homeTitle.gif
  •  
  • The domestic market: a micro view

    Chapter 6 - Market profiles - Turkey 

     
     
    Different players in the market

    The number of domestic traders has decreased over the years. The gradual disappearance of Turkish cotton traders from the domestic and international marketplace has opened new avenues for cotton brokers or commission agents, who sell cotton for ginners and procure cotton for domestic mills. Around 15%–20% of the annual crop is now handled by three ASCUs, which, in addition to domestic sales, may also export their cotton.

    In the case of cotton exports, commission agents can act on behalf of the overseas cotton importers, for whom they check the quality of cotton in the exporter’s warehouse before shipment. On imports, these agents act for domestic textile mills, in which case they assume the responsibility of quality controls on behalf of the textile mills. They may even have to travel to the exporting country to check the quality before shipment.

    Cotton agents will continue to have an important role so long as buying and selling of cotton ‘on type’ or ‘on description’ are the agreed trading methods for acceptance of quality. It is believed that this role will significantly diminish when trading of cotton on quality parameters based on instrument testing of samples taken from homogenous bales becomes a widespread practice.

    Cotton procurement practices in the market

    Buying cotton in the cotton exchange (IME), where most of the large domestic mills have their own cotton brokers or commission agents, is one of the most common procurement methods.

    Another method is for the seller to make a price offer, subject to acceptance of quality by the spinner. In this case, the seller will send one or more truckloads of cotton to the spinner’s premises for quality checking. Naturally, the consignment will be returned to the seller if the quality does not meet the buyer’s expectations. If the quality is approved, however, payment for the consignment will be made according to the agreed price.

    The ASCUs, which usually have sufficient supplies of cotton to sell throughout the season, invariably make their domestic cotton sales in the IME.

    Overseas exporters usually work with local commission agents, who serve as a link between the exporter and the Turkish mill. Commission agents also follow up the work related to transactions, such as monitoring the opening of the L/C, advising buyers on shipment details and quality control.

    Business is often concluded via phone calls. Following the verbal commitment, the seller prepares a contract, in which the applicable arbitration body is also defined.

    For United States cotton, offers may be ‘on call’ or on a ‘fixed price’ basis. The cotton quality would generally include grade (trash content), colour, staple length, micronaire and strength. Quality can be either ‘on description’ (described in terms of international standards) or ‘on type’ (exporter’s private type or sample). For United States cotton, a third alternative, ‘on Government Class’ (better known as ‘Green Card’), is also widely used. An inspection agent can also be asked to ascertain the quality and quantity.

    Most cotton is imported to Turkey on ‘net landed weight final’ basis, in which case final settlement will be made on the basis of weight determined upon arrival. However, imports from Egypt are generally on the basis of ‘certified shipping weight final’. Both shipped and landed weights are determined by internationally recognized controllers.

    Specific cotton contracts used in the market

    In the case of imports, sellers’ contracts are usually accepted by Turkish buyers so long as the contract terms are in line with generally accepted international trading practices. In most contracts, rules of the internationally accepted arbitration bodies such as ICA are specifically referred to. However, the role of the Turkish commission agents is critical in the smooth execution of cotton contracts.

    Cotton finance and payment regulations

    Contracts concluded in the domesticmarket usually foresee immediate payment, unless agreed otherwise. For exports and imports, the preferred payment term is the L/C, with payment soon after loading or at a deferred time. However, parties may choose different payment terms; prepayment, cash against documents, 20% advance–80% on arrival are some of possible alternatives.

    Mention should also be made of cotton financing tools, in particular United States GSM Credits. Under the GSM-102 scheme, cotton can be obtained on credit terms of up to three years. This scheme has been an important factor in raising United States cotton exports to Turkey over the last 10 years.*

    Consumer preferences for specific fibre types and blending

    Turkish consumers generally prefer most of the clothing and textile products they use to be 100% cotton. Blended cotton is not very popular. Shirting fabric blended with polyester was preferred in the past because this blend had good wrinkle resistance. However, recent advancements in textile technology to produce wrinkle-resistant cotton fabric has considerably diminished the need for this type of blending.

    *See Jim Higgiston, www.cottoninc.com/2005EFSConferencePresentations_Turkey/.  
search
  • contentblockheader
    Cotton Exporter's Guide

    Brochure - African cotton promotion
  • Region:
    Country:
    Type:
    Date from:
    Date to: