Cotton futures prices continue to rise

Since the beginning of this year, U.S. cotton futures prices have continued to rise, and apparel products such as cotton T-shirts and denim garments in the U.S. market are also facing price increases. So what caused the US cotton futures price to rise? How wide is the impact?

Production of major cotton exporting countries declines, and US cotton futures prices run at a high level

Extreme weather such as droughts and hurricanes has affected the harvests of major cotton exporting countries in the world. Propelled by this, the cumulative increase in US cotton futures prices has exceeded 44% this year and is hovering at historical highs. In addition, the supply chain is blocked is also one of the main factors pushing up cotton prices.

Founder mid-term futures cotton cotton yarn researcher Bloomberg: The high global freight rate has also made the entire international freight rate have an adverse effect on the transportation of cotton. The current pressure is that the cost of cotton has risen sharply, and downstream enterprises are under greater pressure.

According to a recent report by the US Consumer News and Business Channel, American consumers have already felt the impact of cotton prices. Since more than 90% of the raw material of denim clothing is cotton, each pair of jeans needs to use about 1 kg of cotton material, which accounts for about 20% of the cost. In order to withstand the pressure of rising cotton prices, the producer of the well-known American jeans brand "Levi's" stated that the company has adjusted its product pricing in advance. The National Retail Federation of the United States also said that the average price of cotton T-shirts in the US market rose by US$1.5 to US$2.

The cost of cotton has risen, and the wholesale orders of China's apparel companies have fallen

In the past year, the United States has become China's most important cotton importer, with imports accounting for more than 40% of the total. The volatility of US cotton futures prices has also put some domestic garment foreign trade companies under cost pressures to a certain extent.

Mr. Kwong, who runs a sportswear processing company in Guangdong, told reporters that the price of cotton accounts for 30%-40% of the overall cost of sportswear fabrics. When converted into ready-to-wear garments, according to the cotton content, it accounts for the proportion of the total cost of clothing. About 10%-20%. Therefore, rising cotton prices will inevitably squeeze the profits of garment foreign trade enterprises.

However, some clothing foreign trade companies said that cotton only accounts for a part of clothing raw materials, and the price increase of a single variety has a relatively limited impact on terminal consumer prices.

Yang Zhilong, Chairman of Fujian Longbida Electronic Commerce Co., Ltd.: The prices of cotton, spandex, nylon, etc., have risen at the same time, which has put pressure on the entire textile and apparel industry to increase the cost of raw materials. From a single cotton perspective, it is difficult to deduce the changes in terminal consumer prices.

Under the epidemic situation, production plans have to be adjusted, cotton costs have risen, and Chinese garment export companies are facing many challenges

The rising cost of raw materials such as cotton is just one of the many challenges faced by garment foreign trade companies. The reporter also learned in the interview that in the past year, many apparel companies have significantly increased the pressure on labor costs and transportation costs.

Mr. Cai is the head of a fast fashion garment processing company in Shenzhen, whose products are mainly exported to the European market. Affected by the recent intensification of the epidemic in Southeast Asia, his factory in Vietnam had to suspend production and transfer all orders to the country. Mr. Cai told reporters that although their orders are relatively sufficient now, the cost pressure is also great.

Cai Jingting, General Manager of Guangdong Wangliduo Fashion (Shenzhen) Co., Ltd.: Relatively speaking, the cost has increased, and the wages of employees have also increased a lot. There is also the appreciation of the renminbi. The renminbi has risen a lot since the beginning of the year. A lot of pressure, all things added up, in fact, the cost has increased by at least 30%.

Mr. Cai also said that the global supply chain has also affected the apparel industry. In particular, the congestion of many ports and the shortage of containers have not only caused a significant increase in transportation costs, but also extended the transportation cycle. Once the delivery cannot be made on time, it will face the risk of order cancellation.

Cai Jingting, General Manager of Guangdong Wangliduo Fashion (Shenzhen) Co., Ltd.: Because making fashionable things, the time is not up to date, the colors are not right, and the season is not right, customers may cancel orders.

Mr. Cai is not the only one who has such troubles, many garment foreign trade companies are under the pressure of rising transportation costs.