Ep. 13 Port Strikes – How it affects Cotton Producers in Arkansas

00;00;07;21 – 00;00;17;09
Riley Smith
Alrighty. Well, we’re back. Well, Mr. Scott, how are you doing now?

00;00;17;12 – 00;00;21;14
Scott Stiles
Doing did great, Riley. It’s good to be back with you.

00;00;21;17 – 00;00;54;02
Riley Smith
Yep. Well, it’s good to be here. Good. Good to be visiting with you. Today we’re, Before we get started, we got, we got Mr. Scott Stiles with us today in the studio. Well, virtually. He is, currently sitting in Jonesboro, Arkansas, all at his office at the, Northeast Arkansas Rice Research Center. And, we finally have got it available where we can do a zoom and do a zoom call and, do a recording that way.

00;00;54;03 – 00;01;09;13
Riley Smith
So this is a, last time I believe we had you on. We were at the Rice Research Center when it opened up, and that was the first time for us to do a mobile podcast. And now here we are doing a, what I guess you would call a virtual podcast episode.

00;01;09;16 – 00;01;13;11
Scott Stiles
Yeah. So, yeah, fingers crossed.

00;01;13;13 – 00;01;39;00
Riley Smith
Fingers crossed that this all goes well. So anyway. Well good morning. Good morning. Welcome to another episode of Morning Coffee and AG Markets with your host Riley Smith. So like I said, today, we got Mr. Scott Stiles with us. We’re going to be talking about. Or we’re going to be listening to him, talk about the port strikes that’s going on down the Gulf, Gulf Coast and the East Coast.

00;01;39;02 – 00;01;59;18
Riley Smith
And how that kind of affects the, cotton producers in the state of Arkansas as that directly affects them just based off of what I can understand, the, the freight involved, which they’re, if I’m not mistaken, Mr. Scott, they’re hauling the freight is containers. So that’s why it affects cotton so much more than it does grain.

00;01;59;21 – 00;02;27;07
Scott Stiles
Yeah. That’s, that’s strike only affects, containerized shipping. So not not bulk shipping that we. Actually, most commonly in grain, but, containerized shipping, which cotton exports are not entirely, by way of containers. So, so this port strike is affects just, just container shipping and not bulk shipping.

00;02;27;10 – 00;02;40;00
Riley Smith
I got you. Well, if you, if you want to take it away and just give us kind of a briefing on, what’s been going on with port strikes and and catch us up to date. You can just take the floor.

00;02;40;02 – 00;03;22;02
Scott Stiles
Now, okay? Yeah. All right. Well, this, this strike started October 1st, and it affects, 36 ports at a stretch from Maine down to, to Houston. And, of course, this has got significance for AG. And in Arkansas, Arkansas is, third largest cotton producing state in, in the U.S. take that a step further. And, and when we look at, you know, where’s the where’s the key source to demand for U.S cotton, while that’s largely an exports, about 86% of demand is is tied to exports.

00;03;22;05 – 00;03;53;27
Scott Stiles
So, you know, better than, better than eight out of ten bales that our producers grow or is has found its way into an export market. The, so what has added significance about the port strike is, as the volume of cotton it’s moved now out of the East Coast and the Gulf and, Savannah is certainly a port that’s that’s gained an significance over the, over the past few years.

00;03;53;27 – 00;04;18;25
Scott Stiles
And, and last year, we had 30, 30% of cotton export volume was handled out of Port Savannah. About 14% of cotton exports were handled out of, Houston. And then you’ve also got some, smaller percentage of the exports are handled out of Charleston, South Carolina, Norfolk, Virginia, and some out of Mobile and New Orleans as well.

00;04;18;25 – 00;04;47;14
Scott Stiles
So all total, probably 55% of, the cotton exports, are handled out of ports that are affected by this strike. So, that’s, you know, it’s certainly a of importance to get this resolved as soon, as soon as we can now that we’re in into harvest. So nationwide, and I would just say as of Monday, we have about 20% of the of the crop harvested nationwide.

00;04;47;14 – 00;05;23;19
Scott Stiles
But of course, the South is, is further along than that. At this point. But, but harvest is underway, and, pretty soon we need to, as cotton will need to find its way into the export channels. So, one other thing I would point out is as, of course, the, you know, when you look at, you know, where are the largest markets for for U.S cotton and, people tend to think, you know, China’s is a, you know, is the largest market for U.S. cotton.

00;05;23;19 – 00;05;51;17
Scott Stiles
And and historically it has been. But other markets, are significant as well. And Turkey is another key buyer U.S cotton and of course from a, you know, export efficiency standpoint and the exports to Turkey tend to be handled, you know, all of the Gulf eastern one and Savannah is another that that, handles, the exports to Turkey.

