As more U.S. cotton heads to foreign mills, some growers are considering methods of selling their production directly to international buyers as well as to domestic markets.
The Seam — an online cotton marketing network — is helping weave growers and gins with merchants, mills and other potential buyers.
Headquartered in Memphis, TN, The Seam operates a “Grower-to-Business” (G2B) exchange for producers, as well as a “Business-to-Business” (B2B) platform for cotton gins, merchants and others. It's modeled after TELCOT, operated for years by Plains Cotton Cooperative Association (PCCA) in Lubbock, TX.
What the unique model offers is the ability to buy, sell and/or trade cotton. It began operations for Texas and Oklahoma producers and gins in late 2000. It expanded nationwide last summer. And by mid-November, it had facilitated the trading of more than 1.1 million bales.
Jim Bradford, who markets growers' cotton and is manager of North Gin in Dimmitt, TX, sees The Seam as a bonus for his customers. “The Seam is good for growers because it helps them put their cotton in front of more buyers,” says Bradford, who has also used the PCCA program. “Buyers also like The Seam because it makes it easier to move the cotton into the (CCC) loan and collect the LDP more timely.” For buyers looking for specific cotton quality, “we can go in and do some customizing and market it in a different way,” he adds.
More than 70 firms are buying cotton on The Seam exchanges. The location, price, quality and other factors of a listing are included. “Growers offer their cotton for sale on The Seam by uploading their bales on the network and establishing a price,” says president and CEO Phillip Burnett. “We then generate a traditional recap that can be viewed online by our nationwide network of cotton buyers.”
Buyers can search for specific cotton types using The Seam's search engine. They can navigate through hundreds of thousands of bales to find the desired cotton.
North Carolina producer Eddie Gibson sees The Seam as an e-commerce link, moving his cotton directly to domestic and international mills.
Gibson, who grows cotton, corn and soybeans in Laurinburg, NC, is among six growers who operate a local gin. He had his '01 production for sale on The Seam in mid-November. It was only a matter of time before a buyer pulled the trigger.
“We're merchandising cotton straight to the mill,” he says. “With the ability of domestic growers to sell directly to foreign buyers, I believe our U.S. mills will become strong users of The Seam.”
Carl Anderson, Texas A&M University cotton marketing economist, says electronic marketing such as The Seam provides growers with the ability to expose their cotton and its quality to a larger number of buyers. “The increased number of buyers should assure growers of receiving a price representative of the ‘fair’ market price, considering the supply and demand conditions worldwide,” he says.
“If the market offers an acceptable price relative to CCC loan rate, the grower will get price bids according to the needs of the market,” Anderson says. “This will help producers decide how to market cotton. That is, place under loan program or take advantage of the large LDPs associated with the low market prices.”
Growers and others may observe movement of cotton over The Seam network by clicking on its Web site at www.theseam.com. Additional information about the marketing service is also available at the site.