Apparel industry mobilizes against cotton rally

Cotton has soared more than 70% this year and hit a record

price last month, and that goes for synthetics, too: Rising oil prices and demand have boosted the cost of polyester around 25%. Reached this point, manufacturers have warned for months that a global cotton shortage, exacerbated by speculation buying, would cause prices to skyrocket and result in retail price rises of up to 15 percent by late 2010 or early 2011.

According to experts, main reasons behind cotton going sky-high are rising demand from China, India and other developing countries, along with supply shortages because crops were wiped out by the massive flooding in Pakistan and heavy rains in China. Rain also hurt the Texas crop, a big contributor to the U.S. role as the world's largest cotton exporter.

But also other fibres are going through troubled waters. From Modal to viscose, expect more fibre blends and synthetic fabrics on clothing store shelves next year as cotton prices continue their unrelenting rise.

Facing such a uphill scenario, textile trade associations from 10 developing countries in the Western Hemisphere have sent a joint letter to ask their respective governments to take action to halt cotton trade restrictions by the Government of India. These groups, which represent more than 2.5 million textile and apparel workers from Colombia, Brazil, Peru, Nicaragua, Honduras, El Salvador, Costa Rica, El Salvador y Guatemala have joined with trade associations from four other countries and regions that in late October petitioned their governments to take similar action. In all, the groups represent nearly four million textile and apparel workers responsible for $110 billion in textile and apparel exports in 2008.

They cited an illegal pattern of export restraints on cotton that the Indian government has imposed since April. The Indian restraints have contributed to an enormous increase in the price of cotton for non-Indian textile producers around the globe. The letter, dated Nov. 18, 2010, states that since India began its export restrictions in April 2010, the price of cotton has increased by 126 percent, from 62 cents per pound to $1.40 per pound. "The differential is clearly designed to allow India to grab market share in textiles and apparel during a time of reduced worldwide supply of cotton. According to analysis of India's cotton consumption and production data, India is withholding between 1.5 [million] and 3.5 million bales of cotton from the export market in order to benefit its domestic industry."

In a first warning movement, Hanesbrands, Jones Group and VF Corp. Announced that will boost prices by up to 10% because supplies are short. Despite the sluggish economy and high unemployment, apparel makers see an opportunity to pass along costs to consumers, who are showing signs of renewed shopping. Following data from MasterCard, "spending on women's apparel rose a healthy 5.3% in October, the first positive result since March, reflecting 'healthy' price increases."