The Memphis and Greenwood, Miss., cotton exchanges have agreed to temporarily suspend the adoption of stringent new discounts and penalties for under-weight and over-weight bales of cotton.
Instead, the exchanges will participate in a joint committee formed by the National Cotton Council to review all aspects of non-standard bales that were addressed in the exchanges' adoption of Rule 19 earlier this summer. The committee will report to the Council's board of directors next February.
“While our board continues to feel strongly that lightweight bales are a source of inefficiency in the cotton marketing/distribution system, we are willing to deal with the matter through the establishment of a joint NCC/MCE committee,” said Memphis Cotton Exchange President Danny Lyons.
“It is MCE's hope that an objective review will lead to a consensus recommendation that will be acceptable to all segments of the cotton industry.”
NCC Chairman Kenneth Hood thanked the exchanges for temporarily suspending the new rule and for agreeing to address the issue through the NCC forum. “We believe the positive actions taken by the Memphis Cotton Exchange and the work of the joint committee will allow the industry to establish an effective and unified approach to dealing with the lightweight bale issue.” he said.
“This is a very workable solution that will benefit the entire industry,” said Sledge Taylor, president of the Southern Cotton Ginners Association and a cotton producer from Como, Miss.
“Some might think that Rule 19 was a minor issue, but it had the potential to cause a great division among several different segments of the industry, and so I believe it needed to be resolved quickly before it became a major issue.”
Taylor said he was grateful the NCC became involved as a mediator between the ginners and the merchants. “I feel both sides now have a greater awareness of the problems of low weight bales,” he noted. “The Memphis Cotton Exchange made a wise decision in referring this to the cotton industry to work on, and the NCC did a wonderful job of mediating.”