Cotton Seen Growing After Meeting Challenges

The U.S. cotton industry is preparing for continued difficulties — from pricing pressures to environmental concerns — as the weak economy takes...

View Slideshow

Mark Messura

Photo By WWD Staff

MEMPHIS — The U.S. cotton industry is preparing for continued difficulties — from pricing pressures to environmental concerns — as the weak economy takes a toll on consumer spending.

Despite the near-term woes, however, industry experts believe global population growth will ultimately fuel demand and lead to a return to growth.

"The outlook in the fiber part of the supply chain is strength," said Mark Messura, vice president of Cotton Incorporated's global product supply chain, speaking at the organization's 21st annual EFS System Conference. "Certainly, there are a series of questions in the short term...but longer term we're looking at reduction of global stocks. I believe we will continue to see an increase in global consumption of cotton and over time we're going to build some strength in the fundamentals."

More than 180 farmers, ginners, researchers and scientists gathered here last week to discuss the state of the cotton market and how to ensure the future viability of the domestic industry. EFS, or Engineered Fiber Selection, is a software package introduced in 1982 that allows qualities of a cotton bale to be quickly analyzed and evaluated, allowing for the production of a more uniform product.

According to Messura, a large part of the cost reductions that apparel manufacturers have gained by moving sourcing to China have already been realized.

"The easy gains of shifting sourcing to China are starting to disappear," he said.

In order to maintain low production costs, manufacturers have continued to shift their operations to countries like Cambodia, Vietnam, Pakistan and Bangladesh. Those low-cost sourcing options are likely running out.

There is also further opportunity for cotton prices to increase. Messura noted that yarn prices have gone up about 14 percent since 2007, while cotton prices have increased 21 percent. Not all price hikes have been passed along to yarn manufacturers, so if demand stays strong there will be further pressure to increase prices.

Until macroeconomic pressures build and restore fundamental strength, the cotton and apparel industries are facing considerable challenges. Average prices for key cotton products have not changed significantly between 2007 and 2008. Messura presented data from NPD Fashionworld's AccuPanel that indicated the average price of jeans was $27 in 2007 and 2008. Slacks maintained an average price of $23. The only major categories posting gains were woven shirts and dresses, and those saw increases of only $1.
View Slideshow
Page:  Next »
load comments


Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.
News from WWD

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

getIsArchiveOnly= hasAccess=false hasArchiveAccess=false