High cotton prices cause apparel costs to surge globally

Cotton prices around the world have been on the rise since the beginning of 2021 and have recently crossed the $1 per pound mark, the highest in this decade. The price rise can be attributed to the growing demand for apparel as countries recover from the COVID-19 pandemic due to rapid vaccinations, especially in the developed and developing countries.

Consistently rising shipping costs and the US ban on Xinjiang cotton are also major reasons for the unexpected surge in cotton prices, which has, in turn, caused the retail rates of cotton apparel and clothing to increase the world over.

In market year (MY) 2020-21 (August 2020 to July 2021), the world’s cotton production declined by 7.47 per cent to 24.47 million metric tons over the previous market year due to the pandemic, resulting in an erosion of cotton stocks around the world.

Cotton prices around the world have been on the rise since the beginning of 2021 and have recently crossed the $1 per pound mark, the highest in this decade. The price rise can be attributed to the growing demand for apparel as countries recover from the COVID-19 pandemic due to rapid vaccinations, especially in the developed and developing countries.

High production of cotton in countries like US, Australia and Argentina could also not offset the reduced production of cotton due to unfavourable weather conditions in India, Togo, Greece and Benin.

To add to it, increasing demand has boosted global trade and the consumption of cotton has been consistently rising in Pakistan, Bangladesh, Turkey and Brazil. Pakistan’s cotton imports have shown a tremendous rise in Q3 2021. In the current market year, the US, Australia and Turkey are expected to become the top three exporters of cotton.

The weekly average of Cotlook ‘A’ Index, representative of the level of offering prices on the international raw cotton market, went up by 1.79 per cent from $0.90 per pound in Q1 2021 to $0.92 per pound in Q2 2021, according to Fibre2Fashion’s market analysis tool TexPro.

In Q3 2021, the weekly average increased by 9.68 per cent to reach $1.01 per pound, the highest this decade.

Fibre2Fashion News Desk (KD)