(courtesy of the Textile Association of Los Angeles)
The Issue - “We are consuming more cotton than we are producing worldwide.”
The issue of supply and demand is causing turmoil in pricing for mills, vendors and retailers, according to Kim Glas, U.S. Deputy Assistant Commerce Secretary for Textiles and Apparel.. The market for cotton is booming but cotton supply hasn’t increased.
Factors causing the surge in cotton prices:
Poor weather conditions in China, with damaged crops – China is the world’s top producer of cotton
The Indian government implemented a short term ban in April (which was lifted on May 25th) on raw cotton exports in a bid to lower domestic cotton prices, following shortages in the country because of unusually high exports. India is the No. 2 cotton producer
Factories in Asia that closed because of the recession
World consumption for cotton is forecast (for 2010 -2011) to exceed production for the fifth straight year; the first time this has happened in 50 years.
According to the U.S. Department of Agriculture, shrinking cotton inventories will drive availability to the lowest level in 16 years,
Cotton mills in Pakistan might shut. Pakistan relies on Indian imports for domestic demand, and Pakistan is the world’s fourth-biggest cotton producer. However, an increase of approximately 27% has been recorded in prices of Indian cotton and, because of the increase in import prices, Pakistani importers might cancel their orders. On May 12th, Pakistan’s Ministry of Textiles imposed a 15% regulatory duty on the country’s yarn shipments. Exports of cotton from Pakistan are limited to a maximum quantity of 32000 tons.
Cotton prices in China are nearing their historical peak, squeezing garment manufacturers just as they head into the important summer buying season. “The peak of the buying season is in two months time. If the crop has not improved, we may see another 20% hike,” said Willy Lin, chairman of the Hong Kong Knitwear Exporters & Manufacturers Association.
“The increase in cotton goods will begin to trickle down to consumers for holiday selling,” said Jonathan Greller, senior vice president and general merchandise manager of men’s, children’s and intimate apparel at Lord & Taylor. “For spring 2011, we are seeing 5% to 10% increases in retail prices for like programs.”
Cotton is about 35% of world fiber use and is produced in 80 countries worldwide. However, U.S., China and India together provide two-thirds of the world’s volume.
The U.S. cotton industry generates more than $25 billion in products annually, according to the Economic Research Service of the USDA.
The USDA (US Department of Agriculture) estimates that world cotton output would reach 113.9 million bales in 2011 compared with 102.9 million bales in 2010. At the same time, global consumption would be increasing to 119.1 million bales in 2011, from about 115.9 million in 2010.
There are reports that some foreign suppliers are hoarding cotton stocks with the intention of selling to the highest bidder, which will add to confusion in the marketplace over the correct price of cotton per pound .
Mills, manufacturers and retailers are certainly concerned about this situation. The price of cotton is fluctuating substantially. With cotton prices so volatile, the businesses along the pipeline will have to absorb the increases….with greatest effect on the manufacturers.
Additionally, due to consumer interest in “green” products and the expansion of organic cotton programs by retailers and brand managers, the Organic Exchange predicts the global organic cotton market will grow to about $5.1 billion in 2010 and $6 billion in 2011. The organic cotton market has increased by an average of 40 % annually since 2001. Production of organic cotton in 2008-09 grew 20%, and currently, twenty-two countries now grow organic cotton.
Source: Women’s Wear Daily
- Ilse Metchek, California Fashion Association
- Los Angeles, CA
- Ilse Metchek, the President of the California Fashion association (CFA), created the organization in 1994, with assistance from the major financial and manufacturing participants of the region’s apparel industry. The CFA provides leaders of the Southern California’s manufacturing and textile community with the opportunity to share information about the business of conducting business in the current global economy.