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Annual Supima Meeting at Harris Ranch
<p>Ed Hughs, left, and Allan Terhaar, share a laugh at the 60<sup>th</sup> Annual Supima Meeting in California. Hughs, a cotton expert&nbsp;who works with the USDA in New Mexico, warns growers to remain on top of white fly and aphid treatments to avoid sticky cotton.</p>

Uncertainties abound in global cotton markets

Current USDA cotton harvest estimate is 17.5 million bales. USA has carryover of 5.6 million bales of cotton. Government decisions in China and India could impact world cotton prices. &nbsp; &nbsp;

Cotton marketing these days is no joking matter yet humor is exactly what American Cotton Shippers Association Chairman Anthony Tancredi used as an object lesson during his address to the Western Cotton Shippers Association in August.

Tancredi predicts cotton prices will likely remain in an unspecified range for the short term until the crop is clarified or fundamental changes happen within world governments who trade cotton. Those are the two movers that he predicts will significantly shift prices in world markets.

How China plays its hand in world cotton markets is anyone’s guess, Tancredi says. Several looming questions remain regarding China: Will they liquidate what the world believes are extremely large cotton stocks? When? How much cotton will China import and from whom?

The U.S. Department of Agriculture is currently predicting China will import eight million bales.

Tancredi suspects a larger number because that’s been China’s past practice.

Could it go back to a big number like the United States saw in 2011 and 2012 when China imported 25 million bales?

“It’s highly illogical, which means there’s a 50 percent chance of it happening,” said Tancredi, who also serves as CEO of the Cordova, Tenn.-based Allenberg Cotton Co.

Many moving parts

According to Tancredi there are so many moving parts within international cotton markets that it’s difficult to keep tabs on them all.

“You almost have to examine every little comment someone makes and think that someone might be right at some point,” he said.

“At this time it’s hard to even know what questions to ask,” Tancredi continued.

While growers and gins are cautioned by U.S. cotton industry officials to monitor their shipments for contamination as a means to maintain America’s high quality standards, Tancredi does not believe the United States is sending contaminated cotton as some trading partners would suggest.

Tancredi showed a picture of materials allegedly discovered in export shipments of cotton.

Aside from China, India is a growing world player in cotton markets, according to Tancredi.

Cotton production in India continues to increase, with much of India’s exports headed into China. If China backs off on its imports of Indian cotton, Tancredi told growers to expect market impacts as the rest of that cotton will wind up on the world market at some point.

Another issue with Indian cotton production, according to Tancredi, is the country’s inability to store it: once they grow it they ship it.

So far India’s cotton crop is uncertain as some of the chatter suggests weather (monsoon) issues and an undetermined number of cotton acres planted.

One thing Tancredi is more certain of is the cost of production to the Indian farmer. Cotton is far cheaper to produce there than in other countries, which means it will likely be difficult to entice farmers there to stop producing it.

For the United States, uncertainties remain beyond China and India, and most of them are not optimistic.

Tancredi sees two possible “what-if” scenarios with respect to marketing American cotton.

The current USDA estimate of 17.5 million bales of cotton produced this year is somewhat conservative, according to Tancredi. With the right weather in Texas, US cotton production could move up to 18.5 million bales.

Of big concern to U.S. cotton markets are the 5.6 million bales of unsold cotton the United States is sitting on from last year, according to Tancredi.

Couple that with the possibility that China does not raise its cotton imports from the United States, plus a pessimistic outlook that the USDA is right and the U.S. exports only 10.7 million bales and that could push next year’s ending stocks of U.S. cotton to 6.6 million bales, he said.

A second scenario couples a decrease in the U.S. crop total to 16.5 million bales on poor weather in Texas with an increase in Chinese imports from the United States. U.S. ending stocks could then fall to 4.1 million bales.


Leveraging partnerships with various clothing companies and showcasing American premium cotton continue to be at the forefront of Supima activities, according to Supima President Jesse Curlee.

New in Curlee’s report of Supima activities at the organization’s 60th Annual Meeting at Harris Ranch, Calif. was the $4 million over five years the organization will receive from the most recent Farm Bill.

As part of the 2014 Farm Bill, the Pima Cotton Trust Fund aims to reduce the economic injury to domestic manufacturers resulting from tariffs on cotton fabric that are higher than tariffs on certain apparel articles made of cotton.

The Farm Bill allocates $16 million in Commodity Credit Corporation funds for each year from 2014 through 2018 to the program with 25 percent of that money earmarked for Supima. An additional 25 percent will go to yarn spinners of Pima cotton that produce ring spun cotton yarns in the United States, and 50 percent to manufacturers that cut and sew cotton shirts in the United States and can certify that they used imported cotton fabric in 2013.

Curlee said the funding will greatly help Supima’s marketing efforts as more than half of its income is paid through voluntary dues of $3 per bale, a figure Curlee says has not changed since the organization’s inception in 1954.

“This is a significant help to the Supima budget,” Curlee said.

Supima continues to partner with clothing companies such as Brooks Brothers, Uniqlo, Lands End, and Marks and Spencer, among others to give brand identity to the superior Pima cotton produced by American cotton farmers.

Supima was invited to participate in a fashion show at the residence of the U.S. Ambassador in Paris in February. Fashion shows like this and Supima’s annual Design Competition held during Mercedes-Benz Fashion Week in New York are high-profile ways Supima uses to promote American Pima cotton.

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Also speaking at this year’s annual Supima meeting, Ed Hughs, a cotton ginning researcher with the U.S. Department of Agriculture in Mesilla Park, N.M., talked up the impact sticky cotton is to the industry and the importance of control measures to avoid the “train wreck” of sticky cotton that happened to Arizona in the late 1980s and early 1990s.

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