Whenever someone offers up an early season San Joaquin Valley Pima cotton acreage estimate it invariably comes with a caveat “if we have a good spring.”
Glenn Powell of Visalia, Calif., regional sales manager for Deltapine and Land Co., a major supplier of Pima seed, offered no qualification when he estimated 2006 SJV Pima acreage would reach a record 350,000 acres next season — “even if we do not have a decent planting season.” Prices are that good, and Pima is as sure as a sure bet can be in row crop agriculture in this era of federal farm program uncertainty. Pima has a federal loan and a Step 2 export incentive program, but it is not considered a “program crop” with loan deficiency payment and the like.
Pima is so promising, Powell predicts only 250,000 acres of Acala/Upland will be planted in the valley in '06. “I hope I am wrong,” he added. Pima acreage is clearly taking away Upland acreage.
Pima acreage was poised to take a big jump in ‘05 and bags of planting seed were on pallets in farm storage sheds waiting for decent weather. April 15-20 is considered the cutoff time for growers to plant longer-season Pima. Some have successfully challenged that time frame in recent years; however, the '05 planting window was much later than that and many growers swapped Pima seed for Acala seed as the planting window moved into May. Poor harvest weather is a major threat to Pima cotton. Wet, discolored Pima lint is so heavily discounted the economic advantage of Pima versus Acala can be nullified.
SJV Pima producers have delivered high quality Pima to mills. Normally, about 95 percent of the SJV Pima grades are 1 and 2. It was an early fall in 05, but SJV growers still managed to produce 80 percent grades 1 and 2.
“No one else in the world has the quality we have in the U.S.” said Lewkowitz.
If SJV yields are anywhere near the record 2004 average yield of 1,532 pounds per acre, SJV Pima could break through the 1-million-bale mark next season. Not bad for a crop that was not even listed among California crops 20 years ago.
Powell made his estimate at the recent Central Coast Cotton Conference in Shell Beach, Calif., where no one was willing to put up much of an argument against a projected '06 SJV ELS cotton acreage, almost 140,000 acres more than 2002 and about 150,000 acres more than the record 2001 acreage.
Worldwide demand for ELS cotton has been a steady incline and California is the primary supplier of world export ELS cotton with 32 percent of the market and growing, according to Marc A. Lewkowitz, Supima executive vice president.
California Pima is in demand in a market where ending stocks this season are expected to be only between 300,000 and 400,000 bales from a high of 1.8 million bales just eight years ago. Lewkowitz said carryover levels like that could disappear quickly and mills could run out of ELS cotton before the new season begins.
U.S. Pima cotton producers are increasing yields and production yet are still lagging behind world demand. A poor yielding 2005 was unfortunate. USDA is still predicting final average yields of a little more than 1,200 pounds per acre. Lewkowitz is hopefully it comes at 1,100 pounds.
ELS world offtake has been on a steady uptrend since 1995, driven by consumer demand for high quality, luxury cotton items.
“American Pima quality is one of the best in the world,” said Lewkowitz and it has been steadily improving with improved varieties and producer care in growing and harvesting the crop.
China pima aid
It is more uniform than handpicked ELS cottons, he added.
The federal grading system and the use of HVI to define known quality is a big plus for the U.S. China has asked USDA to come to China to help the world's largest consumer and producer of cotton to set up a similar grading system there for Pima.
“And today there is virtually no contamination in American Pima,” he added.
“It is the hard work of Pima farmers producing a consistently better product” that is creating the demand for American Pima, said the Supima executive vice president.
Pakistan is the biggest buyer of American Pima followed by China, which is gaining fast on No. 1, and Japan via its joint venture textile mills, is No. 3.
Much of the American Pima cotton used in those countries goes in to branded products, many licensed by Supima to use the Supima logo. The voluntary grower association now has 300 licensees paying $5,000 per year to use the logo.
It went from 100 to 300 licensees from 2002 to 2005. The licensing fee recently went from $1,000 to $5,000 with few complaints from licensees.
“Luxury products are the fastest growing section of the retail market” and Pima fits right in there with such items as $600 per pair Pima and Cashmere jeans and Japanese denim jeans costing $125 to $175 per pair.
California and the other Pima producing states (New Mexico, Texas and Arizona) are in the driver's seat for ELS sales since other countries will have a difficult time increasing production, even in China.
“We can easily afford to produce 1 million bales of American Pima cotton,” said Lewkowitz, who expects current Pima prices to drop to about $1.20 from current levels, but still remain very attractive to SJV cotton growers.
It is so attractive that the talk of the coast cotton conference is that there is one SJV grower who has never grown Pima who going to jump in for the first time with 7,000 acres.
Pima is more challenging to produce than Upland or Acala cotton and a quantum leap like that has consultants and growers gasping.
However, it does reflect a very hot luxury cotton market, one that makes Powell's 350,000-acre projection — good or bad spring — and Lewkowitz's 1-million-bale market forecast reasonable.