I would like to commence this paper by highlighting the fact that cotton clothing prices have been increasing rapidly in US market, which adversely affect the consumer buying power and their clothing purchase decisions / consumption. …
Nevertheless, one of the major reasons behind these frequent price hikes is increase in global cotton demand by textile firms (after improvement in global economic outlook), which is not matched due to shortfalls in supply after reduction in global cotton production. The cotton (and yarn) prices at New York cotton market have been increasing due to this demand / supply imbalance that subsequently lead to increase in prices of finished products (readymade garments, unstitched cloth, towels etc.). It is worth mentioning that there are three major cotton growing nations / producers in the world namely Pakistan, India and China. The flooding in Pakistan followed by bad weather in China and India led to depletion of cotton crops. Consequently, the cumulative global production figures came down, while the demand side recorded strong recovery since this is considered as the beginning to the end-of-recession. The high demand then pushes prices upward in New York market, where prices of cotton futures have already touched record peaks. Indeed, the upward trend in prices started from July 2010 and over 80% increment was recorded till November 2010. ...
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