Reports E/CTRM Software – To Build or Buy? | Page 22

CTRM for Ags & Softs For each 100 pounds of fiber produced by the cotton plant, it also produces about 162 pounds of cottonseed. Approximately 5 percent of the total seed crop is reserved for planting; the remainder is used for feeding as whole seeds or as raw material for the cottonseed processing industry. The seed is usually sold to the gin, and the ginner either sells it for feed or to an oil mill where the linters (downy fuzz) are removed in an operation similar to ginning. Linters are baled and sold to the paper, batting and plastics industries, while the seed is processed into cottonseed oil, meal and hulls. After the linters are removed, the seed is put through a machine that employs a series of knives to loosen the hulls from the kernel. The seeds are then passed through shakers and beaters. The separated hulls are marketed for livestock feed or industrial products, and the kernels are ready for the extraction of oil, the seed’s most valuable by-product. Solvent extraction or presses remove the oil. After further processing, the oil is used in cooking or salad oil, shortening and margarine. Limited quantities also go into soaps, pharmaceuticals, cosmetics, textile finishes and other products. The remaining meat of the kernel is converted into meal, the second most valuable by-product. High in protein, it is used in feed for all classes of livestock and poultry. Cottonseed meal makes an excellent natural fertilizer for lawns, flowerbeds and gardens. After ginning, the cotton is generally shipped to a warehouse/gin yard and sampled to establish its fiber characteristics. Cotton can be maintained in-store for extended periods, usually without suffering any deterioration. Cotton is ready for sale after instrument classing establishes the quality parameters for each bale. The marketing of cotton is a complex operation that includes all transactions involving buying, selling or reselling from the time the cotton is ginned until it reaches the textile mill Cotton classification, or classing, is the process of describing the quality of cotton in terms of grade, staple length and micronaire. In the past, this classing had always been done with the hand and the eye. Micronaire determinations are performed with an airflow measurement that indicates fiber fineness. However, the system is rapidly moving from reliance on the human senses to the use of high-volume, precision instruments that perform quality measurements in a matter of seconds led by the USA, Australia and Brazil. In those origins, only the classifications for extraneous matter and special conditions are still performed manually.In some origins, the quality of the bale isn’t known, and there is no way to trace the cotton back to the farm.There is a push across the industry to move to instrument-based quality measurement (www.csitc.org). In the USA, each bale is given a unique barcode, and a 4 oz. sample is taken out of each side of every bale. The USDA’s testing labs look at every single bale sample and assign it a grade based on fiber (staple) length, strength, color, fineness and trash content using High Volume Instrument (HVI tm) testing.This grade determines the price of the cotton on the open market. The grade information is available online for the owner of each bale through the USDA’s website. Buyers worldwide can have confidence in that each bale of U.S. grown cotton has been verified by the use of technology and the identification system. Cotton Quality Attributes per the USDA An important part of the complexity of handling cotton as a commodity is the quality attributes that impact pricing. In the USA, the grading and quality checking is particularly stringent, and the USDA classes virtually all cotton there. There, grade standards are used for manual classification, and they specify levels of color and leaf for various grade designations. The USDA maintains two types of grade standards: Universal Upland Grade Standards and American Pima Grade Standards. USDA’s American Upland cotton standards are referred to as “Universal” standards because they have been adopted by a special governing body and are recognized and used internationally. The USDA has twenty-five official color grades for American Upland cotton and five categories of below-grade color, and it maintains fifteen physical grade standards for American Upland cotton. Seven of the White color grade standards also serve as official leaf grade standards for American Upland cotton. The remaining grades are descriptive. For the classification of American Pima cotton, USDA has six official grades for color and leaf, all of which are represented by physical standards. There is also a descriptive standard for cotton that is below grade for color or leaf. Both Universal Upland and American Pima Grade Standards are valid for only one year because of gradual changes in color as cotton ages. Grade standards for both American Upland and American Pima cotton are reviewed periodically to ensure that they are still representative of the U.S. crop. If at some point all segments of the U.S. cotton industry agree © Commodity Technology Advis ory LLC, 2016, All Right Reserved 21