COTTON merchants are waiting months to take deliveries of fiber from U.S. warehouses, tightening supplies and fueling fears the niche market is in the grip of a storage game that plunged aluminum trading into crisis.

    Traders that own the stockpiled cotton have raced to remove their bales this year in order to cash in on higher prices as inventories shrink to their lowest seasonal level in over seven years. But some warehouse operators are shipping it out at the slowest possible rate in order to keep charging storage fees, 12 traders, buyers, and warehouse operators said.

    The issue, which has dogged the market on and off for years, returned with a vengeance this year at sheds from Lubbock, Texas, to Memphis, Tennessee. The logjams, which have not been widely reported, are among the worst seen since the existing minimum load-out rate was introduced in 2004, traders said.

    “U.S. merchants and growers are missing out on sales because it can take months to get shipments to buyers,” said Kevin McDermott, vice president at Jess Smith & Sons Cotton, a mid-sized merchant in Bakersfield, California.

    Frustrated merchants such as Singapore’s Olam International Ltd., the world’s No. 2 trader, are calling for measures that would force warehouse operators to release the cotton more quickly.

    Those who own the sheds — a mix of independent warehouse operators, farmer cooperatives, and merchants — say they are simply operating within government-mandated load-out rates.

    But the U.S. Cotton Growers Warehouse Association, which represents warehouse operations affiliated with farmer cooperatives, acknowledged the practice of stalling shipments to generate revenue was still a possibility.

    That’s because the load-out rate stipulates only the minimum number of bales that needs to be shipped. As long as warehouses stick to that minimum they are not breaking any rules.

    “We are trying to find a way either through regulations or through market channels to reward warehouses that provide good service and provide disincentives for warehouses that might sit on the cotton simply for revenue,” said association executive director Andrew Jordan.(SD-Agencies)