Since entering 2021, people all over the world have felt the inflationary pressure on “clothing, food, housing, and transportation”. Among them, the textile industry involved in clothing, its raw material – cotton, is also experiencing an unprecedented wave of price increases. As an important cotton exporter in the world, the U.S. cotton futures market has also been affected, which also indicates that the costs of T-shirt and other clothing manufacturers will rise in the future.
According to the Financial Associated Press, on September 28, local time, the price of the main cotton futures contract of the Intercontinental Exchange (ICE) in the United States has shown an upward trend for the sixth consecutive trading day. Overnight trading prices were close to the $1 per pound mark, setting a new price high in the past 10 years. Due to the forecast that cotton will be in short supply in the future, the price of US cotton continues to rise. As of September 28, ICE cotton futures have increased by 48% in the past 12 months.
The report pointed out that the United States, including Texas and Mississippi, is currently facing the “threat of heavy rains”, which will undoubtedly affect the country’s cotton exports within a certain period of time. In addition, the “congested” situation of global freight has further contributed to the surge in cotton prices. An economist in North Carolina, USA, pointed out that the United States will produce very little cotton in 2020, and it will not be easy to harvest this year’s cotton and send it to textile mills in a short time.
A few days ago, the American clothing giant Nike also warned that due to the suspension of its factories in Vietnam for many days, the company’s product inventory will face a serious shortage. Right now, the price of raw materials is rising, which means the cost of manufacturing clothing will also rise. For the majority of retailers, this cost may ultimately have to be “paid” by consumers themselves. But the tricky thing is that due to the impact of the new crown epidemic, everyone’s salary level has not increased, and consumer purchasing desire itself is not enough. Continued price increases of products may suppress demand.
At the same time, overseas buyers’ demand for U.S. cotton is still soaring. According to a report released by the United States Department of Agriculture (USDA), from September 10th to 16th, the United States received a total of 78,406 tons of upland cotton export orders from buyers from various countries, a 21% increase from the previous month; and in the 2021-2022 fiscal year, The United States shipped more than 40,000 tons of upland cotton.
Data show that seeing the supply chain crisis in the global textile industry, countries such as Turkey and Pakistan are frantically “increasing orders” of cotton to promote the normal operation of their own textile industries. As early as early July, media reports stated that Pakistan planned to increase the import of cotton yarn to meet its domestic cotton demand. At that time, the price of US cotton purchased by Pakistan from the United States soared to 98 cents/pound.
Recent reports show that in the first 11 months of 2020-2021 (October 2020-September 30, 2021), Turkey imported more than 1.05 million tons of cotton. During the same period, nearly 120,000 tons of cotton were exported. It is reported that the United States is Turkey’s largest source of cotton imports, accounting for more than 24% of its cotton imports. However, as U.S. cotton futures prices continue to soar, market news indicates that Turkey is considering turning to Brazil and Mexico to purchase additional cotton.
In addition to seeking to diversify imports, Turkey is also expanding its cotton planting scale. On the occasion of the new fiscal year, Turkey plans to increase its cotton planting area by 28%, and its output is expected to reach 750,000 tons, a year-on-year increase of 19%. However, considering the strong domestic demand for cotton, Turkey is considering reducing cotton exports in the next fiscal year. It is expected that only 110,000 tons of cotton will be exported. </p
