I am going to take a break from trying to figure out the ambiguities of money and deal with some real stuff. My intuition tells me that what China is doing in cotton has some significant implications and relations for what it is doing with money. I don't know what China is doing in cotton. Something strange about this whole problem domain of cotton growing, trade and consumption in manufacturing that does not compute in relation to the financing of it all and the related debt of China domestic finances.
I will start by "following the cotton" maybe that will lead to where the money is going, from there finding our where it is coming from. Where it comes from is debt. Right? We all know that debt must be repaid and another thing that we all know is that a debt based revolving fund expansion and contractions must be subject to ceiling limits.
Revolving fund ceiling limits. That is a funny way of looking at the situation when if we exceed those limits we jump off a cliff. Like the old morality story of Icarus flying too close to the sun. Crash and burn.
From Wikipedia here:
Overcome by the giddiness that flying lent him, Icarus soared through the sky curiously, but in the process he came too close to the sun, which melted the wax. Icarus kept flapping his wings but soon realized that he had no feathers left and that he was only flapping his bare arms, and so Icarus fell into the sea in the area which today bears his name, the Icarian Sea near Icaria, an island southwest of Samos.
and:
Literary interpretation has found in the myth the structure and consequence of personal over-ambition (Levin 1952).[17] An Icarus-related study of the Daedalus myth was published by the French hellenist Françoise Frontisi-Ducroux.[18] In psychology there have been synthetic studies of the Icarus complex with respect to the alleged relationship between fascination for fire, enuresis, high ambition, and ascensionism.[19] In the psychiatric mind features of disease were perceived in the shape of the pendulous emotional ecstatic-high and depressive-low of bi-polar disorder. Henry Murray having proposed the term Icarus complex, apparently found symptoms particularly in mania where a person is fond of heights, fascinated by both fire and water, narcissistic and observed with fantastical or far-fetched-imaginary cognition.[20][21]
It is the bubbles in metrics of real things having money value over a time line that relate to their expression of value in terms of money that cause us problems. Housing for example. Cotton is an interesting commodity to look at. Especially the way China is managing the cotton/money relationship.
First: What is the big picture of world wide cotton? How is China handling its segment of the world wide cotton pie ..independent of its money relationship
then
What is the money relationship to cotton?
The pie as served up by the USDA:
|
Cotton: World Markets and Trade |
Full Report
Table of Contents
| Summary | Summary of Changes (1,000 480-lb. bales) |
| Table 1: | World Cotton Supply, Use and Trade (1,000 metric tons) |
| Table 2: | World Cotton Supply, Use and Trade (1,000 480-lb. bales) |
| Table 3: | FY 2002 GSM-102 and Supplier Credit Programs |
| Table 4: | Area, Yield, and Production by Country |
| Table 5: | Cotton Supply & Distribution by Country (1,000 480-lb. bales) |
| Table 5A: | Cotton Supply & Distribution by Country (1,000 metric tons) |
| Table 6: | Cotton Supply & Distribution by Country (1,000 480-lb. bales) |
| Table 6A: | Cotton Supply & Distribution by Country (1,000 metric tons) |
| Table 7: | Export Sales Summary |
| Table 8: | Northern European Cotton and Adjusted World Price |
| Table 9: | World Cotton Production, Yield, Supply, and Utilization |
| Table 10: | United States Cotton Production, Yield, Supply, and Utilization |
| Table 11: | Foreign Cotton Production, Yield, Supply, and Utilization |
- Download Cotton data set (.zip)
All that we need to know about essential cotton metrics in various expressions of physical measurements, locations and trade relations as it moves around the world.
USDA conversion computation formula of metric tons to bales is:
Metric tons to 480-lb bales
Cotton = MT * 4.592917
Fact:
Metric Tons (or Tonnes)
A unit of weight equal to 1,000 kilograms, or 2,204.6 pounds.Short Tons (US)
United States measurement also known as a short ton that equals 2,000 poundsThis is what I think USDA data shows: China has a November 2012 on hand inventory of cotton amounting to 8 million metric tons. As of the same date it had domestically produced (grown) in annual season of 2012/2013 starting on 1 August 2012.....: 6.9 million tons, consumed 7.7 million tons in manufacturing and imported 2.4 million tons.
