# NAM - Namoi Cotton Co-Operative



## ta2693 (6 July 2007)

Namoi Cotton Co-Operative Limited (NAM) is one of Australia's largest cotton organisations with an extensive network of ginning, marketing and logistics operations. NAM operates fourteen cotton gins throughout NSW and QLD and has three warehouse complexes. Approximately 90% of the cotton purchased by NAM is sold to overseas markets, primarily to Asian spinning mills.
P/E 5.34 div 8.9%

As you know the oil price keep on going up as well as the price for oil company like WPL, STO. The cotton is one of major materials for fabric and Clothes industry.The other is chemical fiber. they can be alternative for each other. 
chemical fiber is made from Oil. as the oil price doubled in this year,the Chemical faber price also increased. The spinning mill will use more cotton to replace Chemical fiber. which will push the cotton price to new high in medium future. 1 to 3 years. 


NAM is buying back its shares on market, which shows the good quality of this company. It also could be a potential acquisition target for QCH.


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## ta2693 (6 October 2007)

As the market leader in cotton industry, it is a very promising company in current high oil price time. with the oil price goes up, the artificial fiber's price has to go up. the only alternative fiber for artificial fiber is natural fiber.(cotton) so the cotton price is very like to double in the future as the oil price doubled. 

The profit figure is not good as previous year due to reducing in planting. but I can see its potential. China needs cottons a lot. with the economy of China grows, the needs will increase. China is short of land suitable for cotton growth. 
Its xijiang province is at its high producing limit at this time. Australian could be very competitive in the market as USA (main competitor in Cotton market but it is  more distant than Australia) 
NAM's ginning share in market is also increasing from 30.4% to 36.8%. Nam's market share is growing from 26.5% to 36%. 
Not to mention its very strong financial position, not many companies can continuously buy back shares as NAM does. BHP maybe another. It is very likely to trigger a M&A.
That is what I like to see and put them in my long term holding portfolio. 


I am going to hold this for 5 years as long as its market share are going up.
in addition 9% dividend return is also very attractive.


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## So_Cynical (6 October 2007)

And on the down side
Cotton is a very high water user and 100% dependant on irrigation
(darling system) we are in the worst drought in prob 100 years, climate change will impact heavily on growing areas 
and river flows....production and costs.


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## Prospector (6 October 2007)

I used to hold NAM shares, but now, seeing the impact of unsustainable crops in arid areas of Australia, I sold them on the basis of this being environmentally unethical.  For the same reason I refuse to buy Australian rice when we can purchase it cheaply from overseas.


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## jkool (6 October 2007)

Well true that however how many ethical businesses can you see listed on ASX? And how many of those make for a sound investment?

With all due respect, if your signature holds any true regarding your areas of investing than I'd humbly suggest a little recalibration of your ethical investment yardstick. 

I would go as far as to say that business and ethics very often struggle to coexist within same vicinity.


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## Prospector (6 October 2007)

Hey jkool, at least those commodities always existed, even if the means of extraction are man made.  And there are ethical mining companies, who give more to the community than extract from it.  There are, of course, unethical mining companies but again they are not on my radar.

But rice and cotton are introduced exotic species that simply do not belong in arid lands.

My signature - well I guess as soon as you invest in LIC's then you cant avoid the main miners, can you!


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## jkool (6 October 2007)

You are absolutely right. If you want to make money on the markets today than you cant avoid the miners. Same could have been probably said about cotton growers in the past, tobacco companies etc etc.

I mean once we are out there making money investing/trading shares than, unfortunately, there is only limited weight we can put on ethics. I am not saying I like that but that is the reality of the day. 

If you want your undoubtedly high moral standards dictate your investing decisions than investing/trading shares may not be the best suitable platform. Others may not agree.


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## ta2693 (7 October 2007)

So_Cynical said:


> And on the down side
> Cotton is a very high water user and 100% dependant on irrigation
> (darling system) we are in the worst drought in prob 100 years, climate change will impact heavily on growing areas
> and river flows....production and costs.




I do not worry about the rainfall very much, ELNINO is just temporary effect which reduces the rainfall.  It hits every 2 to 7 years. 5 times PE ratio is good enough for me to take this risk.


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## Prospector (7 October 2007)

It isn't all about the rainfall, but how much irrigators suck out of the river.  Once the Govt gets its act together I am hoping that for the good of Australia, people will realise that you cannot keep sucking this river dry and expect all to be good downstream.  So I hope that the River License system will be reviewed in accordance with proper environmental management.  In which case crops that cannot survive on rainfall and moderate irrigation will no longer survive.


