Demand from China Helps Greek Market Diversity
February 22, 2012 
Following last season’s low production, bad quality, tricky contract situations and defaults, the Greek cotton market is struggling to regain its reputation in light of the European Union financial crisis.
Greek ginners, for the first time in many years, are facing difficulty in selling their production. Although this season’s quality is promising and prices have stayed above $1/lb, very few ginners sold a big part of their production. A lot of people believe this season will force a new era for our cotton sector.
The Greek Crop Status
Presently, there are still quantities of undelivered seed cotton in growers’ warehouses, so we can’t accurately estimate lint production. It seems that we will reach 290,000 tons, up almost 50% from last season’s production. So far, 85,000 to 90,000 tons have been sold, with domestic consumption projected at 15,000 tons, leaving an unsold balance of about 190,000 tons.
Some sources claim that the crop will total 260,000 tons because growers didn’t get the yields they were expecting, but we still believe the final total will be closer to 290,000 tons.
Cotton growers are complaining about the high cost of production this season, but at least the prices that they received for their seed cotton were on the high side. Ginners, on the other hand, are being squeezed because production costs and are not being covered by recent lint prices. We should bear in mind that ginners were taking delivery of seed cotton without having to pay the farmers.
Quality-wise, this season’s cotton is even-running, with the biggest percentage ranging between HVI 41-1 and 41-3. A relatively big part of the crop stands at HVI 31 (mostly low side). Staple length is on the high side this season (1-1/8 and higher), while strength is ideal.
Exporting to China
The good news this season is that we exported serious volumes to the Chinese market. The good quality of the crop has allowed international merchants to switch sales to China from U.S. cotton to Greece’s. Ginners look forward to expanding their selling channels rather than depending only on traditional buyers such as Turkey or Egypt. They are aware that the only way to get the best price for their production is to expand markets.
If we exclude Chinese exports, the rest of demand is actually “hand to mouth,” which explains why a big percentage of our crop (65%) remains unsold.
The ginning sector has been separated into two categories – the large, reliable ginners who have sold a big percentage of their production and are getting the top prices from merchants, and the “second division” ginners (or even defaulters) who are facing difficulties in selling their production. The prices they get are usually 3 to 7 cents below market value.
Without the support of banks, many ginners and co-ops are not able to hold stocks and are forced to sell even when timing or prices are not convenient.
Nobody is sure what our cotton market will be like next season. The small- and medium-sized ginning firms may be forced to either quit ginning or lower their production even more. The financially strong ginners also face difficulties, but they have gained major buyers’ preference, giving them an extra competitive advantage.
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