March 6, 2009

5 Min Read

California’s dwindling cotton industry hit a respectable home run last year in terms of quality, according to Craig Stevens with Dunavant of California, Fresno, Calif. Addressing attendees of the Central Coast Cotton Conference in late January, he said the quality of the cotton was much better in 2008 than it was in 2007.

Micronaire, one of the oldest scientific measures in cotton was “spot on” he said. “4.0 to 4.3 is where most textile mills would like to have it ideally.”

In 2007, the USDA Visalia Classing Office reported Acalas averaged 4.26. In 2008, the average was 4.0. Uniformity was also right on track.

“Uniformity is an important measurement for California cotton,” Stevens said. “Eighty-five uniformity means that 85 percent of the fibers in the same sample are the same length. That creates spinning efficiencies for textile mills. Higher uniformity means less down time, fewer problems and more predictability for a textile mill.”

The Visalia Classing Office registered a uniformity of 81.58 saw-ginned Acala average which is lower than last year’s 82.3, but still respectable. Roller ginned Acalas came in at 83.72.

“We still have a pretty good margin over our competition when it comes to marketing our cotton, Stevens said. “We can offer uniformity that no one else can. Memphis averaged 82.1 this year. That’s not very good, but it’s great for them. It’s the first time I can remember another classing office averaging over 81.”

Fiber strength is one of California’s key selling points. However, roller ginning doesn’t appear to affect that particular characteristic, according to Stevens.

“Roller ginning of Acala creates a more uniform fiber and a longer fiber, but it doesn’t appear that it makes any impact on strength,” he said. “The Visalia average this year (2008) was slightly higher than last year – 33.5 grams/tx versus 33.4 grams/tx last year (2007). The Memphis Classing Office had a pretty good year. The closest challenger was 30.7.”

For staple length, Lubbock was the next closest competitor to California with a 36.9. “We used to laugh them off the chart,” Stevens said. “We’re not laughing anymore. Visalia reported 37.2 for saw-ginned cotton. The roller-ginned average was 39.45.

The horses are almost neck-and-neck these days in the race for high quality cotton.

“When you look at Lubbock, they weren’t even in the ballpark at 32, but now they’ve reached 36.9 which is where we were in 2000,” Stevens said. “Our 37.2 is not exactly a commanding lead any longer.”

Stevens chalked it up to FiberMax more than anything. “Part of what FiberMax has done, I think, is create a different agricultural scenario for Texas growers. There’s more irrigated land than there was in the past. They’re not just growing for the loan anymore. They’re putting money into cotton operations and it’s working for them.”

In regard to California Pima, 2008 was a very nice year, according to Stevens. “The uniformity was higher, the strength was better, the micronaire was within range,” he said. “We had a fairly good growing start. Overall, it was a reasonable season.”

• Pima strength — Visalia came in at 41.64 — “A little bit stronger than we were last year,” Stevens said.

• Pima length — “We outperformed again. It was 46.8 last year; this year we almost made a 48 average. That helps. As a merchant we’re always looking to offer something that no one else can compete with.”

As always, quality is California’s trump card. “We need to be aware of the threat that other areas pose and make good decisions about the seed varieties that we put into the ground,” Stevens said, and he reemphasized the importance of keeping the crop clean. “Do not abandon the sticky cotton program that you have been adhering to so well to over the previous years.”

The 2008 crop was excellent, but the marketing has become a little more complex, according to Stevens. A year or two ago, a deposit of 10 percent to 15 percent from textile mills was sufficient to open a letter of credit.

“In some cases now in China it’s 85 percent,” Stevens said. “Basically, it’s cash on the barrelhead. You might as well just wire the money. There’s still interest in buying cotton, it’s just more on a hand-to-mouth basis.”

An operating line with a bank is structured to smooth out the highs and lows in a business’s money flow. When that tool is taken away, it becomes much more difficult for both the buyer and the seller. Instead of selling cotton and scheduling delivery for six or seven months in advance, now brokers are forced to tighten that time frame to weeks.

“It makes it more difficult to satisfy the needs of the textile mill,” Stevens said. “The textile mills are in the same boat you’re in — trying to hang on to some cash, continue to do business, back off expenditures and wait for things to turn around a bit. I don’t think we’re that far off.”

Stevens foresees significant changes in cotton marketing by the end of 2009. “Part of what’s choked our industry for a long time is ending stocks,” he said. “When you start the season with 50 percent of the cotton you’re going to need to satisfy next year’s spinning needs, that’s not healthy for the market. If we can get cotton into the 20 percent to 30 percent carryover range, which has historically been a very healthy cotton market, I think that will be good for your pocketbook.”

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