept. 27 that final prices for the 2015-2016 Seasonal Pool crop would finish anywhere from 15 to 35 percent above this level, depending upon varieties, regions, and grades.

Calcot President Jarral Neeper said the 2015-2016 marketing year was “not the trading environment cotton producers want to see if they're looking for high prices.”

Upland cotton prices a year ago, Neeper said, were in the 61-cent range and then spent three months climbing to 65 cents before collapsing to 55 cents in March. The market barely recovered over the next few months before spiking to 75 cents with only a few weeks left in the season.

The short opportunity for higher prices in July came at a time when much of the crop had been sold and delivered, thwarting efforts to capture larger gains.

Helping producers was the availability at times of the loan deficiency payment, but it rises and falls depending upon prices. When the LDP was available, it averaged just 3.7 cents per pound. In a pool, Neeper said, any LDP is captured and averaged out and paid out in regular progress payments, but again only helps offset low market prices.

Other factors came into play including: textile buyers who have become accustomed to buying only for short-term needs; China’s cotton stocks auctions which helped fend off efforts for prices to move higher; and a strong U.S. dollar which in effect makes even low prices higher priced in foreign currencies.

This meant the season had few opportune pricing chances, but Calcot made the most of it when it could.

Neeper said that when nearby “futures contract averages only 63 cents over the course of a season you are not going to accomplish what you'd like to do,” he told the crowd gathered at Tempe, Ariz.

It was a scenario repeated from coast to coast in the U.S. Cotton Belt. Upland growers received an average of just over 59 cents per pound for production, according to USDA.

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Calcot Seasonal Pool members with C/A and Desert Southwest finished the season with base grade 31-3-35 at 64.20 cents per pound, following a two-cent final payment.

San Joaquin Valley Acala growers achieved higher prices as is the typical case for the premium grade 31-3-36 long staple fiber, with a final payment of 5.6 cents per pound and a final total of 78.35 cents per pound on SJV gin UD free terms. Roller-ginned Acala topped 86 cents with an 8.35-cents final payout. Those prices are also in the SJV gin UD free terms.

South and West Texas, where producers have a lower 41-4-34 base grade, finished out the year with 200 point payments and a final price of 61.00 cents, but better grades saw an additional three cents per pound.

Neeper said owning warehouses, timely shipments, and controlled costs helped boost the bottom line.

Pima cotton-growing members finished up the season with a final payment of 15 or 13 cents, depending on whether the fiber came from the San Joaquin Valley or elsewhere, and a final price of $1.16.60 in the San Joaquin Valley's gin UD free terms, and $1.13 in Arizona and El Paso.

Call Pool growers finished up with final prices ranging from 400 points off some Upland styles, to 600 on for SJV saw-ginned Acala. Roller-ginned Acala ended the year at 600 points on the fixation.

Growers in C/A and Southwest cotton areas received a final payment of 200 points and 100 points elsewhere.

The final settlement as approved by Calcot’s directors totaled $5.0 million.

More optimistic on marketing

Turning to the 2016-2017 season, Neeper was more optimistic about the marketing prospects for the crop which growers are harvesting or about to harvest. Futures prices are about 10 cents a pound higher at this point than last season. Following the late July upturn, an August pullback, and then recovery in September, higher cotton prices appear to be in the forecast.

This is despite the U.S. producing a crop that is likely at least three million bales larger than last season.

Lower world cotton acreage seems to be the key. In September, USDA estimated world acreage at the lowest in 30 years, and the second lowest planted acreage total since 1960.

Conversely, the U.S. planted 1.4 million more acres than last season, and with higher yields and a larger crop seems poised to gain in cotton exports.

While that’s all good news, Neeper warned that “cheap acid-based chemical fibers” have proved popular in a “disturbing consumer preference.” Continuing low oil prices and excessive production capacity of synthetic fibers have made synthetic fabrics and products incredibly cheap.

Meanwhile, manufacturers and retailers are charging higher prices for finished goods, especially in popular active wear categories. Specially-treated cotton products that rival the performance fabrics have made small inroads into consumer markets, but to date purchasing power has been dedicated to synthetics.

Considering the circumstances, Neeper said, “It’s remarkable that cotton prices have shown strength and buyers haven’t completely rebelled” at higher-priced offers.

He noted good increases in volume for 2016-17, good sales on the books at higher rates than last season, and overall better results when the 2016-2017 season is completed.

Nearing 70 million bales

Calcot Chairman Greg Wuertz noted that next year the co-op will receive, sell, and ship its 70 millionth bale. At end of the 2015-2016 season, the co-op tallied 69,416,978 bales marketed.

Wuertz identified four areas the Calcot board is focused on to ensure the long-term success of the cooperative: reducing costs; increasing volume; “rightsizing” warehouse operations and properties; and continue to improve an already strong capital position.

Wuertz said Calcot has seen a reduction in employees, payroll, and benefits, including some long-term employees. The company spent less than budgeted for the 2015-2016 season and also lower than the previous year.

He discussed the difficulty of matching up warehouse location and size to production, and noted the destruction caused by a microburst weather event last October at Calcot’s Glendale, Ariz. facility. This reduced available capacity at the facility by about 40 percent. The property, structures, and contents were fully insured.

Wuertz praised Arizona gin managers and trucking companies for working with Calcot to reroute shipments into Bakersfield during the difficult time.