Brand-driven Pima cotton marketing possible

Supima brand-driven demand and government support to keep U.S. Extra Long Staple (ELS) cotton competitive in the world market add up to a bright marketing future for American Pima cotton for at least the next two to three years.

Jeff Elder, vice president, cotton marketing, for J.G. Boswell Co. told the Pima Production Summit recently that two-thirds of U.S. Pima cotton is sold to mills in five countries, and they are price buyers.

However, when customers of those mills are marketing Supima branded products licensed by Supima, they must buy U.S. Pima cotton. That is keeping American Pima in the world ELS ball game.

That brand-driven demand is so strong U.S. Pima cotton marketers will likely run out of Pima cotton after July because of a short 2003 crop and that strong demand. That, predicts Elder, will bolster prices for what is shaping up to be a big 2004 San Joaquin Valley crop. There will be little cotton to sell in early fall before this crop is ready to ship in November and December.

Elder gave the market outlook report at this year’s 6th Pima Production Summit sponsored by Western Farm Press, University of California, California Cotton Ginners and Growers Association and Supima at the Visalia Convention Center. About 150 attended.

This season’s SJV planting weather was the best ever since Pima was introduced into the valley in the mid-1980s. It has been called the best valley spring in 50 years for planting cotton.

It was no surprise, then, when Elder said USDA’s initial 200,000-acre March planting estimate for California was clearly inaccurate. He says it is at least 225,000 acres and could be as much as 250,000. Weather is the biggest determining factor in the Pima acreage because it is a longer-season cotton that generally does not yield well if planted after mid to late April. California experienced a rare March "heat wave" and that got a lot of cotton, both Acala and Pima, planted early and in a hurry.

Planting estimate

The total USDA estimated acres planted to Pima for the 2004/05 in the four Pima-producing states is 226,600 acres, according to USDA’s March estimate. That compares to 179,100 acres last season.

California grew only about 150,000 acres last year.

Texas is the second largest Pima producer with 16,000 acres this year, down from 20,000 last year. New Mexico’s acreage has jumped from 6,100 to 8,000 this season and Arizona’s Pima acreage continues to fade, down to 2,600 from 3,000 the year before.

Elder noted that Texas’ average Pima yield has jumped to more than 1,000 pounds over the past three seasons, and he expects Texas and New Mexico to continue to be players in the Pima market.

Elder said the brand-driven strong demand for Pima is because the Supima label can be found on a wide array of Pima products from coarse eight-count yarn rugs to luxurious 120-count yarn shirts. Supima has licensed mills and manufacturers worldwide to use the Supima or USA Pima brand. If those brands are used on the finished product, it must be made of 100 percent American Pima cotton.

"Certainly Step 2 has helped," said Elder, but "demand is there" for Pima cotton even though the 2003 crop is 20-cents per pound higher than the 2002 crop, he added.

That demand should keep stocks to ratio low for the next two to three seasons and therefore bring good prices to growers.

However, Elder warned that Pima prices above $1.20 per pound take the profitability out of Pima products for mills. At between that and $1 Pima is profitable for growers and mills.

Chasing market

The Pima cotton market has gone off shore just like the upland business with the collapse of the domestic textile industry, but Elder promised the industry is chasing it wherever it goes.

Pakistan, India, Bangladesh, China and Indonesia now consume two-thirds of America’s Pima cotton production. Mills in these countries are price shoppers, said Elder, but when a customer is selling a branded product whether it be Supima or Egyptian cottons, those mills must buy that cotton at generally higher prices.

While Elder is optimistic demand will keep prices up, he warned that Egypt, China as well as the U.S. — the world’s three largest ELS producers — are looking at significantly larger crops this season and that could have an impact on price. All three had sharply reduced crops last season, "Nevertheless, I think demand is there to get rid of ELS cotton," he added.

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