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April 2015 Cotton Leader

April 16th, 2015

DON’T FORGET ABOUT COTTON’S NATURAL RESOURCE SURVEY

In early March, Cotton Incorporated initiated a Natural Resource Survey to seek input from all U.S. cotton producers.  It is a continuation of the effort launched in 2008 to assess production practices and provide documentation of the sustainable cotton production practices used in the U.S. American cotton producers have made great strides in improving the environment of their cotton fields in the last three decades.  Soil loss is down 68 percent, irrigation use is down 75 percent and energy use is down 31 percent. The Cotton Research and Promotion Program and Cotton Incorporated are dedicated to continuing this progress and are committed to promoting cotton as one of the world’s most environmentally friendly fibers. The 2015 survey will accomplish several objectives, including; measuring progress since 2008 and providing data to update a global cotton life cycle assessment.  The results of the survey will be provided to the industry through Cotton LEADS™. The Cotton LEADS program is committed to responsible cotton production and is founded on core principles that are consistent with sustainability, the use of best practices and traceability in the cotton supply chain. The survey was announced by postcard in early March, and there is still time to participate. It is administered on-line,  consists of 50 questions related to management practices, and takes less than 30 minutes to complete.  As an incentive to participate, Cotton Incorporated will be providing t-shirts to the first 1,000 participants. Dr. Ed Barnes, Senior Director, Agricultural & Environmental Research at Cotton Incorporated said ,“We are more than half-way to our survey-completion goal and need those who have not participated to complete their survey so we can tell the most robust story possible about U.S. cotton.  And, there is still a chance to get a t-shirt if you hurry.” To participate please use the link provided on your postcard, or go to:  http://www.cottoninc.com/ag-esurvey/.

COTTON INCORPORATED LAUNCHES NEW ADVERTISING CAMPAIGN

In an effort to rebuild cotton’s market share, Cotton Incorporated has launched a new call-to-action advertising campaign. In mid-April, Cotton Incorporated debuted their newest commercial which gives a heartfelt look at why cotton is a consumer favorite and urges consumers to check labels for cotton content. The new campaign focuses on real stories, from real people talking about their favorite cotton items.  The “favorites” commercials feature cotton staples such as denim and shirting, but will also include trending favorites such as athletic apparel. Kim Kitchings, Vice President of  Corporate Strategic Planning and Program Metrics for Cotton Incorporated, says that many cotton pieces have a great story to tell. “There are different reasons to love cotton,” Kitchings says.  “It may be that it’s functional, breathable or comfortable, but it may also be emotional.” The call to check labels for cotton content is intended to let retailers know American consumers are aware of the fabric content of their clothing and to drive demand to purchase more cotton products. The new commercials will be accompanied by digital extensions and promotions, including social media. The digital component of the campaign will launch in mid-May on thefabricofourlives.com. 

ECONOMIC REPORT

NY futures and the A Index surged higher in recent trading. Prices in India and Pakistan also increased, while values for Chinese fiber were stable. Price for the May NY futures contract rose from 63 cents/lb in recent trading to levels over 66 cents/lb. Prices for the December contract advanced to values over 65 cents/lb. The A Index followed movement in NY futures, climbing from values near 68 cents to those near 73 cents/lb. At the world-level, estimates for supply and demand were nearly unchanged in the latest USDA report. The global production figure was reduced only 17,000 bales (to 119.2 million). The global mill-use figure was increased only 85,000 bales (to 111.0 million). With production and consumption essentially unchanged, the global ending stock figure was essentially stable (+27,000 bales) at 110.1 million bales. As has been the case for the past several crop years, China and Chinese cotton policies can be expected to be influential on cotton prices around the world in 2015/16. A minor revision to the current support program for Xinjiang (which represented 60% of 2014/15 domestic production according to China’s National Bureau of Statistics) was announced last week. This change reduced the price guaranteed to Xinjiang producers by 700 RMB/ton to 19,100 RMB/ton (-5 cents/lb to 140 cents/lb at current exchange rates). Initial reaction to the announcement suggests that the decrease in support will not significantly alter planting in Xinjiang this spring. Outside of Xinjiang, the combination of current market prices and a much lower level of support are generally considered not to be attractive, and steep declines in acreage are expected in eastern growing areas. A recent survey by the China Cotton Association suggests the total reduction in Chinese acreage could be 24%. Under normal market conditions, the production deficit in China implied by such decreases in acreage could be expected to be followed by an increase in Chinese import demand. However, with the massive accumulation of government reserves in recent years, this is not a normal market. The USDA estimates that China will have 65.1 million bales of cotton stored in warehouses at the end of the 2014/15 crop year (186% of Chinese 2014/15 mill-use), which is more than sufficient to make up for any production deficit. Nonetheless, no announcement has been made regarding any upcoming series of auctions from reserves, even though in recent years sales from the Chinese reserve system have tended to occur in the spring. The details of any eventual announcement for Chinese reserve sales, particularly the selling price, can be expected to influence global price direction.

COTTON INCORPORATED TO HOST PRICE RISK SEMINARS IN ARIZONA 

Cotton Incorporated is set to host a basic and intermediate price risk management workshop in Maricopa, Arizona on Tuesday, May 19.  The seminar will address how to use market-based strategies to manage price risk for the 2015 crop season, as well as market outlook discussions.  The seminars are part of the series of ongoing workshops across the Cotton Belt that offer cotton producers a perspective on marketing their crop within the risky global economy they are facing.  “The sessions are especially important now as growers are trying to navigate a low price environment, “ says Dr. Jeanne Reeves, “ but you can still market your cotton because there is a need for quality cotton. “ Speakers include Dr. O. A. Cleveland , Jaral Neeper, President of Calcot, Ltd. and  Dr. John Robinson. The Maricopa seminar will be held at the University of Arizona’s Maricopa Ag Center, 37860 W. Smith-Enke Rd., Maricopa, Arizona at 8:30 am, ending at 5 pm. There is no fee to attend and lunch will be provided for all participants. Registration is recommended.  Contact Lynda Keys at Cotton Incorporated by phone 919-678-2269 or email lkeys [at] cottoninc [dot] com. Space is limited so please register as soon as possible.

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