Posted by: brandextenders | October 13, 2010

What’s soft, comfy and getting more expensive?

You’d never guess by looking at it, but that soft, comfy T-shirt you love to wear on the weekends just got more expensive. The price of cotton is rising faster than a hot air balloon, which for the consumer means you can soon expect to pay more for apparel that’s made with cotton or a cotton-blend.

Cotton has been around since before written history with cotton bolls and bits of cotton cloth being found in Mexican caves that tests have shown to be 8,000 years old. Cotton, along with wool, was used to clothe people in ancient Egypt and China and has been cultivated in North America since the early 1600’s. Cotton along with tobacco was one of the main reasons slavery became so prolific in America as more and more was grown to meet the demands of an ever-expanding country.

The worldwide cotton industry is about $4.6 billion with China, India, the US and Pakistan the biggest players; in that order. The price for a pound of cotton has risen steadily over the last couple of years and futures prices now exceed $1 per pound for the first time since 1995. In a recent article in the Los Angeles Business Chronicle, Keith Brown, President of commodity futures trading firm Keith L. Brown & Co. in Moultrie, GA says the markets are scared there isn’t enough cotton to go around based on current demand projections. And he expects prices to continue to rise unless farmers worldwide increase production.

The reasons for this spike are a combination of challenges for the top four cotton-producing countries:

  • China, the world’s top cotton-producing country suffered a delay in planting this year due to bad weather.
  • The No. 2 producer, India, has stopped all exports of their cotton based on fears they won’t have enough for their own country.
  • In the U.S. many farmers have given up growing cotton and moved to more lucrative crops like peanuts.
  • And in the 4th largest cotton-producing country, Pakistan, massive floods earlier this year ruined much of that country’s crop.
  • Add to this the increased demand from the world’s largest countries, reduced stockpiles and the fact both wholesalers and retailers are reluctant to raise prices just yet and you have a “perfect storm” of factors sure to hit our pocketbooks soon.

The promotional products industry has already seen price increases twice this year on T-shirts and other apparel and we’re told to expect another increase at the end of this month and again the first of next year.

The bottom line is don’t be surprised when those “cheap” T-shirts aren’t so cheap anymore. Eventually the markets should adjust and production will catch up to demand, but for the foreseeable future expect increases of 5% or more on the apparel you purchase in the promotional products world as well as at the check-out stand of your local retailer.

The good news is all of this won’t affect the price of that delectable treat, cotton candy!!

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