Short-staple cotton prices hurt denim industry worldwide

Wednesday 08th of February 2012 03:10:30 PM

In India, the production of short-staple cotton, particularly in Gujarat, is predicted to fall following unfavourable weather conditions. India is second only to China in cotton agriculture, but may have to import short-staple cotton in 2012/13 as the predicted harvest in key regions such as Gujarat, Maharashtra and Andhra Pradesh could be as low as half that of previous years.

An extended monsoon season harmed the planting of cotton and some seasonal fluctuation in temperature also seems likely to limit productivity.

Short-staple cotton is the key natural fibre for denim and it’s a distressing scenario for a country that has become more used to creating denim clothing for a national marketplace in recent years, after a long period when denim manufacture was entirely for export markets. Well established denim manufacturers such as Aarvee Denims & Exports Ltd and Alok Industries are already said to be negotiating for short-staple cotton from Pakistan.

In America, Levi Strauss & Co has reported a 49% fourth quarter profit slide, largely resulting from increasing short-staple cotton costs. The rising raw material cost has been somewhat balanced by a revenue increase from $1.29 billion to $1.34 billion for the company. But raw material costs have hurt the retailer’s margin and a tax break earlier in the financial year didn’t offset the entire price increase which Levis could not then counter by increasing purchase price in a weak consumer market.

Amrita Malik

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