CCI warns of further cotton price increases
Increasing demand from emerging markets will keep the price of natural fibres high, the US-based Cotton Council International (CCI) has warned.
The comments from CCI came as the price of cotton jumped 13% to $1.65 a pound (0.45kg) in New York trading last week, largely driven by fears over a bad recent harvest in the southern states of the US.
Cotton prices are more than double last year’s prices and were blamed for a sharp fall in profits at the Swedish fashion retailer H&M last week.
Allen Terhaar, an executive director at CCI, said: “Will we continue to see deflation in apparel and home furnishings prices? Probably not. The consumer should not expect to depend on deflation in clothing as we have seen for many years.”
He described growing demand for clothes from countries such as China, India and Brazil as “very important” in the long-term upward trend for prices.
Mr Terhaar said: “The real generators of added demand are the emerging markets. Between now and 2025, we will have 20 million tonnes of added fibre demand, of which the US is expected to add just 0.5 million tonnes – whereas China and India are expected to add 14 to 15 million tonnes combined. This is through the combination of population and economic growth.”
A fresh reason for the rising of cotton prices is the recent bad weather in the US. In the southern states, severe floods near the Mississippi River in May were followed by a drought in Texas in June.
Mr Terhaar said: “In Texas, it has been the worst drought in 100 years. Despite a 12% increase in cotton acreage [in the US], production is likely to be down.” A US Department of Agriculture report due for release on 30 June is likely to show a larger-than-expected drop in cotton acreage.
