Sell 10, sell 10! shouted Sasha McClure, with Plains Cotton Cooperative Association, Lubbock, Texas. “Sold at 70,” bellowed Luke Dowd, a young trader with the New York Board of Trade. “The specs are killing us! Outlaw the specs!” yelled O.A. Cleveland, professor emeritus, Mississippi State University, a wry smile coming across his face. The action died down for a moment.
It was July 17, 2003, and growers, ginners and other industry representatives were play-acting — taking on roles as traders during a mock trading session at NYBOT in Long Island City.
The mock trading session was the first event of a two-day educational and informational session, sponsored by NYBOT, Ag Market Network, Certified FiberMax Cottonseed, and Farm Press Publications.
On the last day of the session, a panel of cotton market analysts discussed cotton crop conditions, domestic demand, exports and farm policy during the fourth annual Cotton Roundtable. The roundtable was broadcast live over the Internet and is also available for those who missed it, at www.nybot.com.
Attendees of the event arrived in New York from all over the Cotton Belt and from many segments of the industry.
University of California Cooperative Extension farm advisors Bruce Roberts and Steve Wright were there to learn about marketing opportunities for cotton growers. “We felt like this was the place to get together with the economists and learn how this is done in the real world,” Roberts said.
Roberts and Wright are also exploring the possibility of inviting speakers to California “to help us hold an educational program for our Western growers on risk management and marketing strategies,” Roberts added.
The New York experience was an eye-opener for Kenneth Hood, producer and ginner from Gunnison, Miss., “particularly the mock trading session, seeing how the locals react, buy and sell. It was a great experience to see what was going on and be actively engaged in the participation.”
“Growers know what happens to an order between them and the broker,” added Pat McClatchy, executive director, Ag Market Network, a sponsor of the event. “But they don't know how it's processed when the order comes in to New York, how it gets into the hands of the broker and the bidding and offering that goes back and forth.
“We have found that the growers who come and participate have a much better feel for what happens in price discovery and the role of this exchange,” McClatchy said.
Mark Hanna, a producer and ginner from south Georgia, said he enjoyed the visit to the New York Board of Trade “and getting to see the actual physical function of the trading. These guys may not know what a cotton field looks like, but this is how price discovery works. If you want to hedge, you have to have somebody who wants to buy the cotton.”
And it all takes place in the cozy confines of a rather small cotton futures trading pit. And on the day of this mock trade, the price was understandably all over the board.
Roberts and his wife Amy, got into the pit. Kenneth Hood barked an offer. Suddenly, the pace went hectic again.
“Locals” urged reserved guest-traders to shout their orders. Palms out or palms in is supposed to indicate an offer to sell or buy, but you sense a sort of shorthand at work.
There were some sheepish grins as mistakes were made, but as the end of the mock session was announced, there was definitely an appreciation for the young men and women who carry out the trades.
For the first time in several years, the Cotton Roundtable had plenty of good things to say about the cotton market's upside — cotton merchant William B. Dunavant said cotton could get up to 73 cents.
Other panelists reinforced the upside potential, including O.A. Cleveland, Texas A&M Extension economist Carl Anderson, Jarral Neeper, assistant vice president, call pool operations and economics, Calcot, and McClatchy, who moderated the event.
The roundtable “exposed growers in person and listening in on phone lines to hear top people in the industry discuss the cotton markets and ask questions directly,” McClatchy said. “It's been an outstanding meeting and we hope to do it again next year.”
Brent Crossland, representing Certified FiberMax Cottonseed at the event, noted, “It's really an experience from our point of view to see farmers, traders and merchants getting together to talk about the market.
“Also, from listening to the people talking today, there looks like there is a shortage globally of higher-end, higher-quality cotton. We see an opportunity in the marketplace with our product for a higher-end upland cotton to get some share globally as well as domestically.”
About 38 people from industry representing growers, ginners, market analysts, a seed company, news media, cooperatives, banking, and university Extension attended the sessions.
In addition, “We had over 9,000 hits on the banner to get more information about the Cotton Roundtable,” said Tom Walker with NYBOT. “And I'm sure that our Web site chat room (where those on the Internet could participate) was maxed out.”
The entire roundtable discussion can be accessed on www.nybot.com. Click on the Cotton Roundtable banner to hear the report.