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Why Higher Cotton Prices Come with Some Positives (Really!)

Cotton pricing depends on various factors, including basic supply and demand. Due to pandemic pressures, the market has experienced volatility as circumstances changed rapidly. Although Supima and other extra-long staple cottons are unique in the market, these premium fibers have also been riding a pricing rollercoaster.

“Extra-long staple cottons in general have a bit more variability around the marketplace, depending on the origin and their availability,” said Marc Lewkowitz, President and CEO of Supima, the American Pima cotton organization. Recently, the price for Supima has surged to $3.50 a pound from just $1.34 per pound at the end of 2020.

During a recent Fireside Chat with Sourcing Journal founder and President Edward Hertzman, Lewkowitz explained that Supima’s supply has declined over the last several seasons. Last year saw recent record low production of 330,000 bales, and while this coming year the crop is expected to rebound to maybe 400,000 bales, it is still just half of the 800,000 figure from four years ago.

For brands, higher prices are not necessarily a bad thing. Lewkowitz noted that volatility is substantially more of a challenge for sourcing. He views an opportunity for stability and a “normal sourcing platform” due to more consistent—yet higher—prices. “It won’t be the same because you won’t have the same efficiencies, which means costs will have to be higher, but you’ll be able to have more of a regular process for sourcing,” he said.

Raw material procurement might be getting more expensive, but so is cotton growing. Costs tied to labor, chemicals and equipment have all gone up.

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Across the supply chain, costs are also rising as companies work to meet sustainability demands. They are also investing to boost efficiency at the spinning, textile, and garment manufacturing stages, such as adding automation and robotics for production. “All of these things are going to provide advantages, but they’re going to take time to facilitate those economies of scale that often lead to a bit of price reduction,” said Lewkowitz.

Another thing changing in material sourcing is brands’ desire and demand to know the origin of cotton, including the location where fibers were grown and the practices used by the grower. “Brands are willing to take the time and energy to have a better insight and better understanding of who they are working with and where that cotton is coming from,” said Lewkowitz. “They want to get back to knowing who that grower is.”

To help retailers gain the details they need, Supima has been working with Oritain on forensic traceability. This is an added value and industry first in real authentication as brands look to speak about sustainability to the end consumer.

“One of the biggest challenges in terms of sustainability and authenticity is there’s not much that you can say unless you can prove the origin,” said Lewkowitz. “In partnership with our brands and retailers, we have this great circular conversation of continual education, diving a little bit deeper into the sourcing data to help validate their products to position them as the most responsible and the most authentic product that’s in the marketplace.”

Click the image above to watch the video and learn more about cotton pricing and Supima’s authenticity difference. And join Sourcing Journal for our Sustainability Summit: The Road to 2030 on June 1 to hear Marc Lewkowitz discuss cotton myths.