Recent Investment Spells Good News for U.S. Textile Mills

The United States cotton yarn sector is often overlooked, and it’s easy to understand why. In 2012/13, U.S. mills spun only 3.6 million bales of cotton – the lowest total in over a century.

As recently as 1997/98, U.S. mills were spinning over 11 million bales on domestic soil. Unfortunately, Chinese mills then expanded their usage capacity, severely undercutting U.S. spinning mills and ultimately devastating the industry in America.

But in recent months the industry has quietly attracted a noteworthy amount in foreign investments, and U.S. cotton producers are one of the primary reasons why. Ultimately, those same producers could see a major benefit in the domestic revival of a downstream stop in cotton’s supply chain.

“One industry that was dead is slowly resurrecting,” said Joe Nicosia, executive vice president, Louis Dreyfus Commodities. “We are seeing a small resurgence in the U.S. textile industry.”

In 2013, companies from Mexico, China, India, Canada, Brazil, Great Britain, Japan, Switzerland and Korea announced plans to build or expand existing textile plants — all of which are located in Cotton Belt states. And aside from creating a new consumer of U.S. cotton, each investment brings with it the added bonus of new jobs.

In October, news broke that a Mumbai-based textile company would invest $70 million to build a manufacturing plant in South Georgia, creating some 250 jobs. Similarly, in December, Chinese firm Keer Group announced its intention to invest $218 million to open its first U.S. textile plant in Lancaster County, SC, creating another 500 jobs.

The locations of the new plants are no accident. Experts say proximity and access to raw cotton plays no small role in attracting investment and growth.

“(The new investment) is because we do have cheap energy and we have low interest rates,” Nicosia said. “The textile industry is becoming less labor intensive and more capital intensive. So we’re finding investments coming back here. And one of the other reasons why is because we have cotton, and we have a surplus of it.”

Industry analysts say another major reason for the resurgence in U.S. spinning investment is because of a Trans-Pacific Partnership trade stipulation known as the yarn-forward rule of origin that mandates that all materials in a garment must originate from a partner country to qualify for tariff-free entry into the United States.

Domestic firms are joining in the investment trend as well. In December, news broke that private equity firm American Securities, based out of North Carolina, would purchase Frontier Spinning Mills, the second largest spinner of cotton in the United States, and employer of over 1,000 spinning industry professionals.

While the future of Chinese demand for U.S. cotton is unclear, news of a resurgence in domestic spinning is a welcome sign for American producers.

Even with a spike in investment, however, industry experts do not expect a major increase in domestic spinning output in 2014/15. Nicosia said he believes domestic mills could account for four million bales in the next 12 to 18 months – a small but noteworthy increase over the previous year.

Leave a Reply

Marketing Stories
Market Analysis

Shurley on Cotton: Recent Events and Market Direction

April 22, 2016

Although it’s a painful time for cotton right now, there are potential positive factors on the horizon that could eventually lead to better prices.

Market Analysis

Cleveland: Chinese Program Providing Market Stability, Price Boost

April 25, 2016

Cotton prices continue to advance, thanks to stability from an unlikely source – China.

Promotion

Cotton Incorporated Responds to Sustainability Report

April 11, 2016

Cotton Incorporated has responded to a report pitting sustainable cotton production against conventional cotton, providing facts to fill gaps in the document.

Promotion

Tour Seeks To Boost Korean Mills’ Desire for U.S. Cotton

April 11, 2016

Textile executives from 10 Korean companies are touring the Cotton Belt to observe U.S. cotton production, processing and marketing as part of the COTTON USA Korean Special Trade Mission.

Market Analysis

Prices Tick Upward as Demand Debate Continues

April 11, 2016

Cotton prices moved higher in New York at week’s end. But all O.A. Cleveland heard about were his comments on Adidas and demand. So naturally, there’s more.

Market Analysis

Shurley on Cotton: Trying to Decipher the Numbers

April 4, 2016

Spending a little time discussing acres planted is fine for now. But it will all come down to how the weather impacts planted acres, and what happens during the growing season.

OA Cleveland
Market Analysis

Of Demand, Adidas and Planting Intentions

April 4, 2016

The market wants to make a major move. USDA says cotton acres will be will up. Yet demand remains the only game in town – everything else is window dressing.

Around The Gin
Product News

Meister Media Worldwide Website Relaunches With New Resources

April 22, 2016

Meister Media Worldwide — publisher of Cotton Grower magazine – has relaunched its corporate website, highlighting information and services available from one of agriculture’s leading media companies.

