Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Wednesday, Sep. 2, 1998
Much of area's cotton finds no buyers
Overseas market is limited for short-staple crop
By JEFFREY TOMICH
Staff WriterSouth Texas cotton producers are having trouble trying to sell the meager crop they were able to harvest during the drought.
Officials for Corpus Christi's cotton warehouses say shipments are slower than usual. As a result, forklifts are idle, producers and cotton merchants face increased storage costs and cotton bales are stacked two-high and tagged with nowhere to go.
Cotton from the Coastal Bend and Rio Grande Valley is typically in high demand by domestic mills because the region grows the country's first new crop each season.
Before it's shipped, cotton is evaluated by the U.S. Department of Agriculture Classing Office in Corpus Christi. The cotton is rated according to several factors that help determine the price for each bale.
This year's drought produced a short-fiber cotton, referred to in the industry as short-staple cotton. Generally, U.S. textile mills have no use for short-fiber cotton, according to industry officials.
Traditionally, short-staple cotton is shipped to Asia. But export demand has suffered with the financial troubles in Southeast Asia, the currency crises in Russia and elsewhere in the world and an excess supply of cotton in China.
``In previous drought years where we had a short staple, we had an overseas market,'' said Dwayne Strickland, a Corpus Christi cotton broker. ``Now, Taiwan and other countries don't have money to buy this cotton and pay the price that it should bring.''
The week before Labor Day is usually hectic for cotton warehouses. In some years, employees work seven-day weeks taking in bales of cotton from area gins and preparing to ship to mills in the United States, Asia and Mexico.
``Normally, we're receiving cotton and we're shipping it out the back door at the same time,'' said Raymond Kadlecek, manager of the Corpus Christi Public Compress.
That's not the case this year. Because of the drought, the Coastal Bend harvest was completed weeks ago and most cotton has already been delivered to warehouses to await shipment.
At the Corpus Christi Public Compress, a truckload was sent to North Carolina on Friday and a container to be shipped to the Philippines was loaded Monday. Still, it's destination unknown for many of the 42,000 bales harvested this year.
The story is the same at Corpus Christi's Gulf Compress. Except for about 20,000 bales due from gins near Uvalde and College Station, the warehouse has received nearly all of the 240,000 bales it expects to get in 1998, general manager Bob Weatherford said.
Traditionally, the warehouse would have shipped about 25 percent of its cotton already. But because of the cotton's short fiber length and weak export demand, there's little activity this year.
``The mills are always in demand for good, new-crop cotton,'' Weatherford said. ``But the demand isn't there this year.''
``If the quality had been there, it would have been shipped. But there isn't much of a market and no movement of cotton at this point.''
With few shipments out, Weatherford said he's planning to take Labor Day off this year for the first time in 20 years.
There's no record of what percentage of the cotton stored in Corpus Christi warehouses belongs to farmers and what is owned by merchants who bought under forward contracts in the spring.
With cotton futures prices low, many producers gambled they could get more for their crops at harvest, said Harvey Buehring, agricultural extension agent for Nueces County.
``Now they find themselves with no one really interested in taking it because the merchant doesn't have a mill customer out there with a demand for short-staple cotton,'' he said.
At the Corpus Christi Public Compress, the storage rate for a bale of cotton is $1.75 per month, meaning a cotton producer with 2,000 bales is paying $3,500 a month in storage costs.
Meanwhile, the more cotton that's stored and the longer it's stored means greater revenues for the warehouses.
The Corpus Christi Public Compress is owned and operated by the Port of Corpus Christi. The Gulf Compress is a farmers co-operative, so any profits would go back to the producers.
The drought and weak cotton market are a double whammy for farmers, said Carl Anderson, cotton marketing specialist for Texas A&M University in College Station.
``Because of the international market conditions, we are seeing our farmers faced with low yields and low prices in the same year, which has made this drought and the financial stress much greater than it was in '96,'' Anderson said.
By comparison, Anderson said, the average price of cotton was about 72 cents per pound in 1996 - the last drought. The price so far this year is less than 60 cents per pound.
Texas' cotton crop is going to fall about 2 million bales short of last year, Anderson said. The U.S. crop could be 4 million bales less than in 1997.
``We are seeing the makings of a tight supply of cotton as the season unfolds, but there are no signals in the market right now that the market's worried about the short supply,'' he said.
The market for Texas cotton is expected to pick up somewhat, Anderson said. ``Mexico is going to need over 1 million bales of cotton from Texas. We'll probably have an opportunity to move it, but it's definitely going to be at less than base price.''
The more immediate concern locally is whether producers will find a buyer for their crop at the right price in time to pay off loans.
``At some point in time, their banker's going to come in and ask them to settle up on their production loans,'' Buehring said.
The last resort for farmers is to sell their cotton to a government loan program, a safety net of sorts for agricultural producers in need of quick cash.
The program functions much like a pawn shop for farm commodities. Producers can sell their cotton for a rock-bottom price, then have a certain period of time to repurchase it and sell it on the open market if prices improve.
Staff writer Jeffrey Tomich can be reached at 886-4316 or by e-mail at tomichj@scripps.comPost your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web