Staying Balanced in an Unbalanced Textile Market

Monday, June 11, 2012


There’s been lots of contradictory reporting on recent fluctuations in the price of global cotton. Some media outlets predict that the global crop will be smaller this year, as low prices carried over from last year have scared farmers into planting crops other than cotton. By restricting supply, these observers fear that lower supplies of cotton will eventually translate into higher prices -- mill demand will eventually increase beyond current levels. On the other hand, some media pundits suggest that low prices will continue to be the norm for the foreseeable future. A better crop in Texas will add to growing global stocks -- contribute to unsold cotton globally --and will keep supply much higher than demand from textile mills, something many pundits fear will remain anemic.
To be honest, when the news media issues conflicting reports, I get concerned. It suggests no one really knows what’s going on. But I’m not the only one who’s concerned these days – mills buyers of cotton are fretting over a seemingly unstable global market for cotton. What’s a buyer of cotton supposed to do?
In light of the uncertainty in the market, I thought I would share a presentation I made in India earlier this year. I was fortunate enough to speak at this year’s Asian Textile Conference (ATEXCON), an annual event sponsored by the Confederation of Indian Textile Industry (CITI) in Mumbai on March 5-6. It was held in conjunction with our India Kingpins denim show.
The topic of my presentation was “Staying Balanced in an Unbalanced Market,” an effort on my part to say that although a “crystal ball” may exist somewhere to help you to anticipate swings in the market, finding such providential guidance is hard to come by. No one can predict the future with 100% certainty -- despite what your favorite economist or cotton trader may say. On the contrary, what’s much easier to find is a sense of balance in times when the market is unbalanced, when no one seems to know what the future may hold. By developing a sense of balance when the market is unsettled, I suggest a strategy whereby flexibility remains foremost in your planning. Be prepared to make shifts in your sourcing strategy as more empirical data about the market become available. For example, keep an eye on upcoming USDA supply and demand reports to stay abreast on current estimates of the global cotton situation. Such reports and additional analysis are made available via our friends at EmergingTextiles.com.
If you are interested in the presentation, please feel free to download a copy HERE.

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