Cotton pushed up prices of textiles
August 23, 2010 – 8:52 amThe world cotton prices soaring and, faced with this increase, the entire chain of textile and clothing who cares. Last month, the U.S. firm of Levi's has warned its customers: "We have already decided to increase prices for the second half of this year." An ad that does not delight consumers and that may precede many of others. The Swedish manufacturer of clothing and H & M admits that "if things continue this way, this should lead to inflationary pressures."
Firstly, it is mostly entry-level brands, whose margins are tighter, which may review their pricing policy. In the medium and high-end, the flexibility is more important.Nicolas Dreyfus, director of development at Kooples, also explains that "providers defray a portion of the increased cost of raw cotton. And if David Leslie Freche, CFO of Loft, said he was not "worried because of the brand positioning, it is still concerned about" upward pressure on commodity markets. " A view shared by Francesco Maria Grau, secretary general of the French Federation of fashion, which does not hide his concern: "For now, the brands have opted not to pass on price increases on their products . But until when will they? "
Two or three years still difficult
This last month that the price of cotton has engaged its sharp rise.It went from 73 cents in mid-July to 83 cents a pound in August (one bale of cotton weighs 485,000 pounds, 220 kg on average, Ed). The value of the raw material has reached a record high since 1995 no fax payday advances.
It was recent weather disasters that have added to market nervousness. The terrible floods in Pakistan and the recent landslides in China have destroyed much of the world, including these two countries account for 40%, depending on CyclOpe. The storms have pushed the production of 8% and 10% Pakistani Chinese. Consequence: when the production of the northern hemisphere matures in November, it should be less than 10% to 15% anticipated demand. "70% of U.S. crops are already sold," said one trader.The courses are already feeling it: some fear a shortage or that the offer is insufficient to meet current contracts. The situation might be even more tense as the production has been falling for two years. Because of the low prices in previous seasons, prompting producers to convert. Cultivated areas have declined by about 25% and "50% of operators have disappeared in 2008, says even a trader.
Some product lines provided in the textile industry might not see the day. That, to protect stocks son. In fact, "reserves have been eroded in recent years," said one broker who specializes in the area. Blame it on poor anticipation of events. "We were wrong," says a French producer. Missing 4-5000000 bales of cotton for the stocks are in equilibrium.Manufacturers and market experts cotton agree that it will take two or three years of production before the market lost some of his nervousness.
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