We’re All in the Same Boat
If there’s one thing we have all learned over these past few years, it’s that the ability to adapt to a rapidly changing market environment is critical to the continued success of our businesses.
May 1, 2012
If there’s one thing we have all learned over these past few years, it’s that the ability to adapt to a rapidly changing market environment is critical to the continued success of our businesses. That sentiment is reflected in virtually every page of this issue, beginning with the USA Report (see page 11). As the world’s top exporter, shifts in supply and demand anywhere on the globe have a dramatic impact on the American outlook – and there has been no shortage of shifts.
Weather is always a wildcard for the U.S. cotton industry. Consistent rain in West Texas can alter the entire year’s outlook dramatically in a span of days. When the weather is favorable, U.S. producers can have an all-time great season, as we saw two years ago. When drought conditions prevail, as they did the very next year, the result is sky-high abandonment.
Other domestic issues that profoundly affect the outlook for U.S. cotton include legislative developments in Washington – including the shape of the 2012 Farm Bill – and negotiations with Brazil at the World Trade Organization.
What happens on the international front also affects the U.S. industry disproportionately. As the world’s second-largest exporter, India’s on-again, off-again ban on exports (see page 25) plays a huge role in global markets. The purchasing policy of the Chinese government and how it manages its reserve can change the assessment of available stocks by millions upon millions of bales. And West Texas isn’t the only location subject to the whims of weather. Weather conditions have a profound effect on the production outlook in places such as Australia and Pakistan, and thus on the global supply of cotton.
Volatility is a given, but accepting that fact doesn’t necessarily make it easy to deal with. Working more closely and collaboratively with upstream and downstream business partners can, however, make the process manageable (as proof, see coverage of the inaugural Cotton International 2012 Global Summit on page 29). Challenges – regardless of whether they are floods or droughts – can become opportunities, as long as we remember that we’re all in the same boat.