Cotton Prices Likely to Climb

Cotton prices have taken a sharp turn upward in recent months due to world demand and a shortage of fiber in producing countries like Pakistan, China and India. The US exported 12 million bales and surplus US stock shrunk to one of the lowest levels ever of 3.3million bales. Global consumption increased by 1.17 million bales, bringing totals to 115.5 million bales. Based on these USDA figures world production will have to increase by as much as 12.8 million bales just to keep world stock levels from falling further. Pakistan alone imports about $800 million in cotton annually and Indias cotton crop suffered from a virus causing a 20% decline in output. The USDA predicts that ending stocks outside China will be no more than 33.8 million bales by the end of the season. This compares to 40.1 million a year ago and 42.2 million in 2007-08. Mills depend on these stocks in August, September and October to tie them over to new crop.

What does this mean to the US consumer? Increasing prices as our cotton supply is shipped overseas and as domestic mills pay more due to the tightening supplies. We may even see shortages leading to delayed deliveries.

Style Source Inc purchases cotton yarns and fabrics based on projected consumption levels. Customers can greatly aid the accuracy of these forecasts by providing their own forecasted needs to us to consider in our planning. Without projections, we can only guess at seasonal demand, and with us utilizing 8 yarn counts and 12 different base fabrics this becomes a complex act. Custom private label apparel manufacturing schedules cannot be built more than a few months out, as they are built solely on order placements in lieu of longer range forecasts.