Is US quality catching up with Australia? At the time of writing, the US 2016 crop is half way through ginning and classing (just over eight million bales) and the stand-out feature of this year’s crop has been the overall quality.
In what is being touted as the best quality crop on record, the US is catching up with Australian quality very quickly and we have to ask ourselves is this permanent or just the result of an unusually good season?
Not that long ago we thought of US cotton as a mostly lower grade crop, as their base grade for farm support and the futures market is SLM 1-1/16”. Trying to find this lower quality this season is difficult and the variety improvement has dramatically altered the product being produced.
In the 1990s the Australian cotton industry used to strive to match California SJV Acala in terms of quality. In a decade where we caught up with California we did not get to the turn of the century before a new battle was taking place between Australia and Texas FiberMax. Now other varieties in the US are producing impressive cotton.
A major difference between the US and Australia is the number of varieties grown. Whereas we concentrate on one variety, in the US there is not one stand-out variety but rather four seed suppliers that are splitting the market. Americot, Deltapine, Bayer and Phytogen all have particular strengths but the largest planted variety appears to be one by Americot, NG 3406 B2XF.
No big deal, you may think, but each of these seed suppliers is now producing varieties equal to Australian cotton. Having just returned from an extended period in our US office, it was a little concerning to see the amount of quality cotton coming to the market. More than once, colleagues in our Dallas office were very keen to remind me that some of the cotton being received was equal to, if not better than Australian.
On the industry’s electronic trading platform “The Seam” bales from Texas registering 11-2-40 with 32GPT and plenty of 21s (Strict Middling) 37/38 staple with 30 and 31GPT. Even Memphis cotton is now showing staples of 36 and longer with 30+GPT. The USDA has 10 classing facilities across the cotton belt and the current averages for each station are:
- Abilene – 21 colour, 3 leaf, 36.4 staple, mic 4.38, GPT 30.34.
- Corpus Christi – 31 colour, 3 leaf, 35.85 staple, mic 4.42, GPT 30.36.
- Dumas – 31 colour, 3 leaf, 36.3 staple, mic 4.69, GPT 31.35.
- Florence – 41 colour, 4 leaf, 35.64 staple, mic 4.69, GPT 30.00.
- Lamesa – 21 colour, 2 leaf, 36.14 staple, mic 4.47, GPT 30.43.
- Lubbock – 21 colour, 2 leaf, 36.59 staple, mic 4.22, GPT 30.41.
- Macon – 31 colour, 3 leaf, 35.79 staple, mic 4.64, GPT 29.67.
- Memphis – 31 colour, 3 leaf, 36.71 staple, mic 4.61, GPT 31.22.
- Rayville – 31 colour, 3 leaf, 36.34 staple, mic 4.79, GPT 30.98.
- Visalia – 21 colour, 2 leaf, 37.38 staple, mic 4.57, GPT 33.15.
The overall average for the crop to date is 31 colour, 3 leaf, mic 4.53 and strength 30.6 GPT. This is average for more than eight million bales. With the majority of US exports coming from Texas the classing results are even more impressive. Lubbock averages are 21 colour, 2 leaf, 4.22 mic and 30.41 GPT.
The market segment that we compete in is a relatively small target and therefore spinners buying our cotton will look for the best value. We produce plenty of cotton in the 38 and 39 staple area but typically a buyer will want 32GPT for these longer staples and that is what we struggle with as most comes in the 30-31 GPT range.
We have the premium product and it is not just our quality that puts us in this category. It’s the bale presentation, the shipment period and the ability to have cotton to a spinning mill quicker than any other growth.