Cotton pricing has skyrocketed lately, which is affecting the cost of apparel, most of all t-shirts. Below is an article that explains why pricing is rising so sharply.
The cotton industry is battling sticker shock. Global cotton prices have hit historic highs in recent months as demand for cotton has outstripped supply in most parts of the world. Raw cotton prices have been trending higher for most of this year, rising to $1.02 a pound this month compared with 59.2 cents a year earlier, according to the WWD Fiber Price sheet. On Monday, cotton futures hit a new high of $1.247 a pound on the international cotton exchange.
A number of factors have impacted the price of cotton, industry experts said, most notably shortfalls in production levels driven by a combination of weather and a loss of acreage. The increasing popularity of bio-fuels and high prices for other commodity crops enticed many farmers to shift from growing cotton to planting crops such as corn, soybean and wheat.
Further complicating the supply-and-demand ratio, the huge decline in demand in 2009 when the recession was at its peak also helped fuel a worldwide drop in cotton production, said Mark Lange, president and chief executive officer of the national cotton council. The rebound that followed happened more quickly than expected and caught the industry by surprise.
According to data from cotton incorporated, the cotton harvest last year was 16 million bales short of worldwide demand. This year’s harvest is expected to be four million bales short. The shortfalls mean that in order to meet demand, the stocks or inventory of cotton have also been depleted, which creates additional price pressures.
The U.S. department of agriculture estimates for the 2010-11 cotton crop year, world stocks will fall to their lowest point in 14 years, around 45.4 million bales. Stocks in most cotton-supplying countries will decline, the USDA predicts, including China, the largest producer, and the U.S., the third-largest producer. The second-largest cotton producer, India, is expected to see its cotton stock rise because of government imposed restrictions on cotton exports.
“From a production standpoint, the primary issue that we’re concerned about is the sufficiency of world supply,” said Wally Darneille, president and CEO of the Lubbock, Tex.-based Plains cotton cooperative association.
To view how the pricing for cotton has risen, see the pricing below
Price of Cotton per one pound of fiber;
10/26/09 - $0.592
9/27/10 - $0.882
10/25/10 - $1.02
Article by Liza Casabona, Mahlia S. Lone, Kathleen McLaughlin and Mian Ridge
Our recommendation at Magellan Promotions is that if you know you are going to be buying t-shirts, it is better to buy now and lock in at current rates because it is expected the price to continue to rise into 2011.
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