Cotton bourse hit by rising imports
Posted by meb at May 20th, 2008
The İzmir Mercantile Exchange, a cotton-trading pit, or corbeille, in the heart of the Aegean region, facing tough times due to an increase in imports of cotton and yarn and a severe stagnation in overall demand, has gone for many days without a single transaction.
Everyone at the historic corbeille, which opens at 12:20 p.m. everyday and closes 10 minutes later, designating the price of cotton for the entire country, agrees that the slowdown in the cotton market stems from the stagnation of textile production, as well as an increase in the imports of cotton and yarn. The lack of pricing from the corbeille has increased the pessimism of agents who trade on behalf of other individuals and firms in the industry.
The slowdown in the textile sector is affecting cotton trade, said Nureddin Şenli, an agent serving at the İzmir Mercantile Exchange particularly on behalf of the Sanko Group, a company that is active in several industries, including textiles, construction, finance, energy, food, information technology, health care and education.
Apart from integrated facilities, textile producers are having a tough time selling goods, Şenli said. “Sales have not increased despite price and season campaigns… Due to global warming, factories are working with thin yarn, which over time decreases the amount of cotton used in production.”
The quality of Aegean cotton is known worldwide, said Şenli, adding that there is currently not much of the product on the market. “Some 30,000 tons of Aegean cotton, most of which belong to Tariş – the first and the biggest Union of Agricultural Sales Cooperatives of the country – is ready for sale,” he said, adding, “There are only four to five months until the opening of the season. However, there is no demand. I fear we will not be able to sell off the cotton we have now and will have to transfer the stocks to the new season.”
“Imports are the reason behind the cessation of the cotton trade. It is possible to import yarn and cloth at the price of domestic cotton,” he continued. “Cotton prices on the world market declined to $1.75 (YTL 2.20). However, it is still above YTL 2.30 in Turkey.” Policies to prevent imports and to encourage domestic cotton production are required, Şenli said.
Gloomy picture
Every day there is another story about companies that have to suspend production, dismiss workers and invest abroad, said İbrahim Öngünşen, who has been working as a broker at the bourse for 37 years. “We are concerned that things will get worse in textiles. We used to sell 1,000 tons of cotton a day just five or six years ago. However, at present we deem ourselves lucky when we make a trade of 250 tons,” he said. “Tariş is unable to protect the market as it used to. The most important textile firms orient toward imports.”
Aegean cotton is on the verge of extinction because of policies implemented in the past years, Öngünşen said. The Aegean region’s production of cotton has decreased from almost 250,000 tons to 90,000 tons since the 1980s, he added. Producers are instead turning toward oil seeds, corn and wheat, said Öngünşen, in a call for urgent action.
The only way to secure the survival of the cotton trade is to make it a more attractive product, said Aydın Kesen, chairman of the İzmir Mercantile Exchange. “It is crucial to offer a sufficient premium for cotton, as well as to form cotton basins. The production of organic cotton should be supported, while water resources must be used efficiently. Cotton seed development and registry activities should also be conducted.”
Cotton trading pit
Corbeille, which means circular or oval in Latin, resembles an amphitheater. Hosting transactions for 81 years, the corbeille is the most prestigious institution of the 117-year-old İzmir Mercantile Exchange. All the cotton types of the world are traded on the seven-meter corbeille, where 130 people buy and sell out loud.
Rather than checks or bills, the trade on the pit is conducted orally. When the parties reach an agreement, it is recorded in a corbeille notebook, which makes the trade legally valid.
source: Turkish Daily News
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