00;05;51;17 – 00;06;18;20
Scott Stiles
So they’re a significant market for us. And, and I think this year, their fourth or fifth, largest export market for U.S cotton, but exports to Pakistan, Pakistan right now is our largest, buyer of U.S cotton. So that’s another market that, that, we tend to see serviced off the Gulf and, and East Coast as well.

00;06;18;20 – 00;06;36;05
Scott Stiles
So it’s certainly not in the best interest of the cotton industry to, to to hopefully get this strike resolved quickly. And, and it doesn’t then go on, for any significant length of time.

00;06;36;08 – 00;07;20;19
Riley Smith
Yeah. So, one question that I have is, is so d will this affect that? I guess the, the, the you were talking about who are bigger buyers or as far as on a global standpoint, but is are we able to this is going to be more remained in a domestic market situation, or is this going to affect the global search or the global market, as well as far as trading cotton goes for our, export tariffs or I mean, not tariffs, but our exports, because of this port strike.

00;07;20;21 – 00;07;45;03
Scott Stiles
Well, You know, of course, of play as we talked about, you know, the, the the majority of the demand for the U.S. is in an export market. And, you know, the U.S. finds itself in a position of being one of the world’s largest exporters of cotton for many years, we’ve been the world’s largest exporter of cotton.

00;07;45;04 – 00;08;19;10
Scott Stiles
Recently we’ve seen at position in Brazil. But U.S. steel, the second largest exporter of cotton in the world. So the world’s dependent on, you know, that turns to the U.S. for a reliable, dependable source of cotton. But at the same time, you know, we’ve seen production and exports ramp up out of Brazil. So the question becomes if if this strike is prolonged and it stands there it was days turned into weeks, turns into months.

00;08;19;12 – 00;08;43;07
Scott Stiles
Well, some of our key customers turn more so to Brazil for as a as a source of cotton. So that’s again, you know, it’s certainly in the U.S. interest, resolved as quickly as we possibly can so the U.S. can keep its reputation of being a reliable, dependable source of good, good quality cotton on the world market.

00;08;43;09 – 00;08;52;06
Riley Smith
So how does now how does that affect, what’s the direct effect to Arkansas producers in that standpoint?

00;08;52;08 – 00;09;19;28
Scott Stiles
Well, we’re so dependent on exports, and we grow on such a large percentage of the crop for exports that it is, you know, if for some reason this strike jeopardizes our our export volumes and it is going to pressure prices, it’s as the warehouses fill up and cotton sits there could weaken basis for our growers. But it’s also you kind of see some effect of this in the futures market too.

00;09;20;00 – 00;09;41;15
Scott Stiles
You know recently we did see the December contract run up to 7455. It’s kind of where it stalled out. That was the 24th of September. But as the days progressed and it looked like, okay, the strikes. No, I mean, the port workers are going to strike. This labor issue is not going to be resolved. You start to see the market pull back.

00;09;41;18 – 00;10;04;22
Scott Stiles
So, so so we’ve pulled the market’s about 200 points two since you know after the recent highs that we saw on the 24th September. And I think that that’s, you know, largely in reaction to the fact that okay, I’ll be on a strike is underway and we don’t know really when it’s going to be resolved later. But I like it.

00;10;04;24 – 00;10;09;12
Scott Stiles
That is pressure to market sell.

00;10;09;15 – 00;10;10;02
Scott Stiles
And I don’t.

00;10;10;03 – 00;10;14;01
Riley Smith
Understand, but, yeah, well, there’s no.

00;10;14;04 – 00;10;34;24
Scott Stiles
End up. Well, I was going to say, you know, in the coming weeks, I mean, you know, as long as the strikes going on, I mean, we’re going to we’ve already, you know, seen reduce, shipments and export sales compared to last year, where export sales are down about 11% compared to last year. Shipments have been really slow.

00;10;34;26 – 00;10;45;11
Scott Stiles
And so this is thought strike issue just exacerbates these, you know, the lower export volumes that we’re seeing compared to last year.

00;10;45;11 – 00;10;50;00
Riley Smith
So what you’re saying is, is that the longer this goes on, the deeper we’re going to go.

00;10;50;02 – 00;11;15;28
Scott Stiles
Absolutely. And, you know, and, generally as the crops coming off, you know, as you’re into peak harvest, it’s kind of a kind of a lull and a slow period and an export shipments, as you know, the crops harvested, it’s just it’s put warehouses for a time. But, post harvest, you really start to see export shipments ramp up and they really kick out strong and 1st of December.

00;11;15;28 – 00;11;42;25
Scott Stiles
And they continue to increase the the end of March. So, you know, who knows how long the strike will go on. But, but but we really need to have it resolved, as, you know, as quickly as we can, you know, before, before, you know, the key start export shipments kicks in, you know, right at the tail end of harvest.

