Aug 24, 2010
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Cotton prices could induce increased clothing prices

Aug 24, 2010

Flooding disasters in North Eastern China and Pakistan have pushed the price of cotton to rocket up in recent weeks; clothing costs first affected.

Accounting for more than a third of world production, manufacturing in China and Pakistan has dropped by 10 and 8% respectively. In one month, one pound of cotton has increased from $0.1 to $0.83 (US dollar cents); its highest level for fifteen years. While some professionals fear a supply shortage of the commodity, India seems to be the first country benefitting from this price rise.

According to Reuters, floods have destroyed over 4.25 million acres, affecting an estimated 25 percent of the cotton crop. Pakistan would need to buy two to three million bales of cotton from its neighbouring country in order to fulfill its autumn contracts. This is a real turnaround considering that India, the second largest exporter of cotton, suspended its exports in May to support its own clothing industry. Coupled with record harvests in the United States, according to local professionals, sales resuming again abroad could allow the price of cotton to stabilise.

Will the rise in commodity prices impact on clothing prices? Some manufacturers already have their answer. Levi Strauss & Co has indicated a price increase planned for 2010’s second half, as has Hanebrand, owner of underwear brands Hanes and Wonderbra. Label H & M, naturally more exposed like all lower-priced range brands, told French newspaper Le Figaro that if this trend does not change, “inflationary pressures will be induced."

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