The cost of T-shirts and jeans could get more expensive after cotton prices hit a 10-year high last week as extreme weather devastated the United States’ cotton crops.
The commodity’s price is up a whopping 22 percent in the past week.
Cotton futures spiked four percent to $1.09 – the highest its been since September 2011, according to CNN Business.
This time last year cotton was about 65 cents per pound, according to data by Nasdaq. The higher prices could increase clothing costs – which were already on the rise after a combination of the pandemic and extreme weather – and trickle down to consumers.
The cost of T-shirts and jeans could get more expensive as cotton prices have hit a 10-year high because extreme weather has wiped out the United States’ cotton crops
This time last year cotton was about 65 cents per pound, according to data by Nasdaq (pictured). It’s currently at $1.09 per pound
Clothing prices rose 4.2 percent over the course of 12 months, which ended in August.
According to the government inflation report, price increases were greatest for men’s shirts and sweaters, which rose 4.4 percent; men’s pants and shorts, which were up 6.6 percent, and women’s dresses, which increased 11.9 percent.
The commodity has skyrocketed in price mainly because droughts and heat waves have wiped out cotton crops across America – the world’s leading cotton exporter, according to CNN Business.
Peter Egli, the Chicago-based director for Plexus Cotton Ltd., called the situation ‘a classic short squeeze,’ according to Bloomberg, while Robert Yawger, the director of energy features at Mizuho Securities, attributed the price spikes to ‘a shortage situation’.
‘The planting season did not go well,’ Yawger said.
Last year’s weather didn’t help. In October, 2020 Hurricane Zeta, which was classified as a Category 2 storm, rolled through Alabama and left cotton fields in ruin.
According to the US Department of Agriculture’s Crop Progress and Condition Report, about 60 percent of cotton crops were ripped from fields.
Clothing prices rose 4.2 per cent over the course of 12 months, which ended in August
According to the government inflation report, price increases were greatest for men’s shirts and sweaters, which rose 4.4 per cent; men’s pants and shorts, which were up 6.6 per cent; and women’s dresses, which increased 11.9 per cent
‘For those who do still have a salvageable crop, the quality and yield will be much lower than anticipated before Zeta. It’s devastating, especially for our farmers in Alabama’s Black Belt and coastal counties,’ said Carla Hornady, Alabama Farmers Federation Cotton; Soybean; and Wheat & Feed Grain divisions director.
According to WSFA, Monroe County Farmer Federation President Joe Jordan had planned to start picking his 494 acres worth of cotton in the first week of November – just days before the storm hit.
Jordan said of what Zeta left behind: ‘If you drove past the field the day before, it was just completely white with cotton. When we drove by Thursday morning, all you could see were brown stalks.
‘All the cotton has been knocked off the ground. It’s pretty rough.’
A month earlier, in September 2020, Florida farmers in Okaloosa County took a hard and expensive hit to the year’s cotton crop after Hurricane Sally’s high-speed winds and more than 20 inches of rain.
Robert Yawger (pictured), the director of energy features at Mizuho Securities, attributed the price spikes to ‘a shortage situation’. ‘The planting season did not go well,’ he added
The storm’s damage was about a $1million loss, as reported by the NWF Daily News, and also washed away nutrients that farmers rely on for their crops to grow and thrive.
Farmer Nick Marshall, who runs his farm with his father, told the news station that out of ‘any of the cotton that was open, a good 50 per cent is on the ground’.
China has been requesting a high demand of cotton, too, which CNN Business attributed to the US trade policy implemented by the Trump administration in December 2020.
Last year, the Trump administration blocked US companies from importing cotton and cotton products originating in China’s western Xinjiang region because of forced labor in the foreign country.
The penalties of the policy have stayed in place after Biden took office and CNN Business analysts reported that as a result, some Chinese companies have started to buy US-grown cotton.
Those companies will then make goods with that cotton and sell the products back to the United States and other markets around the world.