The U.S. Cotton Cotton Marketing System Physical Flow of U.S.

Cotton
Marketing System

Primary Function
Assemble adequate volumes of cotton in specific
locations to provide a dependable supply to both Domestic
domestic and foreign users. Farms Gins Warehouses Mills
Leslie Meyer USDA/ERS
lmeyer@ers.usda.gov
Complex process involving coordination of many
Presentation to: physical services and merchandising activities Ports, Mexico,
ICAC Research Associates (interdependent network). and Canada

April 4, 2006

Monthly Seasonal Patterns for U.S.

Cotton Marketing Flows Cotton Marketing Flows
Exports and Mill Use, 2002-2004

Physical Movement
Physical Movement--continued 14

Harvested seed cotton moves from farms to gins. Bales are stored in warehouses until shipment to 12 Exports
Lint is separated from the seed and pressed into concentration points or final destination (U.S. Mill Use
10
bales of about 480 pounds (218 kg). mills or export market).

Percent
Ginned bales are normally trucked to Textile mills operate on a just-in-time delivery of 8

warehouses for storage. cotton. Mill use throughout the year is fairly even. 6
Samples are taken and tested for fiber quality in Shipments to the export market depend on a
4
one of 12 USDA classing offices. number of varying factors. Exports follow a
Each bale is uniquely identified with a warehouse stronger seasonal pattern. 2

receipt that is negotiable. Producer retains Record U.S. exports of the last few years have 0
ownership until cotton is sold. forced increased efficiency in the flow of cotton.

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 Cotton Marketing Cotton Marketing Services Cotton Marketing Services

Marketing Services
Seed Cotton Handling
Ginning
Moving cotton from raw product into usable Producers have historically been responsible for Provides the initial transformation of raw cotton
textile or apparel product requires several transporting cotton to the gin. into a marketable fiber.
intermediaries and processing stages.
Each stage provides added utility and additional Harvesting capacity exceeds ginning capacity, Ginning process separates lint from the seed and
costs. causing backups and possible interruptions to other materials in several stages.
Services include: harvest. Dryingimproves grades and increases gin efficiency.
Seed cotton handling Modules (compressed seed cotton of about 10-12 Cleaningremoves foreign materials.
Ginning bales each) provided a solution. Extractingremoves foreign materials.
Storage and handling Last 15-20 years, most of U.S. production handled by Separatinglint and seed are separated.
Cotton merchandising modules. Lint Cleaningremoves additional foreign materials.
Transportation Gins now offer module transport from field to gin. Packaginglint transformed into bales that are easily
transferred.

Cotton Marketing Services Cotton Marketing Services Distribution of U.S. Cotton Farm Sales
Other

Storage and Handling
Cotton Merchandising 5%
Warehousing system important in process to Various marketing firms provide critical link
provide orderly flow of cotton to final destination. between producer and final domestic or export
market.
Warehouses provide several services to the Merchant-shippers and cooperative marketing
cotton industry. associations handle most of each years cotton
Shippers
Receivingbales are weighed and sampled. crop.
Cooperatives 35%
Negotiable receipt issued for each bale. Merchant-shippers (private firms) vary in size,
Storingprimary service performed. 60%
location, and the types of cotton bought and sold.
Outhandlingspecific bales are identified and prepared
Cooperatives operate the same as merchant-
for shipment.
shippers but any equity is rebated to the
grower/member.

2
 Cotton Marketing Services

Transportation
Trucks are the primary means of moving cotton
from gins and warehouses to U.S. mills or ports
for export.
Competitive rates, flexible scheduling, and
quicker delivery have all but replaced rail
shipments.
Regional production patterns and changes in
domestic versus export markets have also
benefited the use of trucks.
Final Thoughts

Cotton marketing system is critically
interdependent and more efficient today as
the U.S. is an export-dominated market.

Consolidation will likely continue at all levels
of the marketing system but at slower rates
than in the past.

U.S. cotton will continue to play a vital role in
the global picture.