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## ta2693 (7 October 2007)

I understand your position on environment issue. but sucking the river dry is definitely an overstatement. Cotton growing as other agriculture industry exists on the plant for hundreds years. It will not cause big environment problem. 
for Nam, it is not very related to ASX index. you can see its performance in latest correction. It just set back 2c. It is related to the weather. If the rainfall is better than the previous year ( the solid likelihood is there) , we will have some big windfall profit.
I think it is good candidate to add into the portfolio to reduce the volatility of portfolio.


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## Prospector (7 October 2007)

Its kind of easy to say that irrigators in Qld, New South Wales and Victoria are not damaging the river system when they don't see and really, don't care, what is happening downstream.  Of course we have not been growing cotton for hundreds of years!  Nor vines, nor rice for pete's sake!

The River Murray is being sucked dry!  We were at the River Mouth last week, and areas that used to have water say, 6 feet deep, are now dry and cracking mud.  The feet of the Hindmarsh Island bridge, just near the mouth, are almost completely out of the water!

We have a property just upstream from the mouth; our only water supply is from the river which is fed through an aquifer and then piped to our community.  Last week we received a letter saying that we were not allowed to drink the water anymore as it is unfit for human consumption due to salinity.  So we have to cart water from Adelaide, (100 kilometres away) just to drink and shower in. 

We can no longer lavish water on crops in arid lands, when we can no longer provide water for people to drink!


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## chops_a_must (7 October 2007)

jkool said:


> If you want your undoubtedly high moral standards dictate your investing decisions than investing/trading shares may not be the best suitable platform. Others may not agree.




I don't agree. There is an ethical investing thread here somewhere...

You can't say all miners are unethical. Look at LGL for instance. They use hot rocks for their power and have a lot of community programmes. There are heaps of other "ethical" stocks out there as well.


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## So_Cynical (7 October 2007)

ta2693 said:


> I do not worry about the rainfall very much, ELNINO is just temporary effect which reduces the rainfall.  It hits every 2 to 7 years. 5 times PE ratio is good enough for me to take this risk.




Ok ta2693 u have clearly made your decision and have a positive attitude.

Just want to point out a couple of things.

1 That rainfall2 PDF is a joke...as in laughable..theres only 4 places 
   in Australia with dependable high rainfall, and cotton don't grow 
   in any of those areas.

2 climate change HAS fundamentally changed things.

3 the darling river stopped flowing a while back and has 
   only just started again and is pretty much saline.

4 total area growing cotton will decrease over time.

5 as a continent Australia has the most variable annual 
   rainfall in the world.


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## j.strong (1 May 2008)

*NAM*

Anyone know how the cotton harvest is going this year? NAM started share buy back again .maybe worth a look


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## mullokintyre (30 July 2021)

Not much written about cotton over the past few years, probably not helped by drought.
Looking at the  areas where cotton is grown using irrigation, one can see that this year, and probably next year should be pretty goos for cotton and other irrigated crops.
Burrinjuck dam one of the storages on the MIA is at 100%.
Water users  on the MIA system have already got 100% of high security  allocation for the  20/21 season.
NSW irrigators have got  97%  and 95% high security from the Murray Valley and Murrumbidgee Valley  respectively, and 100% from the lower Darling.
There are also sales available  to  general security irrigators.
Hume Dam is  nudging 80% and Dartmouth 70%.
So should be plenty of water around for thirsty crops like  cotton and rice.
Mick


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## mullokintyre (9 October 2021)

NAM hitting 52 week high.
With cotton prices surging 20% in the last fortnight, we are seeing cotton prices at levels not seen in ten years.
From ABC Land line


> Cotton Australia chief executive Adam Kay said growers had now forward-sold around 50 per cent of next season's crop, with some growers locking in prices of $670 a bale.
> 
> "We are seeing a situation where the supply is less than demand — that is really driving prices," Mr Kay said.
> 
> "The word on the street is that the Chinese crop might not be as good as they thought, the Indian crop might not be as good as hoped, and next season there's talk that the Brazilian crop might be down by 10 or 20 per cent."



So, with high prices, and plenty of water for irrigation, OZ farmers should be looking forward to a bumper crop.
I should have bought more back in July rather than the token parcel I have, but thats life.
Mick


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## mullokintyre (10 October 2021)

mullokintyre said:


> Not much written about cotton over the past few years, probably not helped by drought.
> Looking at the  areas where cotton is grown using irrigation, one can see that this year, and probably next year should be pretty goos for cotton and other irrigated crops.
> Burrinjuck dam one of the storages on the MIA is at 100%.
> Water users  on the MIA system have already got 100% of high security  allocation for the  20/21 season.
> ...



