Recent figures released by The Seam--an online cotton trading company--show that growers who traded their bales online this marketing year received an average of 11.14 cents per pound over the Commodity Credit Corporation (CCC) loan rate. The analysis is based on all grower-to-business (G2B) transactions on The Seam since Aug. 1, 2003.
The substantial premium was more than 14 cents per pound higher than the previous season. Growers were able to realize such an increase in their margins by being in place to take advantage of strong harvest time prices. New York Board of Trade (NYBOT) prices rallied in early September 2003.
Based on average yields of 634 pounds per acre nationwide, this year's return yielded an additional $70.65 per planted acre above the CCC loan rate. The report was based on sales of 774,497 bales.
"This analysis provides solid evidence that growers are able to maximize their returns on The Seam," notes Phil Burnett, president and chief executive officer of the company.
According to Burnett, the online market especially helps growers by getting their offers to buyers they might not normally consider or even know. That means that the cotton is in position and ready for sale coast-to-coast to more U.S. buyers than through any other channel. The company is now the single largest cash cotton market in existence.
"There is no other system that can move as much cotton into the marketplace as smoothly and efficiently as The Seam," continues Burnett. "And that paid off big time for growers this year."
The Seam's member-growers use its Domestic Trading system to offer their bales to a community of more than 75 buyer firms. Sellers are guaranteed by The Seam to receive payment when their cotton is sold. The online company also clears the transaction on behalf of both buyer and seller.
"Timing is one of the keys to success when selling cash cotton," explains Crawford Tatum, The Seam's Director of Trading Services. "For growers, having their cotton in the market when it peaks is the best way for them to achieve their objectives. That's why we encourage them to get their cotton offered as soon as possible after harvest."
"Not only does The Seam bring most of the buyers in the U.S. to one central platform, it provides the seller security and flexibility in marketing," continues Tatum. "Cotton can be offered online in traditional methods- fixed, basis or open for bids."
In another marketing year-end report, The Seam announced that its Certified FiberMax offerings produced a 13.44-cent per pound premium over the CCC loan rate on lots of predominantly certified bales. Bales of Certified FiberMax cotton are automatically branded online trough a partnership between The Seam and Bayer CropScience.
The Seam is a totally neutral Internet-based global marketplace for the buying and selling of cotton. Users of The Seam increase their profits through improved transaction process efficiencies, expanded exposure to potential customers and suppliers, constant access to real-time market information, and guaranteed domestic trades. The United States Department of Agriculture selected The Seam as its online marketer of Commodity Credit Corporation (CCC) upland and extra long staple (ELS) cotton inventories.
For more information about The Seam, call (901) 374-0374, or visit www.theseam.com.