Among the factors currently shaping cotton sourcing—including pricing and production destinations—are regulations, retail demand and responsible agriculture. Two presentations at the United States Fashion Industry Association (USFIA) 2022 Apparel Importers Trade & Transportation Conference discussed the state of the global cotton market.
Lately, cotton pricing is lower than in 2021, but prices are all over the place. “We continue to see volatility up and down,” said Mark Messura, senior vice president, global supply chain marketing at Cotton Incorporated. “Just in the month of November, we went from 89 cents to $1.04. So here in raw material planning and sourcing, this is the stuff that drives you nuts.”
Cotton is grown in 77 countries, but three-quarters of the global supply comes from just five nations: Brazil, China, India, Pakistan and the United States. The crop is mostly produced in the Northern Hemisphere, with 90 percent of cotton agriculture following the same general time schedule, with planting starting in March and harvesting beginning in September.
Messura pointed out that unlike manmade fibers that can alter production to fit demand in a given week or month, cotton mostly comes on the market once a year and the yield is set. Supply and demand dictate the cost of cotton, with the stocks-to-use ratio typically inversely proportional to price movement. Currently, prices are higher than would be expected, since the stocks-to-use ratio is in the 70s, and Messura anticipates that prices will drop if the ratio remains.
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“Chinese yarn imports are backing off, orders to manufacturers worldwide are slowing down—that’s going to ease demand for raw material,” Messura said. “All other things being equal, with the world crop already produced this fall, slowing down demand means less demand for a big supply, and that’s a recipe for fundamentally some weakness in price.”
Import insights
Just as the production of cotton fiber is concentrated, so too is the manufacturing of cotton garments and textile products. As of 2019, just nine countries were responsible for 90 percent of cotton apparel units imported to the U.S.—including China, Vietnam, Bangladesh and CAFTA-DR nations.
As Sonja Chapman, director of international traffic and customs compliance, Golden Touch Imports, Inc. and associate professor in the Department of International Trade and Marketing at the Fashion Institute of Technology (FIT), described it, China is not only the world’s largest producer of cotton fiber, but it is also the biggest importer of cotton and the leading exporter of cotton yarn and supplies fabrics to around 120 countries. Two major producing hubs that count on cotton yarn are Bangladesh and Vietnam.
Cotton produced in China came under more scrutiny starting in 2020 amid reports of forced labor in the nation’s Xinjiang Uyghur Autonomous Region. Chapman noted China’s export volumes shifted at the same time. “While they’ve had some ebbs and flows in their exports…in 2020, it basically fell off the map,” she said.
China has retained its position as the leading source of cotton apparel imports to the U.S., and in a number of categories it produces at least twice as much as its closest competitor country. Overall, Bangladesh has risen to second place over the last three years, and Vietnam is third for cotton apparel imports.
Due to their China-based material sourcing, Bangladesh and Vietnam could potentially expose brands to “undesirable” cotton. Recently, Pakistan, India and Western Hemisphere manufacturers have grown production in certain categories. For instance, Pakistan has made more coat units, India has grown its dresses and woven shirts, and the Western Hemisphere is expanding men’s trouser and slack manufacturing. And in knit shirts—both for men and boys and women and girls—there is a strong diversification of production, which Chapman said almost resembles the time of quotas since no single country is “owning the market.”
“In 2019, after we saw the 301 sanctions set in, the move out of China was into the areas of Bangladesh and Vietnam in a strong way,” Chapman said. “But once we started with the withhold release orders and the Forced Labor Prevention Act, we saw a different type of movement where Pakistan and India are emerging strongly.”
Sustainability solutions
Cotton may be thousands of years old, but the methods being used to cultivate the crop are constantly evolving.
Messura said that the U.S. cotton market has shown consistent advancements in areas like land use, soil loss, erosion and water use since Field to Market began gathering this data. Sustainability is about “continuous improvement,” he said, and the industry is still working toward 10-year targets for 2025.
Precision agriculture, or using the minimal inputs necessary, is helping to reduce excess. For instance, insecticides can be applied as a coating on seeds rather than sprayed on crops, taking a more targeted approach to pest control, and variable rate irrigation allows for less water use. This tactic is needed in part because prices paid to farmers have stayed stagnant in the last half century. “In agriculture, the incentive is to use less, not more,” Messura said.
Companies can also reduce the eco impact tied to product development through technology. Cotton Incorporated is working to help facilitate 3D design, including providing designers with digital cotton fabrics. Taking more of the development process to virtual tools streamlines sampling and cuts down on waste.
Cotton Incorporated is also collaborating with Accelerating Circularity, an organization aimed at closing the loop in fashion.
“Sustainability is not simply what a farmer does,” Messura said. “She can do great things on her farm, but it’s also what happens in manufacturing and what happens in consumer use and product disposal, so it’s that whole life cycle.”