Among the factors currently shaping cotton sourcing—including prices and production destinations—regulation, retail demand, and responsible farming. Two presentations at the 2022 US Apparel Importers and Transportation (USFIA) Conference discussed the state of the global cotton market.
Lately, the price of cotton has been lower than it was in 2021, but prices are all over the place. “We continue to see volatility up and down,” said Mark Misora, senior vice president of global supply chain marketing at Cotton Incorporated. “Just in the month of November, we went from 89 cents to $1.04. So here in raw material planning and sourcing, these are the things that drive 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 mostly produced in the Northern Hemisphere, with 90 percent of cotton growing following the same general schedule, with planting beginning in March and harvesting in September.
Misora pointed out that unlike synthetic fibers which can change production to suit the demand in a given week or month, cotton mostly comes on the market once a year and the yield is fixed. Supply and demand determine the cost of cotton, with the stock-to-utilization ratio inversely proportional to price movement. Currently, prices are higher than expected, given the inventory-to-use ratio is in the 70s, and Messura expects prices to drop if the ratio remains.
“Chinese yarn imports are declining, and orders to manufacturers around the world are slowing — that should ease demand for raw materials,” Misora said. “All other things being equal, with the global crop already in production this fall, slower demand means less demand for large supplies, and that’s a basic recipe for some price weakness.”
Just as the production of cotton fibers is concentrated, so is the manufacture of cotton clothing and textile products. As of 2019, just nine countries were responsible for 90 percent of the cotton apparel units imported into the United States—including China, Vietnam, Bangladesh, and the CAFTA-DR nations.
As described by Sonya Chapman, Director of International Traffic and Customs Compliance, Golden Touch Imports, Inc. And an assistant professor in the Department of International Trade and Marketing at the Fashion Institute of Technology (FIT), China is not only the largest producer in the world. of cotton fibres, but it is also the largest importer of cotton and the main exporter of cotton yarn, supplying fabrics to about 120 countries. Two major production centers based on cotton yarn are Bangladesh and Vietnam.
Cotton produced in China has come under increased scrutiny starting in 2020 amid reports of forced labor in the Xinjiang Uyghur Autonomous Region. Chapman noted that China’s export volume has changed at the same time. “Although they’ve seen some ebbs and flows in their exports … in 2020, it’s basically gone off the map,” she said.
China has retained its position as the main source of imports of cotton apparel to the United States, and in a number of categories produces at least twice as much as its nearest competitor. Overall, Bangladesh rose to second place over the past three years, and Vietnam ranked third in terms of imports of cotton garments.
Because of the China-based sourcing of the material, Bangladesh and Vietnam can display “junk” cotton trademarks. Recently, manufacturers in Pakistan, India and the Western Hemisphere have been increasing production in certain categories. For example, Pakistan has produced more units of coats, India has increased its woven dresses and shirts, and the Western Hemisphere is expanding the manufacture of men’s trousers and long trousers. And in knit shirts — for both men and boys, women and girls — there’s a strong diversity of production, which Chapman said is almost like quota time where no one country “owns the market.”
“In 2019, after we saw the imposition of 301 sanctions, the transition from China to the Bangladesh and Vietnam regions was in a strong way,” Chapman said. “But once we started with the withholding orders and the Forced Labor Prevention Act, we saw a different kind of movement with Pakistan and India coming out strongly.”
Cotton may be thousands of years old, but the methods used to grow the crop are constantly evolving.
Misora said the US cotton market has shown steady developments in areas such as land use, soil loss, erosion and water use since Field to Market began collecting this data. Sustainability is about “continuous improvement,” he said, and the industry is still working toward 10-year goals for 2025.
Precision farming, or using the minimum amount of inputs needed, helps reduce excess. For example, insecticides can be applied as a coating on seeds rather than sprayed on crops, with a more targeted approach to pest control, and variable irrigation allowing for a lower water application rate. This tactic is required in part because the prices paid to farmers have stagnated for the past half century. “In agriculture, the incentive is to use less, not more,” Misora said.
Companies can also reduce the environmental impact associated with product development through technology. Cotton Incorporated helps make 3D design easy, including providing designers with digital cotton fabrics. Taking more of the development process to virtual instruments simplifies sampling and reduces waste.
Cotton Incorporated is also partnering with Accelerating Circularity, an organization whose goal is to close the loop on fashion.
“Sustainability is not just what the farmer does,” Misora 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 the whole life cycle.”