How Growers Like You Shape the Cotton Market Through PCCA
by Blair White
Whether you market your cotton with PCCA or not, our presence in the market still plays a vital role in protecting the value of your crop. When PCCA shows up in the cotton market, representing over 10,000 growers, we turn supply into strength for our farmers. We don’t just sell cotton. We create market advantages for you.
Why Cotton Prices Would Be Worse Without PCCA
PCCA helps set a competitive market floor. Have you ever looked back at the time before cooperatives existed? Before PCCA existed? Cotton farmers had no choice but to sell their cotton on their own, bale by bale, rarely receiving fair value. Buyer networks were limited, so farmers had to accept the prices offered because they needed the money immediately, and something was better than nothing. Before PCCA, the grower was always at a disadvantage. Imagine receiving the bottom dollar for your cotton and still trying to make a living today. It’s a losing scenario.
PCCA was established approximately 30 years after the implementation of the Capper-Volstead Act of 1922 and the Cooperative Marketing Act of 1926. Since 1953, we have represented thousands of growers in the cotton market and fought for the value of their cotton. Meanwhile, none of our pool members have received the bottom dollar. Ever.
By pooling your cotton and selling it in bulk, we attract larger buyers who pay better. We capitalize on opportunities created by strategically selling your crop through our comprehensive suite of marketing options. PCCA also supports price discovery, the process of determining a product’s true market value. Identifying the most accurate price for a bale of cotton involves many factors, such as industry classing standards, loan values, the average of bids from buyers around the globe, and more. Simply put, we influence the value of your cotton even if we aren’t marketing it. Here’s how:
Aggregating Volume and Managing Sales. Prices are determined by average market conditions, helping members avoid the extremes of the cotton market. These programs reflect timing and volume-based pricing. Even non-members (independent growers, gins, merchants, etc.) reference these prices for their trading actions. (PCCA paid out $$, so we will pay out $$).
Introducing Competitive Pressure. Offering a full suite of marketing choices forces other buyers to stay competitive. For example, Costco pushes grocery stores to offer better prices because their bulk prices are great deals. You benefit from this action even if you don’t shop there. We also keep our finger on the pulse of ICE futures and their impact on prices. This keeps local prices directly tied to global supply and demand.
Transparent Classing and Traceability. All cotton is classed using USDA standards—much of the technology for these programs was developed at PCCA. Electronic Warehouse Receipts (for which PCCA holds the patent) identify each bale’s grade and identification number. This clarity builds trust among buyers, further helping strengthen prices.
PCCA smooths market volatility for members and non-members. Through our forward contracts and marketing pools, we capitalize on large volumes of cotton and strategically sell it over time, maintaining a steady stream of inventory in the market. If those same bales were to hit the market simultaneously, supply and demand would fall out of their already precarious balance. Supply would surge, and prices would fall. Selling these bales over time isn’t just a strategy – it’s a necessity. This action keeps markets fluid, allowing prices to reflect actual value.
Even if you don’t market your cotton through PCCA, you still feel the positive effects of our presence and even benefit from them, but becoming a member lets you experience our full value. Our strategies and operations influence global pricing, competition, and market behavior.
With PCCA, you’re not just in the cotton market – you’re part of the force that shapes it. Imagine the possibilities with even more growers in PCCA!
