to Indian cotton’s export <strong>com</strong>petitiveness during the campaign ahead. The sharp retreat of cotton prices during May, and the recent strong performance of other soft <strong>com</strong>modities such as corn and soybeans, are already casting considerable doubt on planting intentions in parts of the Southern Hemisphere. The most pronounced reaction has thus far been noted in Brazil, where soybean prices are likely to provide a <strong>com</strong>pelling argument for a shift away from cotton, when planting takes place around the year-end. Our current forecast of 1,400,00 tonnes would mark a reduction of about half a million tonnes, or more than 25 per cent, in <strong>com</strong>parison to the crop currently being picked. Some signs of a moderate improvement in consumption have also emerged of late, notably in markets such as India and Pakistan, whose spinners have benefited from China’s current appetite for imported cotton yarn. But on a global scale, neither the shift away from production, nor the revival of mill use, has thus far been sufficient to bring world supply and demand back into balance. China cotton training goes interactive THE 2012 China International Cotton Trade Training Course in Qingdao has successfully concluded, with 110 delegates from 13 different provinces and regions taking part. The training was developed specifically for the Chinese cotton <strong>com</strong>munity and focused on areas currently impacting on China’s international cotton trade and the global cotton market. The three day interactive course was jointly organised by the International Cotton Association (ICA) and Beijing Cotton Outlook Consulting (BCO). The presentations <strong>com</strong>prising the following modules – each conducted in Chinese and delivered by a leading industry expert: ■ Fundamental knowledge: World cotton market and import/ export; major cotton export countries and their characteristics. ■ Trading issues: Risk management; contract making, banking and insurance, futures and options; shipping and logistics; cotton controlling and testing. ■ Trading rules and dispute resolution: International trading rules, arbitration agreement; arbitration procedure; arbitrators training. For more information, please contact Robert Jiang robert@ica-ltd.org The Qindao class of 2012. marketing ICA arbitrations remain high AT the half year stage, the International Cotton Association (ICA) has received 135 requests for arbitration and, as we move into quarter three, the pace does not seem to be slowing down. With continued market volatility, the industry is seeing more and more parties failing to honour their contractual obligations. This is having a direct impact on the number of disputes brought for arbitration at the ICA. By its own admittance, the ICA arbitration system has struggled to cope with the number of arbitrations this past year. In 2011, the Association received a staggering 242 requests for technical arbitration – over five times its normal yearly average. As the pace continues, the ICA has been working hard to implement a series of improvements to reduce the cost and the time taken for arbitrations. It also plans to increase the quality and effectiveness of its awards procedure by introducing a pool of professional ‘ICA Chairmen’, who will monitor the costs and time of arbitrations and also the quality of arbitrators in order to produce more enforceable awards. “The continued market uncertainty is creating a lot of challenges for us, but the situation has given rise to a number of new initiatives,” said Antonio Esteve, ICA President. “Enforcement of awards is still a big problem in some countries. The challenge here is to strengthen the effect of our def<strong>au</strong>lt list. We aim to do this by making better use of “ICA Advisory Notices”. The notices inform our members about firms that have a direct link to <strong>com</strong>panies on the def<strong>au</strong>lt list either through legal, family or individual connections. We are now actively gathering intelligence to uncover these links and to find out who is trading with whom and where they are buying and selling their cotton.” Antonio believes that a <strong>com</strong>mon <strong>com</strong>plaint about the ICA is that its def<strong>au</strong>lt list is ineffective. Part of the reason is bec<strong>au</strong>se def<strong>au</strong>lting firms are able to set up and trade through “phoenix <strong>com</strong>panies” or use trading houses. The ICA’s new approach aims to highlight the firms involved in these practices and reveal the trading links with def<strong>au</strong>lters. “The situation we find ourselves in now highlights the importance of taking consistent and positive action towards promoting contract sanctity and a safer trading environment”, said Antonio. “If the cotton <strong>com</strong>munity sticks together to reinforce our efforts then we may be able to reduce the stress being placed on the cotton supply chain and improve its economic sustainability.” Antonio Esteve. 38 — The Australian Cottongrower August–September 2012
3100% Australian Cotton 3100% Australian Owned Wee Waa Trangie Moree Goondiwindi Toowoomba Ph: 02 6790 3000 Ph: 02 6888 9611 Ph: 02 6752 5599 Ph: 07 4671 6900 Ph: 07 4631 6100 Fax: 02 6795 4036 Fax: 02 6888 9678 Fax: 02 6752 5357 Fax: 07 4671 6999 Fax: 07 4631 6190 www.namoicotton.<strong>com</strong>.<strong>au</strong> August–September 2012 The Australian Cottongrower — 39
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