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Southern Ginners Adjust To New Environment

Southern cotton ginners know how to adapt to changing market conditions. In fact, you might say that they have rewritten the book on this topic in the last few years.

That “flexibility” was a major topic of discussion at the Southern Cotton Ginners Association’s recent summer meeting in Branson, Mo. In short, because of changing acreages for cotton, corn and soybeans, Mid-South gins continue to adjust to a completely new environment.

In addition to having fewer cotton acres in the region, ginners have had to deal with a new farm law, increased cotton stocks, fluctuating cotton prices, competition from grain crops as well as China’s unpredictable policies.

“This has made for a challenging situation for our Mid-South cotton producers and ginners,” says Tim Price, executive vice president of the Southern Cotton Ginners Association.

“I have to give our group a lot of credit for dealing with so much change in the last few years.”

Full Agenda Of Speakers
It is understandable that the agenda for the summer meeting addressed what ginners are currently facing. Some of the key speakers offered the following comments:

  • Dr. Abner Womack, research professor at the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri, says many factors will impact the chances for cotton acreage stability in the Mid-South. He pointed to price volatility, cotton stock buildup, global economic slowdown, lack of demand, crop insurance increase and loss of direct payments as some of the major factors affecting cotton acres.
  • Dr. Wes Burger, associate director of the agricultural experiment station at Mississippi State University, gave a broad overview of issues confronting agriculture. With an increase in world population, he says ag technology is needed now more than ever to find solutions. As part of his staff’s mandate to identify ag research goals, a recent survey was conducted. Some of the top priorities identified in the survey included: weed control, weed resistance, bacterial blight, use of dicamba and 2-4D, physical drift and nutrient management.
  • Kaelin Hanks of Entira Marketing offered an update on the future of Unmanned Aerial Vehicles (UAV) in agriculture. She said the biggest beneficiaries of this new technology will be in the ag sector – specifically precision agriculture. •Tommy Valco of USDA-ARS in Stoneville, Miss., reported on the increased cost of ginning across the Belt. At present, there are 613 active gins in the country. The average variable cost of ginning a bale has increased from $20.84 in 2010 to $24.88 in 2013. He pointed to a reduction in labor and energy expenditures as a way to reduce costs.
  • Memphis merchant Anthony Tancredi of Louis Dreyfus Commodities concluded the meeting by giving a market update on U.S. cotton. He pointed toward the continuing uncertainty in China’s cotton policy as a major contributor to today’s market volatility. He predicted prices are headed into a trend in the 60-cent range or even lower.

Southern Ginners
Too Much Cotton
Tancredi also says there “is simply too much cotton in the world right now.” He says a slight rebound in consumption would help in recapturing U.S. cotton demand. But he expressed frustration because no outside observer can accurately say what China’s next move will be because nobody knows what the country’s policy really is.

Finally, Tancredi urged ginners to remain vigilant in preventing contamination of U.S. cotton. “Our industry has a reputation for the best quality cotton produced in the world,” he says. “But we continue to receive reports of contaminated cotton, and we have to do a better job.”