Cotton Futures Price Will Affect The Market Volatility Of Clothing Enterprises

Since this year, the price of cotton futures in the United States has continued to rise, and cotton t-shirts, jeans and other clothing products in the U.S. market are also facing the pressure of price rise. So what are the reasons for the rise of cotton futures prices in the United States? How wide is the impact?

Domestic output of major cotton exports decreased, and the US cotton futures price was running at a high level

Drought, hurricane and other extreme weather affect the harvest of the world's major cotton exporting countries, driven by this, the cumulative increase of cotton futures prices in the United States has exceeded 44% since this year, and hovered at a historical high. In addition, supply chain disruption is also one of the main factors driving up cotton prices.

Founder medium term futures cotton yarn researcher Peng Bo: the rise of global freight also makes the whole international freight for cotton transportation, constitute an adverse impact. The pressure now lies in the sharp rise in the cost of cotton, and the pressure of downstream enterprises is relatively large.

According to the US consumer news and business channel reported recently, American consumers have felt the impact of cotton price rise. Since more than 90% of the raw material of jeans is cotton, each pair of jeans needs to use about 1 kg of cotton material, accounting for about 20% of the cost. In order to resist the pressure brought by the rise in cotton prices, the manufacturer of the famous American jeans brand "Levis" said that the enterprise had adjusted the product pricing in advance. The National Retail Federation also said the unit price of cotton t-shirts in the U.S. market rose by an average of $1.5 to $2.

Cotton cost goes up, China's clothing enterprises wholesale orders decline

In the past year, the United States has become China's leading cotton importer, accounting for more than 40% of the total. The fluctuation of cotton futures prices in the United States, to a certain extent, makes some domestic garment foreign trade enterprises face cost pressure.

Mr. Kuang, who runs a sportswear processing enterprise in Guangdong, told reporters that the price cost of cotton accounts for 30% - 40% of the overall fabric cost of sportswear. When converted into ready-made clothes, the proportion of cotton content in the total cost of clothing is about 10% - 20%. Therefore, cotton prices will inevitably squeeze the clothing foreign trade enterprises.

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

Yang Zhilong, chairman of Fujian longbida e-commerce Co., Ltd.: for example, the prices of some cotton fiber, spandex and polyamide fiber are rising at the same time, which is the pressure on the whole textile and garment industry to increase the cost of raw materials. From the perspective of single cotton, it is difficult to deduce the change of terminal consumer price.

The production plan was forced to adjust under the epidemic situation   Rising costs   China's garment export enterprises are facing many challenges

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

Mr. Cai is the person in charge of a fast fashion garment processing enterprise in Shenzhen. His products are mainly exported to the European market. Affected by the recent outbreak in Southeast Asia, he had to suspend production in Vietnam and transfer all orders to China. Mr. Cai told reporters that although their orders are sufficient now, the cost pressure is also great.

General manager of Guangdong wanglido fashion (Shenzhen) Co., Ltd   Cai Jingting: relatively speaking, the cost has increased, the wages of employees have also been raised a lot, and the appreciation of * * has increased a lot since the beginning of the year, which is a great pressure on foreign trade. In fact, the cost of all things has increased by at least 30%.

Cai also said the disruption of global supply chains also affected the clothing industry. In particular, many ports and terminals congestion, container shortage and other factors, not only lead to a substantial increase in transportation costs, transportation cycle will also be extended, once unable to deliver on time, the order will be cancelled.

General manager of Guangdong wanglido fashion (Shenzhen) Co., Ltd   Cai Jingting: because of the time, color and season of fashion products, customers may cancel their orders.
Not only Mr. Cai has such trouble, many clothing foreign trade enterprises are bearing the pressure of rising transportation costs.