In a surprising but gutsy move, Calcot has announced that it will close the cooperative's seasonal pool not long after this year's crop has emerged.
May 23 is the final day new Calcot members can sign up for the seasonal pool.
The move recommended by new Calcot president David Farley won unanimous approval by Calcot board.
Farley said marketing outlook dictates the move to protect the seasonal pool from what he says will be lower prices for the 2003-04 compared to the 2002-03 crop now being marketed.
“The 2002-03 season has been a demand-driven marketplace, forced by lowered ending stocks in response to lower production caused by lower prices.
“Rising global prices are already attracting more acres in 2003-04 to meet the demand-driven market. As area grows, prices will adjust downward, and we do not want to dilute our seasonal pool late in the year to the detriment of Calcot growers who committed early to the seasonal pool,” said Farley
By closing the seasonal pool very early, Farley said Calcot's management will have a clear idea early on of how much cotton will be the pool for maximum price performance and will also help “protect earlier pricing opportunities.”
There has been an aggressive recruiting campaign over the past six months among independent merchants and Calcot for growers in California and Arizona in the wake of Calcot's overpayment problems.
Calcot has been successful in holding its ground against an all-our merchant assault.
While the cooperative has lost key growers like the Starrh family in Kern County and Stone Land Co. in Kings County, Calcot currently has maintained its membership at slightly more than 1,600 members and if 2003 yields are average could market 1.2 million bales, about 40 percent of the combined California and Arizona crops.
The Western cotton crop has shrunk considerably over the past few seasons with a dramatic decline in acreage from what has historically been about a 1.5-million-acre base.
This year USDA is projecting only 917,000 acres of cotton will be planted in California and Arizona, about the same as last year.
“The pie is definitely smaller and getting smaller each day as growers make marketing commitments for the season,” said Farley. “The California and Arizona growers are well-served in the cotton marketplace — in some cases too well serviced.”
Most industry observers believe there are few growers uncommitted to a merchant or Calcot at this time.
“I would expect most cotton growers would have some indication where they are going to market their crop by May 23,” said Farley. “Leaving that marketing decision to harvesttime may kill you this year.”
Calcot gives growers two weeks to sign out each year and Farley and the Calcot board are giving non-Calcot or former cooperative members only eight more weeks to sign in to the seasonal pool. “The put has been only a one way put until now,” Farley noted.
“This initiative gives undecided cotton growers a limited window of opportunity to participate in Calcot's Seasonal Pool,” Farley said, “while protecting the interests of Calcot's existing committed members.”
Growers can market through Calcot after May 23, but only through the cooperative's Call Pool and Spot Fixation Pool options.
“These are excellent choices for cotton producers who wish to maximize returns on their farming investment, but it does entail more hands-on management on the grower's part than our Seasonal Pool.”