Focus On The Market: Cotton Prices Continue To Rise, The Pressure Of Downstream Enterprises

 

So what are the reasons for the rise of cotton futures prices in the United States? How wide is the impact?

 

The domestic output of main cotton exports decreased, and the US cotton futures price was running at a high level.

 

Drought, hurricane and other extreme weather affect the harvest of the world's major cotton exporting countries, driven by this, the cumulative increase of cotton futures prices in the United States has exceeded 44% since this year, and hovered at a historical high. In addition, supply chain disruption is also one of the main factors driving up cotton prices.

 

The rise of global freight also makes the whole international freight for cotton transportation, constitute a negative impact. The pressure now lies in the sharp rise in the cost of cotton, and the pressure of downstream enterprises is relatively large.

 

According to the US consumer news and business channel reported recently, American consumers have felt the impact of cotton price rise. Since more than 90% of the raw material of jeans is cotton, each pair of jeans needs to use about 1 kg of cotton material, accounting for about 20% of the cost. In order to resist the pressure brought by the rise in cotton prices, the manufacturer of the famous American jeans brand "Levis" said that the enterprise had adjusted the product pricing in advance. The National Retail Federation also said the unit price of cotton t-shirts in the U.S. market rose by an average of $1.5 to $2.

 

Cotton costs go up, China's clothing enterprises wholesale orders decline.

 

In the past year, the United States has become China's leading cotton importer, accounting for more than 40% of the total. The fluctuation of cotton futures prices in the United States, to a certain extent, makes some domestic garment foreign trade enterprises face cost pressure.

 

The price cost of cotton accounts for 30% - 40% of the overall fabric cost of sportswear. When converted into ready-made clothes, the proportion of cotton content in the total cost of clothing is about 10% - 20%. Therefore, the rise in cotton prices will certainly squeeze the profits of clothing foreign trade enterprises.

 

However, some clothing foreign trade enterprises said that cotton only accounts for a part of clothing raw materials, and the price rise of a single variety has a relatively limited impact on the terminal consumer price.

 

For example, the price of some cotton fiber, spandex, nylon and so on is rising at the same time, which is the pressure of raw material cost rising for the whole textile and garment industry. From the perspective of single cotton, it is difficult to deduce the change of terminal consumer price.