00;11;42;27 – 00;12;16;16
Riley Smith
Well, hopefully it’ll get resolved before we, before we get into the heat of cotton harvest. I know that there, the cotton around our house is getting getting the. They’ve done bowled out. They’re getting ready to defoliate. So, yeah, hopefully this will get settled before, before we get into harvest time and and jeopardize, you know, we don’t want to see it jeopardize our producers of the state and and producers overall, but, specifically Arkansas, but with that being said, you have, you have anything else you’d like to add, Mr..

00;12;16;16 – 00;12;24;16
Riley Smith
Scott, as far as the port, you know, the port strikes goes or any, any kind of updated information you’d like to share with the public.

00;12;24;18 – 00;12;49;06
Scott Stiles
I wish we, you know, could see the, you know, see the end of it in sight. But right now it is, you know, we’re, it’s still ongoing. We really don’t have anything to report on when the strike might be on, but, but, anyway, again, it’s, it’s certainly, would be, it is a detrimental blow to not just cotton, but their livestock industry as well.

00;12;49;06 – 00;12;58;05
Scott Stiles
It’s really dependent on container. Container? Shipping too. So, let’s just, get this resolved. And it’s good for Greg in general.

00;12;58;08 – 00;13;32;27
Riley Smith
All right. Well, without that, hopefully this thing end. Or if it don’t, we may revisit this topic again, know that we, we do want it to end here pretty quickly, but we, if it doesn’t and, continues to seem to steadily grow, we, may revisit this same topic again. As I said, I think in the beginning of this and, give, give our producers in the public it up to date on, what’s going on with the port strikes.

00;13;32;29 – 00;13;59;07
Riley Smith
Mr. Scott, greatly appreciate you coming on here today and giving us, some information and keeping us informed on this and and giving us an update on what’s going on on the Gulf and the East Coast. And, also, the first time we’ve ever done one of these virtual podcasts. So, you’re, becoming a pretty popular guy, being being first for a lot of things that we’re doing.

00;13;59;09 – 00;14;04;00
Scott Stiles
All right. Glad to be on with you today. And and visit with you Riley enjoyed it.

00;14;04;03 – 00;14;29;06
Riley Smith
Well, if, if that’s everything, I think we’re going to, we’re going to call it quits. And, are y’all stay tuned for my market report. Thanks. All right, guys, back on the market report for this week. December 24th, corn. Current prices at $4.33 per bushel. Month agos. Price is at $4.09 per bushel. That’s up, $0.24 year agos was $4.98 a bushel.

00;14;29;06 – 00;14;57;05
Riley Smith
And that’s down $0.55. November 24th. Rice is at $15.17 per cwt a month agos. Price is at $14.94 per cwt. That’s up $0.23 a year ago was at $15.77 per cwt. That’s down $0.60. November 24th soybeans at $10.50 per bushel a month, agos price at $10.12 per bushel. That’s at $0.44. A year ago, price was at $12.73 per bushel.

00;14;57;05 – 00;15;28;00
Riley Smith
That’s down $2.17 July 25th Wheat’s at $6.55 per bushel. A month ago, price was at $6.04 per bushel. That’s up $0.51. Year agos price at $6.33 per bushel. That’s up $0.22. December 24th. Cotton’s at $0.73 per pound. Month agos. Price was at $0.71 per pound. That’s up $0.02. Year agos. Price was at $0.87 per pound. That’s down $0.14 in your weekly U.S average for peanuts is $540 a ton.

00;15;28;02 – 00;15;56;23
Riley Smith
Month ago prices at $478 per ton. That’s up $62. Year agos. Price is at $532 a ton. That’s up $8. That’s your commodity futures prices this week. Your fertilizer prices this week. Urea is at $495 per ton, 34-0-0 $465 per ton. DAP is at $773 per ton, potash is at $500 per ton, and your pellet lime is $320 a ton.

00;15;56;23 – 00;16;29;26
Riley Smith
This week. Your diesel prices off road diesel this week is $2.50 $2.56 per gallon. Highway diesel is at $3.27 per gallon, and your Mississippi River level at Memphis this week. Current levels at 6.46ft. We finally broke out of the, minimum stage, so hopefully we’ll start seeing a positive effect on basis. A year ago it was at -9.39ft.

00;16;29;28 – 00;16;39;27
Riley Smith
I want to thank y’all guys again for joining on another episode of Morning Coffee and AG Markets. We hope you enjoyed your morning coffee. Enjoy the rest of your workweek. We’ll catch you on the flip flop.

00;16;39;28 – 00;16;55;22
Riley Smith
Bye bye now.

00;16;55;24 – 00;16;58;27