Global Cotton Prices Rise Rapidly

The global cotton prices have been rising steadily and steeply for the past two years. This rise in cotton prices has come as a result of a global shortage of stock of cotton. The shortage has occurred because of the commodity prices crashing after the financial crisis. Additionally, floods in Pakistan, India, and Australia has caused a huge decrease in the supply of cotton in the global market since these areas export large amounts of the global cotton stock. The increasing prices of cotton is great for cotton farmers in all markets, especially since traditionally cotton farmers don't see huge profit margins compared to other agricultural products. But this could spell trouble for textiles, and clothing manufacturers. As prices of inputs increase, the price of the final product is increased. Normally this wouldn't be a big deal, but in the economic condition we are in now, retailers cant afford the higher clothing prices, and the consumers cant handle the price inflation either. So in order to combat this inflation, clothing producers should introduce more substitute inputs into their clothing such as polyester until cotton supplies and demands meet a more steady equilibrium. This will cause a shift from cotton production towards fiber production within the local markets of cotton producers.