Dartmouth now 81%, Hume so full they are putting 27megs a day over the spillway, and Eildon 82%.
With Menindee lakes now full for the first time in six years,  and the darling still getting flood pulses coming down , there should be abundant water for all who want it, including the environment.
I went for a fly with a mate yesterday and snuck into the NSW airspsace to have a look at the Lachlan River wetlands. 
I don't think I have seen it look that full and green since the 2013 floods.
The bird life was so abundant we were reluctant to get below 2500 feet in case we encountered a few.
Coming back along the Murray, there is water everywhere.
Farm dams full to overflowing,  canola fields so bright yellow you needed sunglasses to look.
Should be a good couple of years for agriculture and regional areas of NSW and Vic.
Mick


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## mullokintyre (19 October 2021)

Nam hitting another 52 week high.
Now into my usual 10 to 15% take the money and run area, but I think this has still a way to run as more investors look at the cotton production possibilities.
Mick


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## mullokintyre (27 October 2021)

Another 52 week high today.
Up 7%.
Only small volume, as its kinda thinly traded.
but it looks good on paper.
Mick


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## mullokintyre (29 October 2021)

NAM released its interim half yearly  that finished August 31.
Some very good numbers, Revenue up 159%  NPAT up 209%, net operating cash flow up 164% though NTA was down after the Cap raising in May.
Think most of this information is priced into the SP.
2022 forecast  is for the ginning volume to above average, after a number of years below average.
Expecting a 30% drop in debt over the next six months.
ABARE is forecasting a further 170% increase in new cotton plantings, so things should be rosy should this forecast be close to accurate.
Certainly, this year will not have a water shortage problem, and possibly no problem next yeat either given the carry over figures of water that will be available.
Happy to keep holding, may even get a dividend at the end of the full year!
\Mick


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## Dona Ferentes (29 October 2021)

> "[Cotton] Prices in the last 30 years have only been above $600 a bale about 10 per cent of the time. We’re in rare air above $650”




_Adam Kay, CEO, Cotton Australia [peak industry body]_


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## mullokintyre (29 October 2021)

The high cotton prices are great for the farmers planting the cotton, but the high prices only affect  NAM in a sort of roundabout way.
The high prices encourage more plantings , which is good for them as the incremental costs go down as throughput increases.
It will also help their cotton seeds sales, as well as their marketing arm.
Mick


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## mullokintyre (13 December 2021)

NAM hit another 52 week high today.
Was talking to an AG pilot this morning.
He has so much potential work lined up for the cotton season, he is desperately looking for  experienced US and Canadian pilots for  pre harvest cotton defoliation.
With so much water around, should be a good season.
Mick


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## mullokintyre (21 December 2021)

NAM quarterly out.
Much better quarter than last year, ginning nearly 500k bales versus last years 124 k bales.
The forecast for next season is  for 4.6million bales, just shy of a tenfold increase.
Kinda surprisngly, the market was not impressed after hitting another 52 week high, it fell about 8%.
Maybe the market did not like the fact that free cah flows were negative for the quarte as they gear up for the season.
Or perhaps the fact that floods in NSW and Queensland may cause a drop in the forecast ginning.
Was gonig to add more, but held off.
There might be further falls yet.
Mick


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## frugal.rock (26 January 2022)

As stated by Mick, thinly traded, however, that may change.
Chart looking ok, just sitting on bottom of range, which ain't bad for the tizz we've just had...


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## divs4ever (27 January 2022)

yes cotton prices are at multi-year highs , just like several other commodities 

 just maybe it could get exciting


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## mullokintyre (1 February 2022)

