Gatherings of San Joaquin Valley cotton growers, ginners and marketers over the past few seasons have looked like Phil Angelides political rallies.
Phil Angelides? He is the unknown running for governor of California against Gov. Arnold Schwarzenegger and trailing by double digits in the polls.
However, the recent annual Supima meeting for the valley’s Pima cotton industry at Harris Ranch restaurant, Coalinga, Calif., looked like an autograph party for Jessica Simpson.
It was almost a standing-room-only luncheon for farmers, merchants and ginners who came to marinate themselves in the continued success of Pima cotton in the fashion world and the fertile soils of the San Joaquin Valley.
How good is it?
Most everyone in the room was wondering what USDA prognosticators were smoking when they made an estimate of almost 900,000 bales of American Pima production this year. Experts figure this is about 100,000 bales too high. A percentage discrepancy that significant would normally have a big negative impact on a commodity market. It hasn’t. In fact, the American Pima industry actually wish that USDA proves correct because they could use more cotton to satisfy unmet worldwide demand for American Pima cotton.
Supima Executive Vice President Marc Lewkowitz and others are convinced the United States will produce no more than 800,000 bales this season, maybe 825,000 bales. However, certainly not the 893,000 bales USDA is projecting. Supima believes USDA’s 1,137 pounds per acre yield estimate for California and the 1,287-yield estimate for American Pima Beltwide are too high.
The textile world is demanding Pima cotton, but U.S. and worldwide cotton growers have not kept up with that consumption for five years, according to Lewkowitz. This has run Pima prices well beyond the $1 per pound level for months.
The latest spot market for top grade U.S. upland cotton is about 53 cents per pound. The spot market for Pima is $1.30 per pound.
There is no end in sight for the American Pima rocket ride, according to Lewkowitz, who said China is guiding the ELS rocket just like it is driving the world upland market with its unquenchable demand for cotton to drive its industrial textile machine and satisfy its growing economy of 1.3 billion people.
China is consuming 600,000 bales of ELS cotton annually en route to what Lewkowitz says will be 1 million ELS bales per year. China devoured 42 percent of America Pima production last year, 246,000 bales. The United States may just have the inside track on that 400,000-bale China ELS consumption increase. In 2000/01, China bought 3,000 bales of U.S. Pima.
China’s growing middle class is seeking quality, branded products. In the cotton textile world, that is ELS cotton with a Supima label.
America is the world’s No. 1 ELS exporter with 50 percent of world exports leaving from U.S. ports; America produces 33 percent of the world’s ELS cotton.
What is even more remarkable is the impact American Pima has had on the SJV cotton industry. For the first time in the history of SJV cotton, Pima exceeds Acala/Upland acreage this season, according to the recent California pink bollworm program acreage accounting, which reports 272,000 acres of SJV Pima this season versus 255,000 acres of Upland. USDA says there are 288,000 acres of SJV Pima.
This is partly due to a 26 percent increase in SJV Pima acreage, but also due partly to a precipitous decline in Acala/Upland acreage because of low upland prices.
Last year, SJV Pima accounted for 88 percent of U.S. ELS production acreage. In 1987, it was 1 percent: Texas, New Mexico and Arizona account for the 12 percent of U.S. production.
American Pima acreage is expected to continue increasing across all four states since carryover stocks once again expected to be near zero for this marketing season and next year, which bodes well for prices. Arizona, which once was the No. 1 American Pima producing state, recorded a sharp, 71 percent increase in acreage this year due to the start of a pink bollworm eradication effort.
However, the ELS acreage in the state, 7,000 acres, is the smallest among the four states. Continued success with the PBW eradication effort could see another solid jump in Arizona in 2007.