Impressions - January 2011 - (Page 38)

HOW UNIQUE CIRCUMSTANCES HAVE ALIGNED TO HELP BRING A SPIKE IN COTTON PRICES THAT WILL AFFECT EVERYTHING MADE OF OUR FAVORITE FIBER. By Christopher Bernat and Jackson Burnett, Contributing Writers The Cotton Crunch Editor’s Note: The authors’ intention in writing this article is to offer a snapshot of many of the factors affecting cotton prices as of press time in Nov. 2010. A definitive forecast for what will happen in 2011 is difficult to assess because of the rapidly changing economic and societal climate. w buying power also have changed, becoming more intense. The biggest change may be the “new” factors that are affecting how cotton prices are determined. Commodity investing, tight global supplies and the need to maintain cotton for local manufacturing all affect price. e all know and love cotton. The fabric of our lives is a part of virtually every human being’s wardrobe. Basically, cotton has been around forever — it was first cultivated more than 7,000 years ago. For nearly as long, people have been building economic systems around cotton. These economic systems, designed to extract profit from cotton, have changed over time. For example, at the height of British colonialism in India, England created a massive industrial revolution, in part, around Indian cotton. Through a system of tariffs and fees, the British enacted a cotton-based economic engine that built enormous wealth and political stability in England for decades. Through transportation, navigation, mills and sewing houses, the final product was sent back to India and the rest of the world to sell. Over time this model showed itself to be non-competitive. New models were built to better serve the market. Today is no different. While the rules of cotton pricing and distribution have changed, the desire to extract profit from it has not. The countries involved have changed slightly but demand and CAUSE FOR CONCERN As of press time, cotton prices have risen 56% in the past 90 days and 101% year to date, according to The Wall Street Journal. And Business Recorder reported that Pakistan, the fourth-largest producer of cotton, had more than 30% of its cotton crop destroyed by floods. This disaster will impact its productivity for several years to come. Thus, Pakistan is being forced to import 3 million bales of cotton to contend with local manufacturing demand. Bad crops from Southeast Asia to western Arizona have combined to increase concerns about supply. These are only the headlines of the story. There are several other long-term factors combining to create real pressure on cotton prices to cause the most dramatic cost increase since Reconstruction. Cotton consumption is at 1997 levels — the highest on record — and cotton supply has been flat since 2005. As of Nov. 1, 2010, 85% of the U.S. cotton crop had been sold when typically only 30% is spoken for by that date each year (author’s research). China’s demand for cotton is insatiable and that demand, in part, is export driven. The country now is the leading producer 38 Impressions >> January 2011

Table of Contents for the Digital Edition of Impressions - January 2011

Impressions - January 2011
First Impressions
ISS Show Focus
Winning Decorators Focus on Intricate Details
Special Report: The Cotton Crunch
T-Shirts Still an Industry Staple
Worthwhile Projects for the Slower Months
For Screen Printers Only
Use Sublimation to Create High-Value Photo Gifts
Online Directory
Business To Business
Ad Index

Impressions - January 2011