Blog: Leonie BarrieRecord inventories weigh on cotton prices

Leonie Barrie | 14 May 2012

International cotton prices for July delivery fell to a low of 77.16 cents a pound last week after a US government report forecast record inventories for the second season in a row. While prices subsequently rebounded, they are still sitting at around one-third of the cotton price peak reached in March last year.

Data from the US Department of Agriculture (USDA) suggested ending stocks would rise 10% to 73.75m bales in the 2012/13 season, which begins on 1 August.

Inter-governmental group the International Cotton Advisory Council (ICAC) also said the projected accumulation of cotton stocks in China will weigh on international cotton prices in 2012/13 - but the extent of this downward pressure will largely depend on how the Chinese national reserve is handled.

Supermarket fashion brand George at Asda, a unit of retail giant Wal-Mart Stores, is working to "dial up" its fashion credentials this year with shorter lead times following its acquisition of the sourcing arm of its Turkish supplier GAAT. The retailer has already cut its lead times to six to eight weeks, but hopes to speed this to four.

And Sainsbury's says its clothing business is growing faster than its food business and "continues to gain market share," helped by store expansions and the addition of more non-food lines. The retailer's Tu brand is the UK's seventh-largest clothing brand by volume, and sixth for children's wear. The comments came as the UK's third largest grocer reported a 7.1% increase in annual underlying profits to reach GBP712m (US$1.15bn).

A call for collaboration between retailers and their suppliers has come from Henry Tan, the CEO of Hong Kong's largest listed garment firm Luen Thai Holdings. Speaking with just-style managing editor Leonie Barrie at the recent Prime Source Forum in Hong Kong, he also discussed the push into new production bases and the changing role of China.

And signs are emerging that Mexico's textile and apparel industry is reclaiming a growing proportion of the US market as it benefits from an increasing focus on higher-value products and greater diversification.


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