By Paul Scott Abbott, AJOTA year ago, US cotton exporters were trying to overcome a shortage of containers for shipping their product overseas. That’s no longer a concern – and that, in itself, is good news. Bad news, however, is borne in the main reason why there isn’t a container shortage anymore: US cotton export volumes and overall global consumption of the commodity are both experiencing significant declines. Citing weaker consumer demand for textiles, the US Department of Agriculture’s Foreign Agricultural Service issued an outlook report in November that forecast fiscal 2009 US cotton export volume would drop 14% from the prior year, slipping 455,000 tons to 2.8 million metric tons. Moreover, the outlook projected a 32% drop in the dollar value of such exports, plummeting $1.9 billion to $4 billion. The same federal agency’s December world cotton market report was headlined, “Worst Global Consumption Contraction in 65 Years,” and projected a decline of almost 6% in world consumption from 2008 to 2009, the most severe year-to-year drop since a similar plunge in 1974. “The weakening global economic situation is reducing world mill use as consumer demand fades and surplus yarn and fabric inventory weigh on the market,” the USDA’s December report said, adding that India and China have taken measures to support domestic prices – actions that should boost their state-controlled reserves. Neely Mallory III, president and chief executive officer of Memphis-based Mallory Alexander International Logistics, which has handled logistics for much of the US cotton industry since 1925, commented, “We’re still shipping a lot of cotton. It’s just not worth as much as it was a year ago.” In March 2008, cotton had reached a high mark of $1 per pound – about twice the amount for which it was trading in early February of this year. “Right now, we’re not having any trouble getting containers, and shipments are fairly steady,” Mallory said, noting that US cotton is coming off record years for exports in 2005, 2006 and 2007. “If we were shipping at 2006 volumes, capacity would be an issue.” Mallory cautioned that, with volumes of US imports of a full range of containerized goods declining and ocean carriers mothballing vessels, there is a possibility that capacity concerns could return for cotton and other backhaul commodities. A Feb. 13 report from the National Cotton Council projected a 14% drop from 2008 in US upland cotton intentions, falling to 7.97 million acres this year. However, the report, applying abandonment rates and yield assumptions, estimated just a 2% decline in the harvested yield from this spring’s US cotton crop, to 12.76 million bales from 13.04 million bales in 2008. The report indicated that most of the farmers defecting from cotton are switching to soybeans or corn. While officials of a number of top US cotton exporters – including Cargill Inc., Allenberg Cotton Co. and Dunavant Enterprises Inc. – declined to be interviewed, spokesmen for two major US cotton cooperatives shared opinions that the US cotton industry does indeed face challenges and that supply chain shifts may be in the offing. Rick Shepherd, traffic manager for the Lubbock, Texas-based Plains Cotton Cooperative Association, said, “This season promises to bring a break from the situation faced last year where shippers experienced high fuel surcharges, limited container availability and shortages of vessel space. The limited allocations shippers were afforded by the ocean carriers last season have been lifted, and they are gladly accepting our bookings.  “The drop in consumer demand has led to overcapacity in the transportation industry and a relief in the rates shippers experienced in 2008,” Shepherd continued. “The US dollar has steadily strengthened against other foreign currencies, which also have slowed US exports. Tight credit availability and reduced demand has led to a slowdown in cotton exports.” Shepherd said the implementation of user fees at the ports of Los Angeles and