On 7 October, World Cotton Day was celebrated, proclaimed by the United Nations General Assembly (UNGA) from 30 August 2021.
The celebration of World Cotton Day provides an opportunity to recognize the historical importance of cotton as a global commodity grown in more than 75 countries (5 continents) and to highlight the key role it plays in creating jobs and maintaining economic stability. According to the International Cotton Advisory Committee, annual cotton revenues are estimated at $41.2 billion, while the value of cotton trade amounts to $18 billion each year.
However, while recognizing the key role cotton plays in several countries, and its economic and social effects, it is remarkable that cotton prices have reached their highest level in 10 years. Droughts and heat waves have wiped out cotton harvests in the United States, the world’s leading cotton exporter and in India the monsoon season threatens the country’s cotton production. Therefore, one of the factors that is influencing the increase in cotton prices is extreme weather.
“Most-active U.S. cotton futures trading on the Intercontinental Exhange closed Tuesday up 3.8% at $1.09 a pound, keeping prices at their highest level since September 2011. Prices have risen 22% over the past 11 sessions” as noted by the Wall Street Journal, 5 October 2021.
Moreover, demand for cotton has increased, especially in China. In December 2020, the United States banned companies from importing cotton and other cotton products from the western Chinese region of Xinjiang (China’s largest cotton-producing area) because of concerns that the Uyghur ethnic group produced it through forced labor. This situation has forced Chinese companies to buy cotton from the United States and manufacture the products in China to sell them back to the United States and other markets.
According to the U.S. Department of Agriculture, China’s cotton consumption in the current season is expected to be 8.9 million metric tons. This is a 24% increase over the last two seasons, driven in part by increased demand for consumer goods in the wake of the pandemic.
However, rising cotton prices are not the only major concern facing apparel brands. Last month, for example, Nike said it had lost 10 weeks of production since mid-July due to factory closures in Vietnam and Indonesia. This, coupled with transit times that have nearly doubled from pre-pandemic levels, has led executives to warn that demand is likely to outstrip supply over the next few quarters.
This pressure on the different parts of the production chain could lead to an increase in clothing prices.
You can access the UNGA resolution of 30 August 2021 declaring 7 October each year as World Cotton Day, at the proposal of Benin, Burkina Faso, Chad, Côte d’ Ivoire and Mali at the following link.