U.S. cotton futures prices have continued to rise this year, and cotton T-shirts, denim clothing and other ready-made clothing products in the U.S. market are also facing rising price pressures. So what is causing the rise in U.S. cotton futures prices? How widespread is the impact?
Production of major cotton exporting countries declines
U.S. cotton futures prices run at high levels
Extreme weather such as droughts and hurricanes affect the harvests of major cotton exporting countries around the world , driven by this, U.S. cotton futures prices have increased by more than 44% since the beginning of this year, and are hovering at historical highs. In addition, supply chain disruptions are also one of the main factors pushing up cotton prices.
Founder mid-term futures cotton yarn researcher Bloomberg: The rise in global freight rates has also made the entire international freight rate detrimental to the transportation of cotton. Impact. The current pressure is that the cost of cotton has risen sharply, and downstream companies are under greater pressure.
According to recent reports from the US Consumer News and Business Channel, American consumers have already felt the impact of rising cotton prices. Since more than 90% of the raw materials for denim clothing are cotton, each pair of jeans requires about 1 kilogram of cotton material, accounting for about 20% of the cost. In order to resist the pressure brought by rising cotton prices, the manufacturer of the famous American jeans brand “Levi’s” said that the company has adjusted product pricing in advance. The National Retail Federation also stated that the unit price of cotton T-shirts in the U.S. market has increased by an average of US$1.50 to US$2.
Cotton costs are rising
my country’s clothing companies’ wholesale orders have declined
In the past year, the United States has become my country’s largest cotton importer. Imports account for more than 40% of the total. Fluctuations in U.S. cotton futures prices have also, to a certain extent, caused some domestic garment foreign trade companies to face cost pressures.
Mr. Kuang, who runs a sportswear processing company in Guangdong, told reporters that the price cost of cotton accounts for the overall fabric cost of sportswear. 30%-40% of the total cost of clothing is converted into ready-made clothing. Depending on the cotton content, it accounts for approximately 10%-20% of the total cost of clothing. Therefore, rising cotton prices will inevitably squeeze the profits of garment foreign trade companies.
However, some clothing foreign trade companies said that cotton only accounts for part of the raw materials for clothing, and the price of a single variety has increased. For the end consumer price The impact is relatively limited.
Yang Zhilong, Chairman of Fujian Longbida E-Commerce Co., Ltd.: The prices of some cotton, spandex, nylon, etc. are at the same time The rising cost of raw materials has put pressure on the entire textile and apparel industry. From a single perspective of cotton, it is difficult to deduce changes in terminal consumer prices.
Under the epidemic, production plans are forced to adjust and costs are rising. my country’s garment export companies are facing many challenges
CCTV Finance, duration 01:48
△CCTV Finance “On Point” Finance” column video
The rising cost of raw materials such as cotton is only one of the many challenges faced by garment foreign trade companies. During the interview, the reporter also learned that in the past year, the pressure on many garment companies in terms of labor costs and transportation costs has also increased significantly.
Mr. Cai is the person in charge of a fast fashion clothing processing company in Shenzhen, and its 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 China. Mr. Cai told reporters that although their orders are now relatively sufficient, the cost pressure is also great.
Cai Jingting, general manager of Guangdong Wangliduo Fashion (Shenzhen) Co., Ltd.: Relatively speaking, costs have increased, and employees’ wages have also increased. It has increased a lot, and there is also the appreciation of the RMB. The RMB has risen a lot from the beginning of the year to now, which is a great pressure on foreign trade. Adding everything together, the cost has actually increased by at least 30%.
Mr. Cai also said that the disruption to the global supply chain has also affected the clothing industry. In particular, factors such as congestion at ports and container shortages in many places will not only lead to a significant increase in transportation costs, but also extend the transportation cycle. Once delivery cannot be made on time, orders will be cancelled.risk.
Cai Jingting, general manager of Guangdong Wangliduo Fashion (Shenzhen) Co., Ltd.: Because making fashionable things, I can’t keep up with the time and the colors. If it’s not right and the season is wrong, the customer may cancel the order.
Mr. Cai is not the only one who has such troubles. Many garment foreign trade companies are under the pressure of rising transportation costs.
</p
