The entire U.S. raw cotton marketing supply chain works to supply quality fiber to textile mills in the United States and around the world. The American cotton trade is a complicated business, which is well over 100 years old. In recent years there have been significant changes in the way U.S. cotton is exported, brought on by advances in communication technologies, shipping techniques and the classification of fiber by instrument. All in all, these advances have enhanced the U.S. cotton industry's ability to ensure that the service provided to the world's textile mills is unsurpassed.
Textile mills buying U.S. raw cotton generally purchase it from two types of suppliers, U.S. cotton merchants (members of the American Cotton Shippers Association) and U.S. marketing cooperatives (members of AMCOT). U.S. cotton merchants are private firms, which buy cotton in the United States and sell it to overseas mills. U.S. cotton marketing cooperatives are producer-owned organizations, which sell cotton, produced by the member producers to mills overseas.
Modern, fast communications have revolutionized the cotton business. Mill fiber buyers and cotton exporters have virtually equal access to important supply/demand and price information. This has made the process for offering cotton on the world market, as well as for submission/ acceptance of bids, considerably more efficient than in the past. Cotton may be offered "on call" or "fixed price." When cotton is offered "on call," the price is based on premiums or discounts ("on" or "off") in a certain month of the New York Board of Trade. The base price of the cotton will remain unfixed until the buyer instructs the seller to buy ("fix") futures in order to establish the final contract price by adding the New York futures fixation level to the contract "on call," "on" or "off" basis.
The sales price of a fixed price contract is final at conclusion of the sale and does not change -- regardless of fluctuations in the New York Cotton Exchange futures market prices. Business results mostly from firm offers, or mill inquiries and bids received from abroad. The natural evolution of improved communication facilities is that often times business is concluded via a phone call between the buyer and the seller (or his agent). It is the foundation of the cotton trade that this verbal commitment is contractually binding. This verbal commitment is reconfirmed in writing by either telex or facsimile direct through the local sales agent. The seller then prepares the typed contract form and sends it to the buyer (or agent for submission to the buyer), that signs it and returns it to the seller. This formal contract is the written record for both parties of the previously agreed upon terms of the business.
Quantity can be specified in bales, pounds or in metric tons. It is generally understood that the quantity stated in the contract is subject to a tolerance of 3 percent, more or less, to account for differences in bale weight, etc. If bales are stated in the contract, it is usually understood that the average net weight should be about 500 pounds. Growth specifies the origin of the cotton to be supplied, such as exported. SAN JOAQUIN VALLEY (SJV), CALIFORNIA/ARIZONA, ORLEANS/TEXAS, MEMPHIS/EASTERN TERRITORY. Cotton quality description should include grade (i.e. trash content), color, staple (length), micronaire and strength (if applicable).
In summary, U.S. raw cotton trader has evolved into the most efficient exporter of cotton in the world. The reliability and the dependability of U.S. cotton merchandising companies and the efficiencies of our transportation, banking and risk management infrastructure has proven to be very cost efficient. The U.S. textile industry is an important customer of U.S. cotton fiber and the U.S. cotton marketing system works to insure the timely delivery of high quality fiber to insure the production of quality yarns and fabrics.
U.S. textile companies have partnered with Cotton Council International and Cotton Incorporated and have committed themselves to increase the trade of cotton yarns and fabrics between the United States and the nations of the Western Hemisphere under the COTTON USA Sourcing Program
The COTTON USA Sourcing Program began in 2000 in anticipation of the passage of the CBTPA. The purpose is to facilitate trade between U.S. cotton textile manufacturers and garment manufacturers. Following the passage of the ATPDEA in 2002, the Sourcing Program was expanded to include activities in the Andean region. Our hope is that this program will invigorate local economic growth in the regional countries, create jobs, and foster mutually beneficial trade between the regional textile industries and the U.S. cotton and cotton textile industry for years to come.
These leading textile mills, weavers and knitters are part of the organized effort on behalf of the U.S. cotton industry to develop relationships with you. Among these companies, you should be able to find products to suit all of your manufacturing needs.