What is in this article?:
- Cotton leaders address key industry issues
- Economic update
• Upcoming challenges and opportunities facing the industry were addressed during the recent mid-year board meeting of the National Cotton Council.
Gary Adams, the NCC's vice-president, Economics & Policy Analysis, told attendees in his economic update that China’s stocks policy is a key to future price direction.
Building China’s reserves has provided support to prices but there are concerns about long-term impacts on cotton demand. Cotton still has the challenge of competing with $0.75 polyester on the demand side, while trying to hold acres in the face of competition from grain and oilseed prices.
Regarding U.S. production, Adams noted USDA’s recent 2013 production estimate of 13.05 million bales versus 17.32 million bales in 2012. He cautioned that the final crop size still could be considerably different from the August estimate due to the lateness of the crop and uncertainties on the effects of weather.
Christy Birdsong, the NCC’s general counsel, updated directors on the Peruvian counter-vailing duties (CVD) investigation self-initiated by Peru’sNational Institute for the Defense of Competition and Intellectual Property (INDECOPI) that is looking at U.S. cotton subsidies and potential damage to Peruvian cotton producers.
She said NCC’s Gary Adams will again travel to Lima to provide a critique of the “Essential Facts” analysis and again argue against a CVD. She said the US Trade Representative’s (USTR) office and Peruvian textile firms also will present at the hearing, and “again, we’ve been working closely with both groups to provide a united front” as a final determination is expected in late September.
Birdsong said if there is a CVD, the NCC will be looking at ways to “minimize the impact, shorten the length of time imposed and minimize the amount. Aside from CVD itself, we’re mindful of copycat actions by other countries against other subsidized commodities — corn, soybeans, wheat, rice could be vulnerable. USTR shares our concern.”
Cotton Council International (CCI) President John Burch, a California cooperative official, updated directors on CCI’s activities, and said that in spite of last year’s reduced crop and the challenging volatility in cotton prices, CCI’s support base has continued strong.
“That enables CCI to compete with around 85 other organizations for available matching public funding administered by USDA in support of export market development,” Burch said. “Since our industry is more than 90 percent export dependent, we know how important competing for markets is to our livelihoods.”
Burch said CCI is seeing accelerated change — consolidation — in the global brand and retail segments and continued market instability but as much the result of uncertain and unsustainable policies, especially in China and India. He said this means that with brands and retailers increasingly consolidating, they are looking to mitigate risk.
“They want a better understanding of their supply chain; with 15 offices overseas covering 50 countries, this plays to our strength,” Burch said. “But we will need to work both harder and smarter to grow the demand to insure we have profitable business operations.
“That is why I am excited to see CCI and Cotton Incorporated are involved in developing the Cotton LEADs program to demonstrate to brands and retailers the responsibility and commitment of U.S. producers.”