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August 2015 Cotton Leader

August 27th, 2015


The Cotton Board announced last month that starting in January 2016, Cotton Leader will no longer be delivered in the printed version, only in an electronic version. Sending Cotton Leader electronically will save a significant amount of operating dollars, and also allow us the ability to send links and images along with the information. We at the Cotton Board are committed to disseminating timely Program information and we will continue to do so by sending Cotton Leader directly to your email inbox - so, we need your email addresses. To sign up, visit and click on the “email newsletter” link in the top right corner of the site, directly above the seal of cotton. Once you sign up, Cotton Leader will start coming directly to your email inbox. After the December, 2015 issue, you will no longer receive the hard copy mailing. We encourage all of our readers to sign up to receive Cotton Leader electronically so you can stay informed about the Cotton Research and Promotion Program. Cotton Leader is also always available on our Web site under the “news” section.


During its Annual Meeting in Miami, Florida The Cotton Board reviewed and voted to recommend Cotton Incorporated’s proposed 2016 budget of $76 million to the Secretary of Agriculture. This is a $4 million decrease from the 2015 budget. Based on projected collections, The Cotton Board will draw approximately $8 million from reserves to fund the program in 2016. Even with a reduction in the overall 2016 budget, funds for consumer-based programs will increase. Through a new ad campaign and a tighter focus on research and marketing areas that will yield the greatest returns for cotton, the Cotton Research and Promotion Program has a clear goal for the coming year, building cotton’s market share. In Cotton Incorporated’s 2016 plan, many longer-term focused research programs will be streamlined in order to increase funding for the company’s new “Favorites” advertising campaign. This campaign, which is based on considerable consumer research such as focus groups, features a strong reminder to consumers as to why their cotton garments tend to be their favorites. There is an additional call-to-action message to check the fiber-content label before buying. Television advertising will remain an important medium for 2016, but the new campaign was designed to also work effectively in digital media and with Cotton Incorporated’s supply chain marketing activities. The budget and plan, along with The Cotton Board’s recommendation of approval, will be forwarded to the United States Department of Agriculture (USDA) for final approval.


The Cotton Board elected new officers to guide the Program during its Annual Meeting Business Session. Aaron Barcellos was elected to serve as Chairman for the 2015/2016 Program year. Barcellos, a cotton producer from Los Banos, California commented on his election, saying, “Over the years I’ve grown very attached to the cotton industry, and I am grateful for this opportunity to give back just a portion of what it has meant to me and my family. My goal for the coming year is to continue to foster the excellent relationship we have with Cotton Incorporated and to use all of our resources to help reverse the current downtrend in cotton’s market share. There are many people in the cotton industry who are depending on us to make a difference, and I believe that together we can.” Before passing the gavel to Barcellos outgoing Chairman David Grant, a cotton producer from Garysburg, North Carolina, said “ Aaron has a distinguished record of service to the Cotton Board. He consistently tackles challenges with great character, thoughtfulness, and determination and I know he’ll do the same as he leads our Program.” The full slate of newly elected Cotton Board officers is as follows: Aaron Barcellos, Producer from Los Banos, California, Chairman; Janet Ydavoy, Importer from Yardley, Pennsylvania, Vice-Chair; George LaCour Jr., Producer from Morganza, Louisiana, Secretary; and Peter McGrath, Importer from Dallas, Texas, Treasurer. All officers serve one-year terms.


You’ve seen The Cotton Board’s industry calendar and now The Cotton Board wants to see your best cotton photos. One winning photo will be selected and featured in The Cotton Board’s 2016 Industry Calendar. To be eligible to win, contestants must first “like” The Cotton Board Facebook page and then email their high-res jpeg photo to sgorman [at] cottonboard [dot] org. Up to three entries per contestant will be considered. The contest ends on September 30th, 2015. The Cotton Board calendar has become an industry staple and is directly mailed to every cotton producer and ginner in the U.S. The winner will have their photo, along with photo credit, featured in the 2016 calendar and will also receive a cotton prize pack, including 25 copies of the calendar to share with friends and family, a cotton t-shirt, and other cotton prizes.


Most of the world’s cotton prices moved lower over the past month. However, NY futures sharply reversed direction with the release of this month’s USDA report. Prices for the most actively traded December futures declined slowly but steadily throughout the month of July. In August, prices broke out of the range between 63 and 68 cents/lb for the first time since mid-March by falling through support near 63 cents/lb. Following the release of this month’s USDA report, which featured large downward revisions to figures for U.S. production and ending stocks in 2015/16, prices rebounded from levels near 62 cents/lb back to those near 67 cents/lb. The A Index followed NY futures lower throughout July and August and dropped to values below 70 cents/lb for the first time since April. The A Index also followed NY futures higher and has been near 74 cents/lb recently. The move in NY futures in the latest USDA release was likely driven by the substantial changes made to figures related to the U.S. It is not uncommon for there to be large revisions to U.S. production estimates in reports released in August. This is because there is a change in methodology used by the USDA between the July and August releases. In August, and throughout the harvest period, data gathered from field surveys conducted by observers across the cotton belt are used to generate yield and production forecasts. Since reliable field-based data are not available much earlier, forecasts developed from May to July are based on statistical analysis. This year, due to heavy rainfall in many cotton growing states late in the spring, there was considerable uncertainty related to acreage planted, abandonment, and yield. As a result, the change in methods could have been expected to result in important revisions to existing estimates. This month, the U.S. planted acreage number was lowered 100,000 acres nationally (from 9.0 to 8.9 million). Abandonment was increased from 500,000 acres to 1.0 million acres. The national yield forecast was lowered 27 lbs/acre (3%). In combination, these changes generated the 1.4 million bale (10%) decrease in U.S. harvest expectations this month (from 14.5 to 13.1 million bales). Accompanying the reduction to the U.S. harvest estimate were changes to U.S. export numbers and ending stocks. A 200,000 bale increase (from 11.0 to 11.2 million) to the 2014/15 export figure contributed to a 500,000 bale reduction to 2014/15 stocks. For 2015/16, the U.S. export estimate was lowered 800,000 bales, from 10.8 to 10.0 million and was a result of the smaller production number. The implied tightness in U.S. supplies could emerge as a factor supportive of prices in 2015/16.

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