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Northeast Louisiana | Yeah, the good news here is that they are leaving voluntarily and not through bankruptcy. It's a sign of the lower Mid-south cotton acres and difficult economics in the cotton market. The way cotton prices look now, there won't be many gins left around here in Northeast Louisiana next year, either.
Margin calls are hurting some of our local family-owned elevators here too, and I've heard some are probably going to sell to large corporations.
Dave, I guess it would be sort of like a Cargill or something closing. Well maybe not exactly, but Weil Bros. & Stern was a pretty big player in cotton marketing. They weren't the end user, but they bought from the farmer and sold to the end users, which are usually overseas.
Unlike grain, cotton processing and storage are somewhat separated from the marketing. With grain, you take it to your elevator, they store it and market it. With cotton, you take it to a cotton gin who, processes it by removing the seed and cleaning the lint, then pressing it into standard sized bales. These bales are then sent to warehouses where they are stored.
However, the gins are warehouses do not buy the cotton, they just handle it. The farmer deals with a "broker" or "buyer" who markets the crop. Usually there is a local buyer who then deals with the larger firm like Weil Brothers & Stern. Most of the Mid-South cotton is marketed through Memphis, TN.
Anyway, hope this helps.
Edited by Deadduck 11/22/2008 10:28
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Cotton: Weil Brothers & Stern exit the cotton market
