Cotton Pricing Soaring, Adding to Industries Miseries

Compounding the ongoing issues with price escalation due to the lagging dollar and rising petroleum related pricing comes news that cotton futures have reached a price level not seen for the past 7 years. From mid-year 2007 to now pricing has increased 65%, from $.55/lb to $.90. Much of the blame was being placed on Chinas growth and demand for fiber, but more recently has been impacted by the speculation market, which has driven nearly all grain and fiber pricing higher as plantings for bio-fuels increase, taking the place of commodities like wheat and cotton. The impact is being felt at the grocery stores as well as at the mills, who have been reluctant to pass on increases but have no place to go with this type of escalation than to push it forward. Basic 18/1 cotton yarn has risen from mid $.80s to the $1.05-$1.10 range, with another increase in the horizon. Yarn producers have taken a big part of the increase on the chin, but that can't hold for long.

Style Source uses cost averageing to accomodate yarn market fluctuations. We have not had a wholesale price increase for 3 years. This has been accomplished by planning for increased pressure and insuring our structure is resilient enough to accomodate market disturbances. We all have limits ,however, and further escalations of material costs may have us pointing back to this blog with a deep sigh.