The Rising Price of Cotton

 

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Letter to our customers

World Cotton Supply

Advice to Customers

Trends in Cotton Prices

 

CNN Money - Cotton Stortage = Pricey Tees and Jeans (Sept 2010)

 

Ash City Eye on Asia Update (May 2011)

2011 Cost Impact (April 2011)

 

 

 

Price Increase Announcements:

ACC

VF Imagewear

NES

Charles River

Sanmar

Otto Cap

Champion

Colorado Timberline

Heritage Sportswear

Alpha/Broder/NES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month Year

Maryland Athletic and Corporate Supply

 

 

In This Issue

Cotton Price Increases

 

Visit our website:

www.macsgear.com

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Dear Valued Customer: 

Please read below for important information on cotton price increases that have occured over the last year and will continue into 2011. 

It has always been the commitment of MACS to deliver quality products at fair prices. We have seen some of the standard items our customers purchase - such as tee shirts, sweats, polo shirts, etc. dramatically increase in pricing over this past year. 

   

 Here are the key elements of cause:
-China's vastly emerging middle class has created a new group of mass consumers who have now taken a great amount of the US cotton supply to China. China's own cotton production has also been weakened by weather and bad crop output.
-The Pakistan floods and overall bad crop have created more shortage in the global supply of raw cotton.
-Because of previously low pricing and profits - as well as the global recession, world cotton planting and production did not keep up with the growing demand.
-India's growing middle class consumption has limited exports from that country.
-The US government farm subsidies have motivated farmers to grow crops other than cotton for many years, and we must import far more than we can grow.

The global textile market continues to face an unprecedented rise in raw material cost - like no other we have seen in the past 140 years. Cotton is now the highest gaining commodity in the market, and prices have moved from $.45 per pound to $1.30 per pound in just two years.  The Chicago Sun Times reported recently that cotton pricing is now the highest in history, since records were kept from 1870

 

MACS has been absorbing the price increases on these goods for orders placed during this past year. The bottom line is that, as we place orders daily, our costs have been increasing from 35-50%. The current dynamics in today's cotton market will force us to pass along some of these price increases to our customers in the coming year. Our goal in communicating this is to assure you that we are committed to continuing to provide you with top quality goods at the most reasonable price available.
   

 

 

 

 

We are extremely thankful for our loyal customer base and understand the importance of our role in your business.  We look forward to serving your needs in 2011 and beyond as we work in partnership to grow your business.  Please feel free to call us if we can assist you in any way.

 

Thank you for your continued business,

 

Sincerely,

Jim Emery, Craig Hardin

Sandi Turner & Marion Hemerly

 

 


Maryland Athletic & Corporate Supply

10041 Culverene Road

Ellicott City, MD 21042

410-461-6227

macs@macsgear.com

 

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Information for Universal-UniLink Purchasing Association Members regarding the world's cotton supply: 

We received this letter from Azher Khan, President of Calderon Textiles, with updates about the cotton supply in the world market.  He asked us to pass along this information to you because cotton prices may affect your business.  Please read his letter below: 

August 25, 2010

Dear members of Universal Purchasing Association:

I wish to update you on the state of the world cotton market by sharing what I learned firsthand during my recent overseas trip.  Last Thursday I returned from a four-week trip to Bangladesh and Pakistan As you know Pakistan is currently suffering from disastrous flooding that resulted from monsoon rains.  Nearly 20 million people have been affected by the catastrophe.  One fifth of the country is still under water.  Needless to say the flooding will continue to pose enormous economic and health challenges for the people and government of Pakistan for quite some time.

Since the beginning of the monsoon season in mid-July, Pakistan 's cotton market has been particularly volatile and erratic.  Cotton market prices can swing as much as 10 percent from one day to the next.  My hope has been that the new harvest season would bring a reprieve from the historically high cotton prices of 2010.  Many speculated that prices would be driven downward by increased production (bumper crops) and through the replenishment of worldwide cotton inventories.  Unfortunately some of my optimism has been washed away by Pakistan 's flood waters.  New York cotton reached a five-week peak at $0.87/lb. on August 11th.  This can be attributed to the uncertainty about the cotton situation, especially the unknown potential damage to cotton in Pakistan

I have read many conflicting reports about the extent of the damage to the standing crop in Pakistan 's cotton growing region.   Pakistan was expected to harvest a bumper crop of 15 million bales (2.5 million more than the 2009/2010 year).  Some reports indicate the damage to be minimal, stating the loss to be 2 million bales.  However, other experts are reporting a loss of up to 40% (6 million bales).  Any damage exceeding 15% is likely to have an adverse effect on cotton prices.  We all must wait patiently for this uncertainty to fade.  The actual crop size will become known by late September when the monsoon season ends and the flood waters recede.

