Cotton Market Goes Crazy

The latest headline in Textile World magazine says "The cotton market goes crazy". I would call it insane. Prices on yarn quoted to me last week are up yet another 15%. Prices from 2 months ago are up nearly 35%. I received a quotation from a mill on a cotton fabric two days ago with a bold statement "Quotation good for two days only". I placed the order today, and the mill owner begged me to allow him another $.12 a yard, as the price had gone up in the past day. I held him to his quotation, and he is now modifying his disclaimer to read "quotation good for the day of quotation only.

I'm not sure where the deflation concerns are coming from, as yesterday I received price increase notifications that UPS will raise rates 4.7% next year and our snap supplier just raised prices 6.5%. On the sewing side, cotton thread is experiencing the same issues as yarns.

Experts are stating that world supply will be 3 million bales short this year. China is the main concern, for they are consuming at an expansive rate and if they heat up further pressures will be that much greater. The article also states that prices have not been higher since 1870, when civil war caused blockades in the north and cotton could not get through. A weakened dollar rounds out the picture of misery.

I cannot urge you strongly enough to anticipate first quarter needs and attempt to provide us with forecasts. We cannot invest all of our working capital on speculation inventories, as we handle so many fabrics and programs we would never be able to cover everyone. Open a conversation with us so we may work through how best to position you for the first quarter of next year.