|Moderator:||Kevin Brinkley, National Cotton Council|
|Panelists:||John Mitchell, Hohenberg|
John Dunavant, Dunavant
The session focused on many of the most important aspects of growing, harvesting, ginning and spinning UNR stripper cotton. To complete the initial examination of UNRC we must evaluate the marketing potential of stripper harvested cotton in regions traditionally known for spindle picked cotton. Growers need to know "what are the benefits and the costs of this farming method?"
With the increased production and price risk in our current environment, growers are searching for new ways to stay profitable. Ultra-narrow row has the potential, for some growers, to reduce the per pound production cost. With prices in the market hitting four-year lows, growers are scrambling to drive down cost.
However, productions cost alone are not the only issue. Growers also face questions about fiber value under ultra-narrow row production. Anecdotal evidence suggests that discounts have been applied to stripper cottons from the mid-south and Southeast. The presence of bark that is common to most stripper samples is the most widely applied discount. However, some concern is given to non-systematic discounts applied to stripper cotton compared to spindle-picked cotton of the same physical (or HVI) characteristics. Most days one can observe a discount on Texas stripper cotton of the same quality as a mid-south spindle cotton. Will the same phenomenon seen in the southwest region apply in the mid-south and southeast? This type of information will be necessary for growers to make accurate decisions about planting UNRC. Growers may be enticed to grow UNRC by the prospect of increased yields. However, the potential to add revenue with more cotton, may be offset by discounts applied to the product.
U.S. seed breeders and growers have expended tremendous resources over the past 20 years improving the physical qualities of cotton. An examination of the quality distribution in five-year averages shows just how much the supply of long, white cotton has improved. U.S. textile manufacturers have welcomed these changes and encouraged the trend to continue. The environment of textile trade is increasingly competitive. Improved fiber quality plays a vital role in a manufacturer’s ability to deliver high quality at a market price. And, of course, manufacturers' delivery into the market affects demand for raw cotton.
The bottom line is to determine the true characteristics of UNRC fiber and value them accurately. In which markets will UNRC be useful and possibly provide manufacturers with a source of fiber that can help them be more competitive?
Most merchants don't want to discourage UNRC. Rather, the facts should be discussed about the value of this fiber to the end user.
Three possible scenarios are likely for UNRC: 1) sold to mills that use Memphis/Eastern growths, 2) sold to mills that use Texas growths, or 3) the cotton would be unmarketable to domestic mills.
Scenario 1: Mills using spindle-harvested cotton buying stripper
Will U.S. mills pay the same price for stripper-harvested Memphis/Eastern cotton as they do for spindle-harvested Memphis/Eastern? The answer is no. Experience with Texas cotton indicates that stripper-harvested cotton contains bark. Evidence to date suggests that Memphis/Eastern stripper-harvested cotton contains more bark than Texas cotton.
What if the Memphis/Eastern cotton has no bark? Mills will still not pay as much as spindle-harvested. The perception is still that stripper-harvested cotton contains more unknown characteristics. The cotton may contain excessive foreign matter, extra preparation, short fibers or other undesirable properties. Most of these properties are not quantified by USDA classing.
Scenario 2: Mills using stripper-harvested Texas cotton buying stripper-harvested Memphis/Eastern
Will mills pay the same for stripper-harvested Memphis/Eastern cotton as a Texas cotton? Probably not, Mills are experienced with Texas cotton and the amount of bark it contains. The perception is that Memphis/ Eastern will contain more bark. Also, there is more cotton to choose from in Texas. Texas grows five million bales that are mostly stripper harvested.
Mills can already buy Texas cotton at a three-to-five cent discount over Memphis/Eastern.
Other comments included:
Mills have spent $2 billion in capital improvements over the past few years. They want quality cotton to maximize the return on that investment.
Disclaimer: Statements contained herein are believed to reflect the subject matter discussed and opinions expressed at a seminar held in Memphis on February 26, 1998 -- Ultra Narrow Row Cotton - Harvest To Textiles. This account of the Memphis seminar is the best effort of the Chairpersons involved to summarize (from notes and tape recordings) the discussion that took place. Nothing printed herein or expressed at the seminar necessarily represents the views of Cotton Incorporated.