Trade favors with Pakistan might hurt U.S. cotton sales

Cooperation with the United States in rooting terrorists out of neighboring Afghanistan could give Pakistan a bigger chunk of the U.S. textile market.

“We are concerned about trade favors (the U.S. government) might grant Pakistan,” William B. Dunavant III, told participants in a recent west Texas cotton marketing and flow meeting, sponsored by the Texas Cotton Shippers Association (TCSA) in Lubbock.

Dunavant, president of Dunavant Enterprises, Inc., in Memphis, Tenn., and first vice president of the American Cotton Shippers Association (ACSA), said Pakistan already is the No. 1 producer of cheap textiles. Increasing the amount of textiles they can export into the country will limit how much U.S. cotton domestic mills will buy in an already shrinking market.

Dunavant said Uzbekistan, “one of the fastest growing textile markets in the world,” also may get favors for cooperation but will likely prefer military help.

Dunavant said the cotton industry faces other challenges. “We have a 9-million-bale carryover in the United States,” he said. “That's 53 percent stock to usage ratio, the highest since 1985. The ratio has averaged 27 percent for the past 16 years and could rise to nearly 60 percent by August 2002 if domestic consumption continues to fall.”

He said a meeting of 600 textile representatives in Liverpool recently “was extremely bearish,” and voiced concern about subsidies in the United States.

One of the biggest concerns among cotton shippers, he said, is default from mills.

“A drop from 60 cents a pound to 30 cents means customers are beginning to waver,” he said.

Default concerns, he said, is something “shippers let happen to themselves,” by not enforcing their own rules. “Shippers have to show unity and refuse to sell to buyers on the default list. Our worst enemy is that the default penalty has no teeth. We have no real means of punishing a shipper for selling to mills on the default list.”

Dunavant said domestic market woes continue. “Banks are now beginning to question domestic mills' receivables in regard to credibility as collateral,” he said. “Banks are nervous about the stability of the domestic textile market.”

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