As U.S. textile mills keep going out of business or relocating offshore and the textile industry continues upgrading to equipment that runs better with different fiber qualities, “this cotton will face major obstacles in moving to the export market,” the chairman and chief executive officer of Globecot told members of the Southern Cotton Ginners Association at their annual summer conference at Franklin, Tenn.
Jernigan’s organization is a worldwide provider of information and analysis for the fiber/textile industry and handles 10 percent to 15 percent of world cotton futures trades.
“This is something the industry hasn’t prepared for, but will be facing from now on out,” he said.
Memphis/Eastern cotton, which was equivalent to 57 percent of the crop last year, has a high percentage of 1-1/6-inch staple, Jernigan noted. But mills are rapidly upgrading to equipment that runs more efficiently with 1-3/32-inch staple.
“That’s becoming the new textile industry standard.”
Before the U.S. textile industry started its free fall, closing 124 mills and evaporating nearly 70,000 jobs, Memphis/Eastern cotton was effectively isolated from the world market, he said, because the bulk of it was used in the U.S.
In the meantime, mills around the world were modernizing their spinning equipment and upgrading the quality of the cotton used, Jernigan said.
With domestic demand slashed, there are now several million bales of Memphis/Eastern cotton that have no place to go but export, he said, and that’s becoming an increasingly tough sell.
“Just one example: An Italian spinner told me he’d only consider using 1-1/16-inch cotton as an alternative. For the most part, this cotton has been taken out of consideration by world buyers, except when it’s discounted. Because most of it has always been used domestically, buyers outside the U.S. know little about it.”
In a question-and-answer session, Jernigan said, “I believe staple discounts for 1-1/16- inch cotton will grow over time.” A number of mills, he said, are buying West African cotton rather than opting for 1-1/16-inch U.S. cotton.
“Most of the sales in export markets are middling growths. Anything outside that is discounted. Middling has pretty much become the standard.”