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Reprieve for retailers as cotton prices slump

Cotton prices have fallen sharply over the last months after mills stockpiled the material to guard against potential price rises, and more farmers started planting the crop in order to cash in.

The cost of Indian cotton has fallen 25% since mid-April, from 58,000 rupees (£796) to 44,000 rupees (£604) per 365 kilogrammes, whilst the prices of raw cotton and cotton yarn in Pakistan have slumped by around a third.

Cotton in the US has also fallen by around 18% from $1.84 (£1.14) to $1.51 (£0.94) a pound, according to reports.

The falling prices represent a reprieve for high street giants such as Next, Marks & Spencer and H&M and young fashion giant SuperGroup who have all said publicly that their margins have been severely squeezed by the rocketing price of raw materials.

However, cotton is still more than double the price it was a year ago, and is far from stable.

Drought and floods in different parts of the US are expected to affect the US cotton crop and retailers are still unsure about how much of the cotton price rises consumers will be prepared to absorb.  

Cotton prices spiralled over the last 12 months thanks to a poor cotton crop, flooding in Pakistan, and financiers trading cotton as a commodity. They hit a 15-year high in September last year and peaked even further in February.

Readers' comments (1)

  • I doubt very much whether this will make wholesale prices fall. In reality, prices will stabilise. Denim sales have fallen through the floor as some brands have used cotton prices as an excuse to pitch themselves too high with predictable consequences. That excuse cannot be used for Spring '12 orders as management continue to make their reps look like stooges.

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