PCCA and Partners Officially Launch Internet Cotton Trading
The signing of official documents on Nov. 6 formally established a new company offering the latest Internet trading system for U.S. agricultural commodities. The new company, The Seam, now offers the world’s first, truly online cotton marketplace and is the result of a new partnership involving Plains Cotton Cooperative Association (PCCA).
The Lubbock-based cooperative announced May 24 it had signed a letter of intent to form a joint venture with Allenberg Cotton Co., a division of the Louis Dreyfus Corporation, Dunavant Enterprises and Cargill’s Hohenberg division (see the summer issue of Commentator). Officials from the four companies explained the purpose of the joint venture was to create a comprehensive, independent, electronic, business-to-business marketplace for cotton and cotton-related products and services.
In June, the initiative gained momentum with the addition of the two largest cotton consuming textile manufacturers in the United States: Avondale Mills of Monroe, GA, and Parkdale Mills of Gastonia, NC. PCCA’s 25-year-old electronic marketing system, TELCOT, serves as a foundation for The Seam’s Internet service.
In preparation for the cut over to The Seam, PCCA personnel completed TELCOT’s conversion to a fully web-based system in September and temporarily re- named it WebTELCOT. The Seam now is available to cooperative members in Texas, Oklahoma and Kansas through PCCA and to independent customers through PCCA’s wholly owned subsidiary, TELMARK, Inc. From Sept. 19 to Nov. 28, 142,944 bales of cotton were traded on WebTELCOT, illustrating the new technology’s ease of use.
“Our members will continue to deal directly with PCCA,” the cooperative’s President and Chief Executive Officer Van May explained when the joint venture was announced. “Our members still will be able to trade equities on the system, and the service to which they have become accustomed will continue as it has in the past,” he added.
May went on to explain the new marketplace will provide more choice, not less, for its users, and competition should increase based on the number of U.S. cotton merchants across the country. The competition should result in improved prices received by producers due to expedited flow of cotton from producer to consumer.
The Seam is expected to launch the web-based, electronic marketplace nationwide in the first quarter of 2001. The Seam also will continue to guarantee payment to sellers and guarantee each buyer delivery of the cotton purchased, and it will provide real-time market summaries, market quotes and weather forecasts. Expansion of The Seam across U.S. Cotton Belt states other than Texas, Oklahoma and Kansas will not create increased membership in PCCA.
“Growers in other territories will not become members of PCCA simply by trading their cotton on the new website,” May stated earlier this year. “Nor will they be eligible to participate in PCCA’s Mill Option or any of our dividends.” May added that as the new company profits, PCCA will participate in the earnings as an equal partner.