Note this information about harvesting the cotton crop as found here:
Cotton in China is planted from the first of April through mid-May. Cotton harvest will then begin around the first of September and should be completed around the end of October.
The Bloomberg news story cited by Marshall Auerback in my prior post had this statement:
Cotton stockpiles in China, the world’s biggest importer, are set to climb to about 9 million metric tons this season, enough to cover the country’s deficit for the next six years, according to Allenberg Cotton Co.
Very interesting statement when I parse it for meaning. A national stock pile of raw material cotton is a working inventory revolving asset. When more goes out of the China national stockpile of cotton than comes into it through domestic production then there is a deficit to whatever has been chosen as the the target level of on hand cotton inventory to support continued manufacturing of finished goods. That reduction is a lowering of inventory called a deficit. If the intent of China stock pile management is to maintain the revolving raw material cotton inventory stock pile at a specified level to support use of the asset in production then the deficit has to be made up by importing cotton to fill the short fall deficit. USDA stats show that the China cotton imports as of November 2012/13 (season beginning August 1) to maintain what ever target level of revolving stock inventory they have chosen (by default the level that currently exists unless China says that level is too big or too small and has a (known or unknown) plan to change it. Imports for the 2012/13 annual season beginning 1 August 2012 were 2.4 million tons. For the 2011/12 yearly season it was 5.3 million tons to make up the deficit between domestic production and total manufacturing needs.
Questions persist as to why Tancredi suddenly and unexpectedly left Allenberg in the first place, though volatility within the cotton market the last few years has been cited as a contributing factor. The company is still working its way through federal lawsuits that allege Allenberg and Louis Dreyfus Commodities BV illegally fixed cotton prices in 2011.
That volatility helped spur a separate, unrelated lawsuit against commodities giant Cargill Inc., an Allenberg competitor that a group of U.S. cotton farmers accused of prematurely dropping market hedges that ended up costing them $35 million. The claim is in private arbitration proceedings filed with the Memphis Cotton Exchange and involves a contract dispute, according to a Cargill spokesman.
According to MBJ research, Allenberg Cotton was the highest-grossing private company in Memphis in 2011, with $3.45 billion in gross revenue. It employs 292 people locally and has more than 400 in total.
Profile of Anthony Trancredi here http://www.zoominfo.com/#!search/profile/person?personId=542921048&targetid=profile
Allenberg Cotton Company has a presence in two places:
7255 Goodlet Farms Parkway
Cordova, TN 38016
901-383-5000
8225 N. Fresno St
Fresno, CA 93720
559-447-1800
The Allenberg Cotton Company has no corporate website itself as a corporate public presence on the internet. Its only presence as a corporate entity on the WWW is its listing as an office on the parent company site. for North America. Nor does the office in Fresno have its own corporate entity website, only a presence on the parent company site.
At this Yellow Pages web site about Allenberg there is an interesting connection between the Allenberg Cotton Company in Fresno and Dunavant of California:
General Info
Dunavant of California is a fully owned subsidiary of Dunavant Enterprises, which is one of the largest privately owned cotton merchandisers in the world. Dunavant Enterprises owns various real estate development companies, a truck brokerage company, cotton warehouses in the United States and Australia, ginning operations in Zambia, Uganda, Mozambique, and Australia, as well as a commodities trading company with locations in New York City and Memphis, Tenn. Dunavant of California handles annually in excess of 500,000 bales comprised of Acala Uplands and ELS Pima cotton.
Duanvant also has an office at 959 Ridgeway Loop Rd. Memphis, TN which is their new world headquarters. Dunavant Enterprises has been at its current location since 1971, during which time most of the company’s focus was the global distribution of cotton. The company sold its cotton interests to Allenberg Cotton Co. in 2010.
There is an interesting story about the cotton industry in Memphis here relating to William B. "Billy" Dunavant Jr. the greatest cotton merchant in Memphis history--indeed, the greatest cotton merchant the world has ever seen.
Might there be a strong connection between Dunavant and China?
Yes, indeed as stated here
The Memphis cotton trade's ties to China stretch back 40 years.
William "Billy" J. Dunavant Jr., chairman of former Memphis cotton giant Dunavant Enterprises, was the first to sell U.S. cotton to China in 1972 and helped create a worldwide market for the domestic fiber.
Dunavant Enterprises is currently hiring here at their website to fill a position of Manager of Asian Operations.
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