THE SEAM39s Phil Burnett and Wang Zhengwei chairman of the board of the China National Cotton Exchange

THE SEAM's Phil Burnett and Wang Zhengwei, chairman of the board of the China National Cotton Exchange.

CNCE, The Seam discuss next steps in cotton trading platform agreement

“We hope both sides can make the best use of technology — both from the CNCE and The Seam — so more U.S. cotton of good quality can be introduced into China,” said Wang, whose organization oversees the grading and sale of much of China’s cotton.

Farmers know the more customers they have looking to buy their crops — whether it be cotton, corn, grain sorghum, rice, soybeans, peanuts or pecans — the better chance they have of receiving a higher price for it.

Imagine if that included 4,200 potential buyers — all of whom could see the staple length, grade, strength and other pertinent HVI classing information for each bale of cotton you grew on a computer screen in their offices.

That scenario is becoming a reality following the signing of a memorandum of understanding between Wang Zhengwei, chairman of the board of the China National Cotton Exchange Co. Ltd., and Memphis, Tenn.-based The Seam, the electronic trading platform that serves the U.S. cotton industry.

“The majority of cotton consumed in the world is sold or processed in some form in China,” said Phil Burnett, who is serving as interim chairman and CEO of The Seam. “The China National Cotton Exchange has handled millions of tons of cotton since its formation, and we believe this represents a tremendous opportunity for U.S. cotton producers.”

“We hope both sides can make the best use of technology — both from the CNCE and The Seam — so more U.S. cotton of good quality can be introduced into China,” said Wang, whose organization oversees the grading and sale of much of China’s cotton.

The CNCE and The Seam first announced they were entering into the agreement in March. Since then, the response in both China and the U.S. has been positive, according to Kevin Brinkley, former CEO of The Seam, who became president and CEO of Plains Cotton Cooperative Association in Lubbock, Texas, last spring.

CNCE officials have also received numerous inquiries about cotton resources on The Seam. The company recently launched the real-time display of data from The Seam on its new e-commerce website, www.cottoneasy.com.

The China National Cotton Exchange was approved by the government of the People’s Republic of China in 1998. It currently has 4,200 registered members, who represent about 80 percent of China’s annual cotton consumption.

The CNCE operates more than 240 warehouses throughout China’s producing and consuming areas and bonded zones. It is the exclusive trading platform and has been entrusted with handling more than 32 million tons of China’s national reserve cotton. (One metric ton equals 2,204 pounds of cotton.)

Considered 'barometer'

It’s considered the “barometer” of China’s spot cotton trading with about 40 million tons of commercial cotton traded on its platform. Since 2014-15, it has also been the specialized warehousing provider for most cotton produced in the Xinjiang Region in western China.

“CNCE is the world’s largest trading platform for cotton,” said Wang, “And we know The Seam has excellent resources of U.S. cotton. The CNCE was developed because of the marketing challenges faced by China’s textile industry, and we believe our agreement with The Seam will help us meet those challenges.”

The organization currently provides cotton to 1,800 textile mills. It’s a full-service organization, providing seed and cotton to buyers. It also provides financing for sales of cotton across its electronic platform.

“Our organizations first started cooperating in 2003, so we understand each other very well,” said Wang. “We believe our operations will complement each other in the years ahead.”

The Seam, founded by leading global agribusiness companies, began operating the world’s first fully online neutral exchanges for cotton trading in December 2000. Since that time, the company has added other commodities such as grains, peanuts, and dairy to its trading platforms. The Seam also delivers food trading platforms for major manufacturers and reverse auction procurement systems for USDA.

For more information on The Seam, go to http://www.theseam.com/.

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