Cotton Prices Hit Record High

10 Mar

[reprinted from Counselor® PromoGram® Volume 797 / March 10, 2011. Price of cotton keeps rising. We expect impact to most of apparel programs. But there are still some deals out there.]

Amid concerns that global supplies may not satisfy rising demand – particularly in China – the price of cotton soared again this week, hitting an all-time high. At the close of a seven-day rally on Monday, cotton futures reached $2.197 per pound, which is more than double the cost of the commodity compared to this time last year. Prices finally stabilized mid-week following a report from the International Cotton Advisory Committee that global cotton output will rise 11% this year to a record 27.6 million metric tons. The increase in output is becoming more necessary, as China alone imported 390,720 metric tons of cotton in January, a 31% rise. China’s Ministry of Commerce said the country will continue to actively expand its imports of cotton in 2011.

The U.S. is taking a lead in cotton production, recently exporting 403,341 bales in one week to countries including China, Turkey and Bangladesh. U.S. export sales of cotton rose 56% in late February, according to the U.S. Department of Agriculture.

Since last year, the rapid rise of cotton has steadily increased the cost of items like T-shirts, polos and jeans. In response to questions posed on ASICentral’s Facebook page (www.asicentral.com/facebook), distributors say their businesses have clearly been affected by greater cotton costs. “We are definitely doing more one-color and one-side prints instead of multiple colors and locations,” writes Amy Petitjean Graff. “Customers are trying to recoup the higher cost of the t-shirts by printing less.”

Adds Erik Anderson: “This kind of cost increase being so rapid and showing no sign of relenting must be passed on to the end-user at some point.” There are also concerns among distributors that sales of apparel will be hurt by the rise in cotton costs. “People who have ordered clothing in the past have put orders on hold and new orders are harder to come by,” writes Krista Miller-Shifflett.

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