Cotton Prices Hit Two-Year High After Bad Weather, Chinese Import Bans
Cotton prices have hit a two-year high after dry weather affected crops and concerns grow over products sourced from forced labor in China.
According to The Wall Street Journal, the U.S. Department of Agriculture expects the smallest domestic cotton yield in five years. One farmer in Texas, the top cotton-producing state in the U.S., told WSJ that drought has reduced his cotton harvest by about a third this year.
“We’ve been in a bad cycle here for several years now,” he said.
Conversely, other parts of Texas hit by Hurricane Hanna in July saw their cotton yields affected by flooding.
In addition to the problems in the U.S., the apparel sector is still dealing with the Trump Administration's move to ban cotton and cotton products from one of China’s top exporters due to allegations of forced labor in Xinjiang, an area home to the country’s oppressed Muslim Uighur minority.
Xinjiang produces 85 percent of China’s cotton output. Globally, China makes up 40 percent of the world’s textile exports and 30 percent of its clothing exports.
This all comes at an inconvenient time, as the COVID-19 vaccine rollout has retailers optimistic that people will return to stores in higher numbers once lockdowns and in-person shopping limitations subside.
One positive here is the possibility of U.S. cotton production getting a boost due to the bans on overseas product sourced unethically. Peter Egli, director of risk management for Plexus Cotton Ltd., told WSJ that China has had to look elsewhere for cotton to supplement its own supply, and that U.S. farms could solve that issue.