Cotton Price Hike affects Textile Industry 11/3/2010

Cotton futures on the New York Stock Exchange have reached an all-time high; the highest that the NYSE has seen since the start of cotton trading 140 years ago. China, the world’s largest buyer of cotton is experiencing this shortage firsthand. Chinese manufacturers, who use 40% of the world’s cotton, have said to be considered endangered, according to a report published in yesterday’s Bloomberg BusinessWeek.

Why the price increase?

China’s vast size and agricultural strength still cannot keep up with their demands, and hasn’t been able to for some 12 years now. Hence, China has been importing from other countries, further decreasing the global stockpile, driving prices up. Weather also plays a factor, as a cold spell has slowed harvesting and stunted production in China this October. The global supply is forecast to be at a 14 year low. Asia’s stockpile is at a 16 year low.

Interesting Fact! The U.S. has sold almost 26 times more cotton to China compared to last year, thus far.

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