Cotton Prices Are Soaring
We assure you, there is absolutely zero spin in this story.
Cotton, the fluffy fiber that has been cultivated by humans for over 5,000 years, is on a tear.
Since falling to a low of 48 cents per pound in April, cotton futures have soared nearly 60% to roughly 80 cents per pound.
Weaving The Cotton Story
Texas is, by far, the largest producer of cotton in the U.S. But this year growers have been contending with a variety of headwinds.
- In West Texas, growers have suffered through a drought that has cut yield dramatically.
- In East Texas, excess rainfall from hurricanes has damaged much of the crop.
The Net Net: The U.S. Department of Agriculture expects the smallest domestic crop in five years.
On top of the poor supply from the U.S., demand is rising overseas. In December the Trump administration banned cotton and cotton imports from China’s top producer, the Xinjiang Production and Construction Corp. (which accounts for 85% of China’s total cotton output)
As a result, clothing manufacturers which source cotton and yarn from China are being forced to source elsewhere, including from the U.S.
The Numbers: China has committed to buying 4.1 million bales of U.S. cotton during the current marketing year, which began in August. That is 50% more than China bought from U.S. farmers before the two nations signed their “phase-one” trade deal in January 2020.
The Takeaway: Should your wardrobe need an upgrade in 2021, be mindful threads may be more expensive than you’re accustomed to.