The first seven months of 2016 have been well below the hopes and expectations of many spinners.
“We’ve been really disappointed in the activity so far this year,” said one spinner. “Business is coming in small chunks. There seems to be no consistency at all. One week we see signs that things are beginning to loosen up, then the next week we see very little come in. We have enough business to keep everything running, but our pipeline is thin — a whole lot thinner than we would like it to be.”
Added another spinner: “It’s just week-to-week. We have orders coming in, but few of them are big. Our backlog is not nearly what it needs to be. I keep hearing there are some big programs out there that are going to come our way, but I haven’t seen any evidence of it.”
“The strong dollar certainly isn’t helping us right now,” added one yarn broker. “It is a hard sale, especially when competing on price with countries that artificially devalue their currencies. We talk a lot about imports in this country. But what a lot of people don’t realize is that the United States is among the largest exporters of textile products in the world. And when our prices start going up because the dollar is so strong, we start losing business.”
Not every spinner, however, is disappointed. Specialty yarns continue to move well. “We’re selling everything we can make,” said one specialty spinner. “The keys for us are innovation, communication and delivery. We make a unique product and we stay in touch with our customers so that we can anticipate and meet their needs. A critical part of our success is lead time. We know we have to get our product our customer faster than anyone else can. If we fail, someone else can step in. It used to be we talked about quotes and turnaround in weeks. Now we talk in days.”
Is It The election?
Going forward, some spinners expect business to remain stagnant until after the election. “It’s not unusual to see drop-offs in election years,” said one spinner. “After the election, depending on who is elected and what the message is, things could change. That is certainly what happened four years ago, and I am optimistic it will happen again.”
Another spinner agreed: “Maybe it is just uncertainly about the upcoming election. We have been expecting business to pick up every month this year, and it just hasn’t happened so far. We have a few solid weeks and then a few slow weeks. At first, we thought it was an inventory correction and that things would be back to normal by mid-year. Consumer confidence doesn’t seem to be terribly low. Unemployment is low, and new jobs are being created. So maybe everyone is now just taking a wait-and-see attitude. There have been a lot of things in the campaign for President that have made a lot of people nervous — and that goes for both sides.”
Final TPP Battle Looming?
Under the Trade Promotion Authority legislation passed last year, the White House is required to give a 30-day advance notice to Congress before submitting the Trans-Pacific Partnership (TPP) agreement for approval.
In mid-August, President Obama did just that through a Statement of Administrative Action. However, Congressional leaders have indicated they will not consider TPP until after the election because of its widespread unpopularity among the American public. Both major party candidates for President, Hillary Clinton and Donald Trump, oppose TPP as it is now written.
As of the week ended September 1, spot-market cotton prices for the base quality of cotton (color 41, leaf 4, staple 34, mike 35-36 and 43-49, strength 27.0-28.9, uniformity 81.0-81.9) in the seven designated markets measured by the USDA averaged 65.30 cents per pound.
The weekly average was up from 60.64 cents reported during the corresponding period a year ago. Spot transactions for the week totaled 2,630 bales. Total spot transactions for the season were 10,996 bales, compared to 18,729 bales for the corresponding week a year ago. The Intercontinental Exchange October settlement prices ended the week at 68.01 cents.