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Pima prices predicted to strengthen

Mar 12, 2007 11:04 AM, By Harry Cline
Farm Press Editorial Staff

American Pima cotton producers and marketers are on track to export 700,000 bales of cotton this season, once again leaving virtually no American Pima carryover.

China, the biggest Pima buyer last season, has yet to come into the market this year.

And the long term interest in Pima cotton by world textile mills continues strong.

Yet the spot market price of Pima has been falling since January to a price now of just above $1 per pound, 17 cents below the January spot market price.

“Far too cheap,” is the way Marc Lewkowitz, executive vice president of Supima, described the current price at a recent growers meeting sponsored by Delta and Pine Land Co. at Harris Ranch, Coalinga, Calif.

He expects it to rebound to $1.10 to $1.15 per pound. World demand is too strong to believe otherwise, he said.

China’s largest Supima-using textile mill has yet to enter the American Pima market. Last year it bought 130,000 bales to support its Supima-licensed products.

China purchased 42 percent of all Pima exports last year, 250,000 bales.

“I do not know if China will reach that level this year,” Lewkowitz added. However, the more traditional Pima markets in Thailand, Indonesia, Japan, Korea and Pakistan are showing much better this year than last, when 581,000 bales of U.S. Pima were exported.

Lewkowitz says 700,000 export bales is attainable for the 2006/07 marketing year. This is 25 percent more than last season. Sales levels through mid-February were running almost 35 percent more than the same time last year.

The Supima executive vice president said Extra Long Staple (ELS) demand continues strong worldwide. He expects this season to end with just 700,000 bales worldwide in carryover compared to world stocks of 1.8 million bales at the close of the 1996/97 marketing year.

China’s ELS

China’s insatiable demand for ELS cotton spawned the largest production in that country’s history, 700,000 bales. However, Lewkowitz said the cotton is not competitive with Supima cotton. It is priced much higher than American Pima and will likely go to the domestic market at season’s end. He expects China ELS production to decline next season.

One thing that is driving Pima consumption is Supima’s licensing program. There are now 270 licensees in 24 nations paying $5,000 per year to use the Supima label. To use the Supima moniker, 100 percent American Pima cotton must be used through the entire textile making process. Supima for the first time is auditing this.

Many Supima licensees are contracting products from China’s textile industry, and the Chinese are also promoting Supima domestically.

Although the American Pima price is down right now, it is about the only cotton game in town for San Joaquin Valley producers. ELS is so hot that the National Cotton Council has forecast Pima acreage for 2007 at 320,000 acres, 16.5 percent more than last year’s 275,000 acres, the largest ELS crop ever planted in the state. NCC predicts only 208,000 acres of Upland. However, seed marketers say that is too low. It may reach only 175,000, but not 200,000 for the San Joaquin. ELS is taking away some upland acreage, but alfalfa and other forage crops for dairies also are taking out cotton acreage.

Lewkowitz did not totally dismiss that NCC 320,000 acreage estimate, but he said to reach it would require additional rain this spring, more snowpack and ideal early planting weather. April 15-May 1 is about the last window for planting longer season Pima.

When he made his presentation at Coalinga, the first of a series of winter storms had not hit the valley. By late February, these storms had brightened the weather outlook. However, there was a lot of catching up needed to win farmers full irrigation water allocations.

The late February price situation also was taking the shine off the 320,000 acres figure.

Largest ever

“I would be happy with 275,000 to 290,000 acres,” said Lewkowitz. These are still figures that could make the 2007 crop the largest ever. An average yield like ’04 would push California production to more than 900,000 bales. California produces 90 percent of the U.S. Pima cotton crop.

email: hcline@farmpress.com

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