NEW YORK CITY — November 20, 2012 — Cotton Council International (CCI) and Cotton Incorporated, in
cooperation with USDA, jointly presented the seventh biennial Sourcing USA Summit in Rancho Palos
Verdes, California. The event, held on November 12-16, attracted 400 delegates from 23countries,
including representatives from the cotton industry’s top tier textile manufacturers, merchants
along with companies and organizations integral to the global cotton supply chain.
Opening remarks by National Cotton Council (NCC) Chairman Chuck Coley reiterated the
continuing commitment of U.S. growers to supply mill customers and the entire supply chain with
reliable, quality cotton, a pledge echoed by the U.S. cotton growers attending the event. The issue
of supply, and its partner demand, shaped the event program, which explored the myriad factors that
affect these business basics. Panel discussions and presentations by world class experts offered
perspectives and outlooks for the mitigating factors of weather; cotton’s competitors in the
commodity and textile fiber arenas; the global economy; and changing manufacturing, retail and
The keynote presentation by Luke Williams, professor of innovation and design at New York
University Stern School of Business, challenged traditional business models of predictability,
advocating instead a model of provocation as a means of business survival in a disruptive age.
Relying more heavily on predictive models, Craig Solberg, a senior meteorologist at
Freese-Notis Weather, explained cyclical weather patterns and suggested that the current drought
conditions affecting the U.S. High Plains might continue for five to 10 years. This news was
tempered somewhat by Doug Rushing, director of global industry affairs at Monsanto, who cited
emerging developments by his company for cotton and corn varieties with enhanced drought tolerance
Corn, as explained by Richard Brock, president of Brock Associates, recently has been a key
challenger to cotton acreage, especially in the United States where ethanol fuel programs enabled
corn to fetch a higher price than cotton on the market. Looking forward, however, Brock anticipates
a collapse of the corn bubble, which could make cotton a more attractive commodity for farmers in
the United States and other countries.
The historic high price for raw cotton fiber, which exceeded US$2.00 a pound last year, has
returned to more traditional levels, currently hovering around US$.80 per pound. Dr. Gary Adams,
the NCC’s vice president of Economics & Policy Analysis, discussed the run-up aftermath and
recovery challenges. The Summit also featured an animated “Bull & Bear” panel of U.S. cotton
industry representatives who focused on prices and cotton availability.
John Baffes, a senior economist at the World Bank, provided a more macro perspective of the
relationships between commodity prices, in general. Baffes noted that relative to the 1997-2004
averages for commodity prices, cotton advanced modestly at under 40 percent, as compared to energy,
metals, grains and other commodities.
A candid presentation by Dr. John Cheh, vice chairman and CEO of Esquel Group, a leading
Chinese textile company,conjectured that the origins of the cotton price disruptions began with the
end of quotas ten years ago, and not with the run-up in pricing of two years ago. Cheh stated
further that other distortions, including those caused by China’s cotton reserve policy, continue
to complicate stable pricing.
Rounding out the economic perspectives was Ron Insana, senior analyst for CNBC and a
financial expert. Insana provided an optimistic outlook for the U.S. and global economies.
The industry, however, is still nursing the hangover of the run-up, most notably in the area
of fiber substitutions made to help the downstream end of the chain maintain margins when cotton
prices were high, and the difficulties of some companies to honor cotton contracts.
Addressing the former concern, Cotton Incorporated president and CEO J. Berrye Worsham urged
attendees to stick with cotton,citing currently price stabilization and additional cost-savings
that could be attained through efficiency opportunities in the chain’s manufacturing segments.
Worsham shared top line results conducted by his company that concluded mills and weavers could
achieve a 6 to 15 percent savings potential using current machinery and existing technologies.
During a panel discussion, Antonio Esteve, representing the International Cotton Association,
explained how his organization is exploring disciplinary options to address contract sanctity
issues, including downstream contracting.
Chris Callieri, principal for the consumer and retail practice of A.T. Kearney; and Marshal
Cohen, chief industry analyst for the NPD Group, Inc., each addressed consumer-related
opportunities for cotton in separate presentations. Callieri identified consumer markets on the
rise, including Peru, Mongolia and the Mid-East, in addition to the BRIC countries: Brazil, Russia,
India and China. Callieri also suggested that there were immediate and significant opportunities
for collaboration and cooperation across the textile supply chain.
The always-entertaining Cohen informed attendees that products that adapt to consumer needs
— rather than products to which consumers would have to adapt — were on the rise. He further
suggested that the “era of more” for consumers held great promise for cotton, alongside revitalized
communications about cotton’s benefits.
The leadership of the U.S. cotton industry, Cotton Council International and Cotton
Incorporated, in cooperation with the USDA,have hosted the Sourcing USA Summit on a biennial basis
since 1999 in an effort to increase cotton fiber exports and further develop that export market.
The U.S. cotton industry and its allied industries are integral supporters of the Sourcing
USA Summit. The 2012 Summit Exporter Sponsors include: Jess Smith & Sons Cotton, Plains Cotton
Cooperative Association, San Joaquin Valley Quality Cotton Growers Association, Toyoshima,
Omnicotton, ECOM Cotton, J.G. Boswell Company, Staplcotn, Calcot, Allenberg Cotton Co., ACG Cotton
Marketing LLC, Cargill Cotton, White Gold Cotton LLC, Olam, Cotton Growers Coop, Toyo Cotton
Company, Noble Cotton, Baco Trading, Glencore Trading and Supima. The 2012 Summit Allied Industry
Sponsors include:Wakefield Inspection Services, Steadfast Futures & Options / LOGIC Advisors,
Monsanto, Cotton Market and Risk Management Consulting, Cargo Control Group, CoBank ACB, Uster
Technologies, Rieter Textile Systems, Bayer CropScience/FiberMax &Stoneville, ICE Futures U.S.,
Intertek and Cotton Outlook.
Posted on November 26, 2012
Source: Cotton Council International