Will rising cotton prices affect the clothing market in 2022?

Summary of the report

Global raw cotton prices almost doubled between April 2020 and November 2021, after a period of decline resulting from mill closures and lower retail demand resulting from social distancing measures put in place to combat the spread of COVID-19.

The rise can be attributed in part to ongoing trade tensions with China and the U.S. ban on importing cotton grown in Xinjiang province, China, in response to claims that Uyghur Muslims are being victimized. serious human rights violations. Despite rising raw cotton prices, U.S. apparel import prices declined in 2021. However, towards the end of 2021, there were indications that import prices were beginning to rise and this is expected to continue into 2022. In October 2021 alone, for example, US import prices rose relative to all of 2020 in the case of yarns and apparel, and rose sharply in the case of cotton textiles and clothing.

A key question is why the price of cotton rose at that time, given that demand in 2020 was weak with economies locked in, and in 2021 the industry was affected by supply issues. shipping. However, government stimulus programs were pumping money into economies around the world and setting the stage for inflation to creep into supply chains. Additionally, China bought more American cotton in 2021 than in 2020 to meet the needs of mills seeking to avoid using cotton from Xinjiang.

Additionally, demand for apparel grew in 2021, as did apparel imports into the United States. Granted, the rising cost of cotton for, say, a pair of jeans is small compared to their wholesale price. But each stage of the supply chain – spinning, weaving and knitting – will try to add a little more to the prices they charge for their products, which will cause a cumulative increase in costs for clothing companies.

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Publisher: Textile Intelligence

“Editorial: Will rising cotton prices affect the clothing market in 2022?”

4 pages, published in December 2021

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About William G. Patrick

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