Cotton Supply Down-Prices Up

There are some commodities in the world that we just take for granted until something happens to bring attention to them.  This time, the cotton market is in flux and effecting something we never really think about but wear almost every day.

Due to a number of circumstances, there is a world-wide cotton shortage which is driving up prices.

Apparel suppliers crank out millions of cotton garments a year – and right now they’re paying a premium because of it. Cotton prices have shot up to 90 cents per pound, whereas a year ago it would’ve cost about 60 cents, says Gary Adams, chief economist for the National Cotton Council. “These prices are the highest we’ve seen in the last 10 to 15 years,” he notes.

This industry is truly a global one.  The cotton in the custom logo embroidered shirt you are wearing right now could have easily been grown in China, India, Pakistan or the United States.  The U.S. grows about 20% of the world’s cotton.

Growers planted less cotton last year and drought and flooding in China and Pakistan, respectively, further cut production. In 2006, worldwide production was at 122 million bales. (One bale equals roughly 500 pounds.) In 2008, it was just 107.5 million bales, and last year, it was down to 102.5 million, according to the U.S. Department of Agriculture.

That production cut may not have had such an impact at first, but with demand for garments increasing, it’s more noticeable. “Demand recovered,” Adams says. “It’s exceeded production.” Growers in China, India and the U.S. – the world’s three biggest cotton producers – cut their cotton production in part because of the lesser demand for garment materials.

You may already have noticed the price for your favorite cotton items has probably gone up.  The large t-shirt manufacturers have raised their price on t-shirts this summer.  I would expect other cotton apparel suppliers to follow suit if this situation continues.

While some of our apparel prices have gone up, we at Thread Logic have decided not to pass that increase on to our customers at this time.  What we are hearing is this production shortage should correct itself soon.  The USDA predicts 116 million bales to be harvested this year.   With that increase we expect prices to return to previous levels within the near future.

So just in case you have noticed prices going up on your favorite cotton items, now you know why.

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