Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

Cotton’s October Price Rise Not Expected to Last

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

After dropping by more than 6 percent in September, cotton prices stabilized and actually rose a bit in October, according to the U.S. Department of Agriculture. The seven-market U.S. average cotton spot price increased by almost $0.02 to $0.635 per pound during the month.

However, lower futures prices indicate that the increase is not expected to continue for long. Though demand for cotton apparel–outside of the sluggish U.S. and European markets, that is– is actually quite healthy, there still remains tremendous downward price pressure from a worldwide oversupply of the fiber.

China, the biggest supplier of the world’s apparel and its largest user of cotton, has begun to release large portions of fiber reserves accumulated during the buying program it implemented to support prices. In September, the Chinese government stopped buying cotton from farmers for national reserves. Later in the month it detailed plans for a direct subsidy to farmers, and announced that it would reduce cotton import quotas considerably to stimulate demand for domestic fiber.

The U.S., the world’s biggest cotton exporter, is expected to produce a 16.3 million bale crop in the new season that began in August, slightly below prior estimates. The USDA has increased crop size forecasts for China and India by 1 million bales each to approximately 30.5 and 31 million bales, respectively.

The USDA also revised upward its estimate for global mill use by 1.6 million bales to 113.7 million bales, which will put the amount of cotton remaining in warehouses worldwide at the end of the season at an all-time high of 107.1 million bales, further contributing to the growing worldwide glut of the fiber.

cotton

 

Related Articles

More from our brands

Access exclusive content Become a Member Today!