The U.S. is expected to harvest approximately 19 million bales (480 lbs./bale).  If so, the U.S. may export nearly 15 million bales.  India is expecting a bumper crop of about 34 million bales (375 lbs./bale), and may export up to 8 million bales.  This will help lower prices in India and other countries; however, the Indian government will set export prices from September 1st -- another reason to wait for good news.  The third largest cotton growing region is Central Asia These countries produce about 7 million bales (480 lbs./bale), and will export about 5 million bales.  The total export potential from the U.S. , India , and Central Asia is 28 million bales.  China , Pakistan , and Bangladesh are the potential buyers of this surplus.

Cotton Incorporated's most recent Monthly Economic Letter forecasts a 2.7% increase in global consumption over the 2009/10 crop year.   It also reports a 14.4% increase in world cotton production during the same period.  Yet, there will be a 4 million bale production shortfall in the 2010/11 crop year, the sixth consecutive year in which demand exceeds supply.  It will take some time for this demand and supply gap to close; again, we must be patient as we wait.

Especially during periods of uncertainty and market upheaval, Calderon employs several supply chain strategies to ensure supply to its customers.  For example, Calderon sources products from multiple countries, such as Pakistan , India , Bangladesh , and China so that its in-stock product availability remains high.  I am pleased to report that Calderon has maintained a fill rate of at least 97% each week thus far in 2010.  Calderon's overriding objective is maintaining supply for you as one of our valued customers.

I plan to depart for Pakistan again in early October.  While away I will continue to monitor this situation so that I can keep you informed of its developments.  I will report back to you upon my return with another update.  Please do not hesitate to contact me at 888-742-1998 ext. 107 in the meantime if I can answer any of your questions.

Regards,

M. Azher Khan

President & Founder

 

 

Dear Valued Customer,

We at MACS know how important it is to maintain the integrity of your overseas orders.  There have been many changes in the last few month, and there will be more based on the cotton and labor shortages.  These shortages will affect pricing, possible lead time, and quality of product.   I have some important information that every customer should read before placing orders overseas.

This information is not to alarm, but to inform.  It is business as usual at MACS. Please feel free to call with any questions.  We look forward to being your go to supplier for any products produced overseas.  Have a great day. 

     What's A Customer To Do?

Similar among all the industry suppliers we talked to, here's the advice they shared for getting your orders filled in the quickest and most efficient way possible:

1.  Stay in regular contact with suppliers so you're aware of inventory fluctuations.  Assuming that items are in stock and can be shipped in 24 hours isn't going to cut it anymore. 

2.  Order EARLY, and - if you know you place repeat orders – may I suggest you order more than you immediately need. MACS can hold the extra stock until you need it.

3.  Choose product options. If you love a certain style of bag, may we suggest two similar bags as a backup plan in case the first is in a holding pattern on a production line in a Chinese factory. 

4.  If you have an item you ordered just isn't going to make their in-hand date, consider offering a similar, though slightly more pricey, item to save the order - and more importantly, the relationship. Don't do this often, but do it when necessary.

In A Nutshell ...

Are you a customer that doesn't understand why inventory seems to be perpetually on back order and prices are rising? Here's a tutorial for you as to where the issues lie:

1.  A lack of workers. A survey by the Chinese government showed a 35% increase in vacancies posted by employers in the first quarter of 2010, but only an 8% increase in the number of applicants for those vacancies. The result is the tightest labor market in recent years.  

2.  An increase in wages. Economists say increased salaries for factory workers will ripple through the global marketplace, driving up prices of everything from T-shirts and sneakers to computer servers and smartphones.

3.  Fewer factories. When the worldwide recession hit, many factories in Asia closed. But, now that ad specialty sales are picking up, there simply aren't enough factories in China , specifically, to fill the orders. 

4.  A ship shortage. Freightliners and the containers they carry have been dry-docked over the past couple of years as orders have reduced. Now, when demand is picking up, there just aren't enough of them ready to set sail. Rather than taking a week, which is the norm, for products to be put on 6.  Ships from Asia to North America , it's now taking upwards of three weeks. 

5.  A dearth of cotton. Specifically impacting cotton-based apparel is the worldwide shortage of this product, and with yarns being more difficult to obtain, there are production delays and material cost increases everywhere. Add to that the labor issues in Asia, ranging from a 50% increase in wage rates mandated by Bangladesh to workplace labor shortages currently in China .

COUNSELOR

The Asia Effect
By Michele Bell
August 2010

 

 

October 28, 2010

Valued Customers,

Increased cotton and other raw materials costs have prompted industry suppliers Gildan, Hanes, Port & Company and Jerzees to announce price increases. These increases will range from 5% on basic t-shirts to 10% on sport shirts and fleece. These prices will be effective Monday, Nov. 1 and will be on www.sanmar.com.

