Better Year for Western Cotton Growers

Western Cotton Growers See Market Improvement

 

By Patrick Cavanaugh, Farm News Director

 

Cotton growers throughout California and the West fared better this year compared to last year in terms of prices and exports, as reported at the Calcot, Ltd. 89th Annual Meeting last week in Tempe, Arizona. Jarral Neeper president and CEO of the Bakersfield-based Calcot, Ltd., the cotton marketing cooperative representing growers in California, Arizona, New Mexico, and Texas, announced, “Last year we produced about 13M bales. We should be a hair over 16M this year.”

California Cotton, Merced County, Sept 2016
California Cotton, Merced County

Neeper estimated, “We’re going to go from about 10.2 million bales in exports to 11.5 million based on a review of our historical shares of the marketplace and the world, the foreign production/consumption gap, our historical shares of filling that gap, and how much we should export.”

“One year ago at this time, cotton prices were at a very low $0.61 per pound,” said Neeper. “The market eventually fell. Prices rallied a little bit, and then fell down to $0.55. Then, the last month of the crop year, we had calcot-logothis unforeseen $0.10 rally—almost $0.12 rally.

In cotton marketing where there are highs and lows, Neeper acknowledged, you can’t always sell high; you have to sell when you can. “As a cooperative, in order to make progress payments to your membership, you do have to sell cotton and turn it into cash.”

“The cotton futures look good,” Neeper said, “even better for the coming year. We’re sitting at roughly $0.70 a pound, about ten cents higher than a year ago. And, generally, California cotton growers tend to get a $0.05 to $0.10 premium per pound because of our growing additions and high quality lint.”

Neeper believes the future of Calcot, Ltd. is “terrific.” He added, “89 years and still going strong; we’re looking for another 89 years.”

 

Calcot Could Market 70 Millionth Bale this Year

Calcot Ltd. Chairman Talks California Cotton at 89th Annual Meeting

By Patrick Cavanaugh, Farm News Director

Calcot Ltd., a democratically-run cotton marketing cooperative owned by 1,200 select cotton growers in California, Arizona, New Mexico and Texas, held its 89th Annual Meeting in Tempe, Arizona, this week. 

Gregory Wuertz, chairman of Calcot and an Arizona cotton grower, said, “The cooperative started in 1927, and it is just amazing to me that we will reach 70 million bales sometime this year.”

“That’s a lot of cotton if you think about it,” Wuertz said. “And it has a great effect on all the growers. A lot of money has been run through the organization, and we are still doing it.”

Wuertz said Calcot directors are in the field across the western cotton belt, interacting with the industry.

“We have Calcot personnel in each cotton region who are also out in the fields talking to people and bringing up questions. They just don’t stay in their office. We try to get great members, and we work really closely with gin managers and their staff. We want to be on a first-name basis,” he said.

Wuertz noted, “You have to love the lifestyle of cotton production. You get attached to the crop. You plant it in March and harvest it in November. It’s a long-term thing.”

Yet, Wuertz acknowledged, “There are ups and downs. There always are. There is always a new catastrophe because you deal with the weather and the water issues. I think you just build up a little bit of a strength and have tougher skin than maybe some growers have with other commodities.”

Many Calcot growers outside of California are in awe of California producers. 

“California has a lot more regulations,” Wuertz said. “They’re blessed with a really nice climate—just a perfect area. Our climate is a little harsher, but California people work with air quality, labor laws, and their water issues. They have to have a real sharp pencil to make all that work.”

However, Wertz says, California growers always enjoy a better per-pound price for their cotton.

“I think over the years they have developed markets, and because of their climate, they do grow a real [high] quality crop that just demands a higher price. Everybody says there’s no difference, but there is some kind of difference that is just a little better,” he said.

Wuertz explained that the Calcot cooperative is good for growers when it comes to the prices they receive.

“It is the classic cooperative idea,” he said. “It is too risky to try and peak these cotton markets. It is risky to just hold all your cotton and try to peak it at one time.”

“You have to be conservative,” he continued. “Like cotton growers are — very conservative. So you sell some and hold some and seek financing from banks for the short term. We have good tight covenants with the bank, and that’s part of our risk-management policy. We don’t want to speculate, so that is why we sell throughout the year, and we try and watch all those things.”

“We have a very strong relationship with mills and we can sell directly to them, which I think demands more of a premium for Calcot growers,” Wuertz said. “And while most cotton-spinning mills are offshore, we still have a good chunk of cotton going to some very good domestic mills, where they turn out top of the line sheets and higher-count shirts.”