By Paul Scott Abbott, AJOTContinuing strong global demand for US cotton coupled with competition from the grain industry is forcing the nation’s cotton exporters to fight for space in outbound containers. “There is now such competition for containers that there are serious issues,” said William E. May, executive director of a pair of Memphis-based trade groups – the American Cotton Exporters Association and the American Cotton Shippers Association – whose member firms handle more than 80% of US cotton sold in domestic and foreign markets.
May told the American Journal of Transportation that increasing grain export volumes and higher prices for export grain bode to put an even greater strain on outbound container space that in years past had been readily available for cotton. “It’s putting a very serious crimp on containers,” May said. When asked how the cotton industry anticipates resolving the issues, May replied, “We won’t go back to breakbulk. I can tell you that.” Bales of cotton once moved as breakbulk, but that practice has been long-abandoned, as the industry has realized the efficiencies of movement in containers. At least three cotton firms are among the top 25 US exporters. They include: Cordova, TN-based Cargill Cotton, a unit of Wayzata, MN-based Cargill, Inc.; Cordova-based Allenberg Cotton Co., part of the France-based Louis Dreyfus Group; and Memphis-based Dunavant Enterprises, Inc., which, like the other two firms, is privately held. Officials of each company declined to be interviewed. At this month’s annual meeting of the National Cotton Council of America, held at the Peabody hotel in Memphis, industry leaders were told to anticipate a slight decline in cotton export volume in 2008-09. Still, US cotton exports will continue to march to China and other markets just as faithfully as the world-renowned Peabody ducks have made their twice-daily processions to the hotel’s grand lobby since the 1930s to the tune of John Philip Sousa’s “King Cotton March.” The council’s 2008 economic outlook, released Feb. 11, shows US exports for 2008-09 at 14.7 million bales, down 3.3% from 15.2 million bales in 2007-08. One bale weighs approximately one quarter of a ton. Those figures are somewhat less optimistic than projections released Nov. 30, 2007, by the US Department of Agriculture, which forecast US cotton exports remaining unchanged at 3.6 million tons in fiscal 2008 while reaching a record $5.8 billion in value. The USDA report cited an increasing share of higher-grade cotton exports, as well as the largest US carryover stocks in 40 years, record exportable surplus and strong foreign demand, especially from China. However, in his report at the Memphis annual meeting, Dr. Gary Adams, vice president for economics and policy analysis at the National Cotton Council, said the surplus will soon diminish as US cotton growers are projected to produce 15.4 million bales in 2008 – the smallest US cotton crop since 13.9 million bales were produced in 1998. Adams, who holds his doctorate in agricultural economics, told delegates that the council sees the US export figure of 14.7 million bales coupled with domestic mill usage of 4.4 million bales in 2008-09. He added that, assuming a new farm bill is enacted with economic assistance for the US textile industry, any 2008 textile mill losses due to a slowdown of the US economy and elimination of China import safeguards should be tempered. At the National Cotton Council meeting, US Agriculture Secretary Ed Schafer told producers he is committed to “fighting hard for you to make sure that we provide that level and fair trading field out there.” Schafer, a former North Dakota governor, made his speech Feb. 9, a dozen days after being sworn in as the USDA’s newest head. Schafer cited Bush administration dissatisfaction with a recent finding by a World Trade Organization co