Among the factors currently shaping cotton supply, including prices and production destinations, are regulations, retail demand and responsible farming. Two presentations at the United States Fashion Industry Association (USFIA) 2022 Apparel Importers Trade & Transportation Conference discussed the state of the global cotton market.
Lately, cotton prices are lower than in 2021, but prices are everywhere. “We continue to see volatility go up and down,” said Mark Messura, senior vice president, global supply chain marketing at Cotton Incorporated. “Just in November, we went from 89 cents to $1.04. So here in planning and sourcing raw materials, that’s what drives you crazy.
Cotton is grown in 77 countries, but three-quarters of the world’s supply comes from just five countries: Brazil, China, India, Pakistan and the United States. The crop is mainly produced in the northern hemisphere, with 90 percent of cotton farming following the same general schedule, with planting beginning in March and harvest beginning in September.
Messura pointed out that unlike synthetic fibers which can change production to meet demand in a given week or month, cotton mainly comes to market once a year and the yield is fixed. Supply and demand dictate the cost of cotton, with the stock-to-use ratio generally being inversely proportional to price movements. Currently, prices are higher than one would expect, since the inventory-to-use ratio is in the 70s, and Messura expects prices to fall if the ratio holds.
“Chinese yarn imports are falling, orders to manufacturers around the world are slowing, which will ease the demand for raw materials,” Messura said. “All things being equal, with the global crop already produced this fall, the slowdown in demand means less demand for a large supply, and that’s a recipe for fundamentally some price weakness.”
Just as the production of cotton fiber is concentrated, so is the manufacture of cotton clothing and textile products. In 2019, only nine countries were responsible for 90% of cotton apparel units imported into the United States, including China, Vietnam, Bangladesh, and CAFTA-DR countries.
As described by Sonja Chapman, director of international traffic and customs compliance at Golden Touch Imports, Inc. and associate professor in the Department of International Trade and Marketing at the Fashion Institute of Technology (FIT), China is not only the world’s largest producer of cotton lint, but it is also the largest importer of cotton and the largest exporter of cotton yarn and supplies fabrics to around 120 countries. The two major production centers that rely on cotton yarn are Bangladesh and Vietnam.
Cotton produced in China has come under greater scrutiny from 2020 amid reports of forced labor in the Xinjiang Uyghur Autonomous Region. Chapman noted that China’s export volumes have changed at the same time. “Although they had some ups and downs in their exports…in 2020, that has pretty much disappeared from the map,” she said.
China has maintained its position as the largest source of cotton apparel imports to the United States, and in a number of categories it produces at least twice as much as its closest competitor. Overall, Bangladesh has risen to second place over the past three years, and Vietnam is third in cotton garment imports.
Due to their material sourcing from China, Bangladesh and Vietnam could potentially expose brands to “unwanted” cotton. Recently, manufacturers in Pakistan, India and the Western Hemisphere have increased production in certain categories. For example, Pakistan has manufactured more units of coats, India has expanded its dresses and woven shirts, and the Western Hemisphere is expanding manufacturing of men’s pants and slacks. And in knit shirts, both for men and for boys, women and girls, there is a strong diversification of production, which, according to Chapman, almost resembles the era of quotas, because no country does not “own the market”.
“In 2019, after we saw the 301 sanctions put in place, the movement out of China was strong in areas of Bangladesh and Vietnam,” Chapman said. “But once we started with the suspension of release orders and the Forced Labor Prevention Act, we saw a different type of movement where Pakistan and India are emerging strongly.”
Cotton may be thousands of years old, but the methods used to grow it are constantly evolving.
Messura said the U.S. cotton market has shown steady progress in areas such as land use, soil loss, erosion and water use since Field to Market began collecting. those data. Sustainability is about “continuous improvement,” he said, and the industry is still working towards 10-year goals for 2025.
Precision farming, or using the minimum necessary inputs, helps to reduce excesses. For example, insecticides can be applied as a coating on seeds rather than sprayed on crops, taking a more targeted approach to pest control, and variable rate irrigation helps reduce water consumption. This tactic is necessary in part because the prices paid to farmers have remained stagnant over the past half-century. “In agriculture, the incentive is to use less, not more,” Messura said.
Companies can also reduce the environmental impact of product development through technology. Cotton Incorporated strives to make 3D design easier, including providing designers with digital cotton fabrics. Moving more of the development process to virtual tools streamlines sampling and reduces waste.
Cotton Incorporated also collaborates with Accelerating Circularity, an organization aiming to close the loop in fashion.
“Sustainability is not just what a farmer does,” Messura said. “She can do great things on her farm, but that’s also what happens in manufacturing and what happens in consumer use and product disposal, so it’s this whole cycle of life.”