Cotton futures rose for the seventh straight month, the best run since 1959.
Whatever the reason for the price increases in cotton (and there have been many stated), the end result is that standard items like Americas
staple workwear, blue jeans, is going to go up by somewhere near 10%.
_"Supply disruptions and soaring costs pushed the industry to draw on stockpiles, which have practically vanished at ICE Futures U.S., with higher prices unable to lure supplies into the exchange-tracked warehouses," Bloomberg said. _
High prices for the fiber indicate inflation is coming to shirts, blue jeans, dresses, sweats, and so much more. 
Demand for cotton worldwide _"is simply not being met,"_ said O.A. Cleveland, a consultant and professor emeritus at Mississippi State University. 
_"Industry group Cotlook on Friday shifted its global outlook for 2021-22 back to a deficit, the second shortfall in a row, citing diminished production in top exporter U.S. and India. More plantings in the coming season have been put into question by soaring costs for crop inputs including fertilizer," Bloomberg continued. _
Cleveland said the cotton dynamics are _"extremely bullish," and the "last time I recalled such a situation, I stopped forecasting futures prices once the market reached $1.50 a pound. Will the May or July futures price ascend to such a level? I do not know. This is a no man's land."_
It's still unclear how consumers will act when their favorite clothing brand prices continue to rise. But since clothes are considered discretionary spending, there will be a point where consumers will buy fewer of them due to higher prices. 

May well be good for Namoi.
Mick


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## mullokintyre (3 February 2022)

From ABC News


> Australian cotton growers are forecast to produce the second-biggest crop on record this season, with an export value tipped to reach an eye-watering $3.5 billion at current prices.
> 
> Key points:​
> The export value of this year's cotton crop could be a record-breaking $3.5 billion
> ...




Flooding in some areas of NSW does not seem to have affected production (yet), so fingers crossed the prices stay high and we get a bumper crop.
Mick


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## mullokintyre (28 March 2022)

NAM quarterly cash activities out.
Gearing up for start of harvesting season to start in a few weeks.
Nothing terribly exciting, except for the statement that they expect the cotton production to top 5 million bales, compared an historical average of 3.5 million bales, so obviously any losses due to floods were minimal.
My aerial ag spraying mate still flying max hours per month, so things look good.
Still holding.
Mick


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## divs4ever (28 March 2022)

missed my target price ( so far ) when attempting to open a position here 

 a long time between divs. keeps my target price fairly low  ( mid 30 cents a share )


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## mullokintyre (27 April 2022)

Fin Year report out.
Big increases in everything, which is not surprising as it was coming off such a low base during a prolonged drought.
Expecting a 5 mill bale thus year, and  forward estimates are suggesting  another above average year in 2023 given the continued water availability and demand for cotton.
Might even see a renewal of dividends next year.
Mick


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## mullokintyre (26 May 2022)

Got out of NAM today after it hit 17% above my last buy in price.
May well go higher, but I don't like to be too greedy.
Mick


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## mullokintyre (17 August 2022)

Back into NAM as cotton prices are soaring again.
from Zero hedge


> US cotton prices continued to surge above the boom days of 2010-11 after a *massive crop estimate cut by the USDA*, shocking Wall Street analysts and traders, due primarily to a *megadrought scorching farmland of Texas*, according to Bloomberg.
> 
> Futures in New York for December delivery were up 4.5% to $1.1359 a pound and up more than 21% this month.
> Last Friday, the *USDA's bigger-than-expected cut to domestic cotton crop* stunned many on Wall Street. *Crop output plunged to 12.57 million bales, the lowest in a decade*. The cut also pushed down the US from the world's third-largest producer to the world's fourth.
> ...




The US based National Weather Service's Climate Prediction Center as well as the Oz BOM have upped the chances of a threepeat La Nina  event this year to 70%.
Generally, these events signal more rain for the East Coast of Australia, and less rain for the west coast and mid west of the USA, so the droughts do not appear to be ending anytime soon.
Mick


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## InsvestoBoy (30 August 2022)

Another wow


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## mullokintyre (21 September 2022)

SPP at 43 was not what I was looking for.
Won't take it up, and will look to exit with hopefully a small profit.
Mick


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## mullokintyre (27 September 2022)

Decided against dumping Namoi.
This youtube video was one of the catalysts.


mick


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## mullokintyre (22 December 2022)

NAM released quarterly results.


> The ginning season was completed at the end of October 2022 with ginning volumes reaching 1,173,497 bales1.
> In comparison to prior seasons, payments for operating costs and cottonseed inventory previously weighted to Q1 and Q2 moved into Q3 with ginning finishing later than the previous season as the result of wet conditions.
> Receipts from customers for ginning services, cottonseed marketing and maintenance costs are also weighted to Q3 and Q4.
> Net cash inflows from operating activities in Q3-FY23 totalled $0.05 million (Q3-FY22: net cash outflows $9.0 million).
> ...



Like so many othe Ag industries, the massive wet this winter/spring has curtailed what looked like a record harvest, and also impacted seed plantings for next year, but it should be a greatly improved reult next year, as  much of the receipts from this season will be pushed into next seasosn results.
Still looking to exit with a small profit if it can get to .58
Mick


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