Product News

ReinCloud Promises Remote Control

April 18, 2016

New software set to combine irrigation management and data collection – all in the palm of your hand.

Product News

Search Begins for Deltapine Class of 17

April 14, 2016

Deltapine’s NPE program is nine years old, and the search for the company’s Class of 17 cotton varieties is underway.

Product News

Texas Farmer First to Plant Enlist Cotton Variety

April 11, 2016

Dean Hansen of El Campo, TX, was the first cotton grower in North America to plant the first commercially-available cottonseed with the Enlist cotton trait.

Product News

New Options for Roundup Ready PLUS Program

March 25, 2016

The Roundup Ready PLUS Crop Management Solutions program for 2016 includes a new tool for weed management and new incentives for farmers looking to fight insect pests in corn.

Product News

Greenleaf Launches easyFlow Closed Transfer System

March 24, 2016

Greenleaf Technologies has launched the company’s new easyFlow closed transfer system for the North American market.

Product News

AgLogic Launches Aldicarb Product in Georgia

March 15, 2016

Growers in Georgia will be able to use a new aldicarb pesticide in 2016 for nematode and early season pest control.

Product News

Moss Joins Mid-South Team for Brake Herbicide

February 29, 2016

Ag sales veteran Larry Moss has joined SePRO Corporation as a technical specialist for Brake herbicide in the Mid-South.

Latest News
Market Analysis

Cleveland: Chinese Program Providing Market Stability, Price Boost

April 25, 2016

Cotton prices continue to advance, thanks to stability from an unlikely source – China.

Market Analysis

Shurley on Cotton: Recent Events and Market Direction

April 22, 2016

Although it’s a painful time for cotton right now, there are potential positive factors on the horizon that could eventually lead to better prices.

Market Analysis

Bulls and Bears Collide in Eventful Market Week

April 18, 2016

An exciting, bullish week for cotton prices turned bearish, as prices ran ahead of demand, the Chinese announced reserve sale plans, and USDA released its April WASDE report.

Promotion

Building Demand Bale by Bale

April 13, 2016

New technologies and innovations developed for cotton are helping grow usage for the fiber, strategically and methodically.

Promotion

Cotton Incorporated Responds to Sustainability Report

April 11, 2016

Cotton Incorporated has responded to a report pitting sustainable cotton production against conventional cotton, providing facts to fill gaps in the document.

Promotion

Tour Seeks To Boost Korean Mills’ Desire for U.S. Cotton

April 11, 2016

Textile executives from 10 Korean companies are touring the Cotton Belt to observe U.S. cotton production, processing and marketing as part of the COTTON USA Korean Special Trade Mission.

Market Analysis

Prices Tick Upward as Demand Debate Continues

April 11, 2016

Cotton prices moved higher in New York at week’s end. But all O.A. Cleveland heard about were his comments on Adidas and demand. So naturally, there’s more.

Market Analysis

Shurley on Cotton: Trying to Decipher the Numbers

April 4, 2016

Spending a little time discussing acres planted is fine for now. But it will all come down to how the weather impacts planted acres, and what happens during the growing season.

Market Analysis

Of Demand, Adidas and Planting Intentions

April 4, 2016

The market wants to make a major move. USDA says cotton acres will be will up. Yet demand remains the only game in town – everything else is window dressing.

Market Analysis

Riding Out Cotton’s Flooded Market

April 2, 2016

Joe Nicosia says better days are coming. But American cotton must persevere as China finally unloads its massive reserves.

Market Analysis

Cleveland: All Eyes on USDA Planting Intentions

March 28, 2016

As prices remain unchanged and China remains quiet, the cotton market awaits the USDA planting intentions report for possible good news.

Marketing

Staplcotn Recognizes Marketing Milestone

March 22, 2016

Staplcotn took receipt of its 100 millionth bale of cotton in December. That milestone bale is now on display at the company’s headquarters.

Market Analysis

China Still Sits Heavy on the Market

March 21, 2016

Chinese reserve stocks still sit as a heavy hat on cotton prices, providing little reason to break above the 59-cent price resistance.

Promotion

Mississippi Women’s Group Coordinates Large Denim Donation

March 15, 2016

The Mississippi Farm Bureau Federation Women’s Leadership Committee recently collected over 2,000 pairs of jeans for the Blue Jeans Go Green denim recycling program.

Market Analysis

Cleveland: Quality Premiums Are Coming

March 13, 2016

The quality premium for U.S. cotton has been holding steady, but improvement is on the horizon. Hold for it.