China Trade Dispute and Cotton Flow

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With no end in sight for the trade dispute between China and the United States, cotton industry stakeholders met recently to discuss the situation.

About 220 people representing all segments of cotton supply chain such as producers, warehouse operators, merchants and shipping agencies met in Lubbock last week in a meeting organized by Texas Cotton Association (TCA).

The flow of cotton from the flat fields in the United States to markets several thousand miles away is complex and any trade dispute surely affects the flow. New markets and their requirements must be considered in these situations. Therefore, the gathering organized by TCA as part of their annual meeting takes significance, this year more than ever.

“The purpose of this annual meeting is to provide a forum and timely setting for each segment of the cotton industry to meet to communicate any anticipated problem associated with flowing Texas cotton to market. If there is one broken link in the chain, we all suffer, “ stated Kandice Poteet, Executive Vice President of Texas Cotton Association.
While talking about the demand for U. S. cotton, Kandice Poteet stated, that in a recent meeting with China National Textile and Apparel Council, held in Dallas, it indicated that the demand for U. S. cotton in China would increase by one million bales over previous years, which is highly significant while there are trade disputes between the two countries.

Steve Verett, Executive Vice President of Lubbock-based Plains Cotton Growers, Inc., provided an update of the 2018 cotton crop from the High Plains and Rolling Plains of Texas. His analysis on the quality of cotton showed that cotton maturity is on track and will be better than the 2017 crop. He was optimistic about the staple length being good and micronaire returning to normal distribution. There has been significant abandonment of dryland acres in the region.
As expected, the impact of recent tariffs occupied the center stage of discussions. As China’s lead as the number one importer of U.S. cotton has eroded in the past two years, it still imports good quantity and hence the situation needs attention.

“We are much better without tariffs, but trade wars come and go,” stated Darren Hudson, Professor of Agricultural Economics at Texas Tech University. He added, extended trade war may not be good as it affects the supply chain.

Setting aside the current trade dispute, providing contamination free good quality cotton based on delivery schedule is important for the United States to have premium markets.

“The U.S. cotton industry has worked hard for many years to have the reputation of being contamination free.  The whole industry, from producers to ginners must do everything possible to keep plastic out of cotton harvesting and processing so that we do not diminish our reputation of contamination free cotton, “ stated Steve Verett.
As textile processing is shifting away from China, focusing on the needs of emerging markets in Southeast Asia such as the flow to these markets must be carefully considered by the United States’ cotton industry.

Prof. Seshadri Ramkumar, Texas Tech University, USA