Corpus Christi port seeks more cotton
Port Corpus Christi Authority of Texas has applied to IntercontinentalExchange (ICE) Futures U.S. to serve as a designated delivery point for Cotton No. 2 future contracts.
The port authority noted in its application that Southwest cotton merchants and producers face significant obstacles to delivering under current contract terms, because the designated delivery points are 'out of the flow of local export-oriented commerce' and the concentrated ownership of warehouse capacity 'does not provide ready access to warehouse space.'
The port authority said since March 2008 the basis has widened considerably on merchant-to-producer forward contracts that reference ICE cotton futures exchange prices.
'These conditions have substantially reduced the utility of the ICE cotton futures contract for hedging purposes,' the port authority said. 'Adding appropriate delivery points would help address the problems of over-concentration of warehouse control, inadequate liquidity and reduced hedging utility.'
Corpus Christi has substantial warehouse space in place and each year about 500,000 cotton bales go towards export markets. The port also has abundant access to rail and road transport services.
'Port Corpus Christi is undergoing substantial development that will make the port capable of handling the new larger ships that will go through the Panama Canal after its expansion is completed in 2014,' the port authority said. The port 'therefore will likely become an even more attractive transit path for Far East cotton exports in the future.'
The port authority commission also voted Tuesday to end the lease agreement of its cold storage facility tenant, Coastal Bend Cold Storage. The company's lease, which began July 1, 2009, included a minimum five-year lease with an option to buy the building.
Effective Wednesday, the port resumes operation of the 100,000-square-foot refrigerated facility. Port staff will consider whether to lease the facility to another tenant or continue to run the facility itself, the port authority said.