California’s Drought has Buhler Considering Wider Cotton Possibilities

Manufacturing

As of Thursday, September 10, 2015

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Marty Moran, CEO, Buhler Quality Yarns

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Buhler Quality Yarns headquarters

JEFFERSON, GA.—California is known for its high-quality Pima cotton, but the state’s ongoing drought has had an impact on cotton yields and prices. Recently, CALIFORNIA APPAREL NEWS / Textile Preview With Tech Focus contributing writer Hope Winsborough met with Marty Moran, chief executive officer of Buhler Quality Yarns, at the company’s spinning mill in Jefferson, Ga., to discuss the California drought, the U.S. cotton market and Buhler’s newest development, a long-staple cotton yarn.

Recent reports say cotton farmers are cutting back on their Pima crops due to the drought in California, where Buhler sources all of its Pima fiber. What have you heard about the Pima production in California?

Marty Moran: [The farmers] have to decide in March or April how much they’re going to plant. [Depending on] the rain they get starting in November, December—all through the winter, [as well as] the snow pack, they decide in March or April what they can plant. You have to live with whatever they plant in March or April and hope there’s enough water to get decent yields.

Have you had a significant drop in volume [of orders of Pima related to] the drought?

It’s been a significant drought this year and last year. The previous year, there was pretty decent water allocation. Other than a brief couple of months last summer, which I don’t know that I can tie to the drought, [business has] been pretty steady. We’ve been able to do some things to improve our cost position, to try to keep the increases on the yarn as reasonable as possible.

All indications are that this will be a pretty strong El Niño year and that usually means wet weather in the San Joaquin Valley. So we’re cautiously optimistic about that. And I would say that there are options to grow the Pima cotton in Arizona and in other places. They haven’t grown that much simply because of the San Joaquin Valley’s yield. But I think if that [changes], markets are efficient and it’ll find a home. And I think the long-staple has an even bigger potential. It can be grown in even more places.

Right now are you looking at Pima [sourced from] elsewhere?

There’s really nowhere else to source the Pima from in the U.S. And it has to be U.S.-grown Pima to be Supima.

Where else is Pima cotton grown in the United States?

Mainly in the San Joaquin Valley of California. There’s a little bit grown in Arizona and a little bit grown in Texas.

Is that your only choice for domestic sourcing?

Yes. The yields in the San Joaquin Valley are so much better [than other regions].

They can grow a good Pima in Arizona and Texas, but they don’t get the good yield California gets. So it’s been hard for them to compete. We did see where Arizona has increased their Pima production this year over last year. But it’s so small that it’s almost not significant enough to really move the needle.

China has recently been producing Pima as well?

Here’s where I’m probably going to get a little technical. Pima is considered an extra-long staple cotton, or ELS. China is increasing their production of ELS cotton. Whether it’s technically a Pima or not, I don’t know. There’s a certain seed variety [that produces true Pima cotton]. I know [China is increasing] its production of ELS, which has to be a certain fiber length.

There are a lot of international spinners looking at opening operations in the U.S. What do you think is driving that interest?

We’ve definitely seen a resurgence in investment in the U.S. across the board in textiles, and yarn’s a big part of that. I think a big draw for that is the proximity to the cotton, [to be] able to get the cotton at market prices—and this is really more about the Upland cotton than the Pima.

It’s [also] our energy rates, and the fact that so much of yarn manufacturing is more capital- than labor-intensive. If you can get where there are good energy rates—when it comes to energy in the U.S., we’re fairly competitive, fairly reasonable—you can offset that. With the free-trade agreements—both CAFTA and NAFTA and potentially TPP—people are preparing to take hold and reposition to take advantage of that as well.

Let’s talk about the new long-staple cotton yarn that [Buhler] is producing in addition to Pima cotton yarn.

We’ve been offering it about six months now on a pretty regular basis. Because of the drought and the price of Pima cotton going up, we have some of our customers who have said, “We just want a good 30s [yarn size], a good 40s. We don’t need the Supima, the Pima name.”

The Pima cotton is needed for 60s, 70s and 80s, the really fine-count yarns, 90s. You spin a better yarn with the Pima, obviously, but you can spin a good yarn with long-staple cotton. To give us something to offer those customers at a price they’re looking for, we decided to produce a long-staple cotton line.

How does it compare to Pima, aside from price?

The long-staple cotton is a little weaker and a little shorter. The yarn quality is a little lower, but it’s acceptable. It’s a perfectly good yarn for what some of our customers want to make.

How does it compare with non-Pima cotton that’s already out there?

It’s more about whether they want to spin 30s and 40s. We like to spin those yarns. Other spinners will spin them, but it’s not exactly what they like to do.

For a lot of yarn spinners, the finest thing they want to do is the 30s—they really don’t necessarily want to spin 40s all the time. A lot of people look to us to do those yarns. But [if] we’re Supima only, [the price is too high for some customers]. So we wanted to come up with a lower-cost option.

The long-staple cotton is also grown in California. Is it also more expensive than it was before the drought?

Yes, but it’s less expensive than the Pima.

Aside from the price, are there any benefits of the new long-staple cotton?

Just that it makes a good quality yarn at a lower price point. That’s what it really boils down to. There really aren’t any other advantages. But that’s the biggest one for most people—that price point. Long-staple is a high-end yarn. It’s still a very good cotton, and it makes a very good yarn. It’s just not the highest of the high end, but it’s a small step down.

That’s how we present it: “Here is the price for high-end, premium cotton. If that’s not going to get you to a price point your customer is going to pay, here’s another option, which will make a perfectly good product.”

Is there anything else that manufacturers and retailers should know about the new yarn—in terms of capabilities in garments?

As long as you’re talking about 30s, 40s, 50s from Buhler, it’s going to function and run very similarly to our [existing] yarns. Because it’s a different cotton, there would be a slight shade difference. Function should be very similar as long as you stay in that range for processing and dyeing.

If you handed me two T-shirts, one made from long-staple cotton and one from Pima cotton, would I be able to tell the difference?

[If they are] made the exact same way, finished the exact same way, the Pima cotton shirt would feel a little bit softer. Softer is probably what the lay person would feel. The presentation of the garment after 10 or 20 washes would be a little different as well.

What categories of manufacturers are interested in long-staple cotton?

We’ve offered it to a number of our customers and we’re getting interest both in wovens and knits, men’s and women’s.

It’s fairly new and people go slow, so we don’t necessarily know where it’s going to hit at this point. It all depends on testing.

We spin the 100 percent cotton—Supima and long-staple. We spin 100 percent MicroModal and a 50 percent Supima/50 percent MicroModal. We also spin 100 percent MicroTencel. [All] are high-end yarns. We spin the fine counts. That’s our niche—that’s what we do.

What changes have you made to prepare to offer long-staple cotton?

We invested in some new equipment to allow us to run it more easily in the mill, so we didn’t have to run Pima one day and long staple the next. We can run them simultaneously, so that makes us more efficient.

What percentage of production do you expect long-staple cotton to be going forward?

It’s probably going to be driven by the market. We could go to whatever level the market wants. There’s a certain level that we would like to get to that makes sense to have it. Probably we’d like to see it get to at least 30 percent of the business.

There’s been some investment made, so you know we’re committed to it. If the market wants to stay with the Supima, we can do that. If the market decides it really wants the long-staple, we can do that—or some combination of the two. We can go either way.

And that’s what we wanted. We wanted that flexibility.