Cotton prices are at record highs and we believe there will be more price increases in the coming months. We encourage our customers to be VERY conservative when holding prices for clients for long periods of time. We monitor yarn costs and supply daily and don’t see an end to rising costs in the next few months. It is truly an unprecedented time in global manufacturing and sourcing.

See below for a snapshot on cotton pricing that illustrates what is driving these price increases. The more knowledge we all have, the better we will be at working with end users during this period of rising costs. We appreciate your continued support. Our Customer Care Center is available at 800.426.6399 to answer your questions.

Best,

Marty Lott, President

 

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ACC

ACC Logo

January 11th, 2011

Year 2010 was unprecedented in our industry. Cotton prices rose dramatically due to a combination of ecological disasters, political unrest and rising demand. Due to this, Atlantic Coast Cotton has received price increase notices from manufacturers. Specifically, tee prices have risen in cost about 9%, fleece around 7% and polos around 5%.

Atlantic Coast Cotton has been able to absorb some of this increase, due to average costs of on-hand inventory. However, the reality of the marketplace has forced us to begin to raise our prices, as we receive new inventories.

Please remember that in spite of this, ACC always tries to offer the lowest possible prices. We can still quote large orders based on average inventory costs, and we will not raise our EQP pricing unless absolutely necessary. We appreciate your business, and we want to provide you with the highest quality products at the lowest costs.
This increase affects the entire chain: manufacturers, wholesalers, remanufacturers, end users.
Also be assured that any price increases we are forced to make are reflective of the cost increases at the raw materials source, and nothing else. We feel the pinch as much as anyone else in our marketplace, and we apologize for any inconvenience this may cause. All we can do is tighten our belts and try to soften the impact on you, the customer, any way that we can.
If you have any questions or concerns, please do not hesitate to call us.  Thank you for your understanding and your continued business.
Sincerely,

Your friends at ACC

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March 29, 2011

Atlantic Coast Cotton has once again received price increase notice from manufacturers. We have been able to absorbe some on these costs, due to average cost of on hand inventory. However the reality of the marketplace will force us to begin raising prices again as we receive new inventory.

Please remember! In spite of this ACC will always be able to offer the lowest possible prices...

We appreciate your business and want to provide you with the highest quality products at the lowest cost.

Also be assured that any price increases we are forced to make are reflective of the cost increase at the raw material source and nothing else...

Sincerely,

Your friends at ACC

 

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NES

Dear Valued Customer,

Due to recent price increases from our major trade mills, NES will implement new pricing on trade mill products on Monday, January 17, 2011. The price increases will generally range from 7-10%. Retail and private label brands will not be part of this price increase.

At NES, we always value your business and thank you for your continued support. If you have any questions, please call customer service or e-mail a member of your sales support team.

Sincerely,

The Customer Support Team at NES

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Charles River

IMPORTANT PRICE NOTIFICATION

 

Dear Valued Customers:

 

As you have most likely heard, textile costs both in the U.S. and overseas are extremely volatile right now. Materials, especially cotton, are fluctuating at unheard of prices. Charles River Apparel held the majority of our prices throughout 2010 and we even went ahead and published our 2011 price sheet on September 1st of this year. However, due to the extreme price increases from our fabric vendors and factories we have no choice but to increase our prices overall effective December 31, 2010.

 

Textile mills as well as garment manufacturers are reeling from these dramatic price increases. I advise all our customers to be careful when extending prices – from any supplier – to your customers right now in order to protect your own businesses. We have provided a new online price sheet with our updated pricing at http://www.cramkt.com/netpricelist123110.pdf. Please use only this pricing going forward.

 

At this time we will not be printing a new 2011 price sheet as we hope that prices will stabilize or decrease over the first quarter of 2011. Our new prices are effective December 31, 2010.

 

As always, I am personally available to each of you, as is the rest of the Crew at Charles River Apparel.

 

Sincerely,

 

Barry Lipsett
President & Owner
Charles River Apparel

Sanmar

 

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January 10, 2010

Valued Customers,

We have recently received a price increase from Gildan and are committed to providing you with as much upfront notice as possible. Gildan has communicated that these price changes are due to the continued increase in cotton, yarn and other input costs. A copy of their letter to us is as follows::

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January 7, 2011

Dear Valued Customer,

Due to the rapidly increasing cost of raw materials especially cotton, Gilan Activewear is announcing a price increase that will take effect immediately, January 7, 2011.

Please note that back-orders with a requested ship date prior to today will be honored at the previous pricing. All new orders will attract the increased pricing.

As always, we thank you for your continued support of Gildan Activewear.

 


While the announcement and price increase takes immediate effect, our Gildan prices, mandated by their minimum advertised price, will not increase until at least January 24, 2011.

While we regret to inform you of the Gildan price increase, it is likely that other mill suppliers will follow with similar price changes in the near future. The average Gildan price increase is approximately 7-10% and a detailed price list will soon be available on www.sanmar.com. In an effort to communicate as quickly as possible, we realize we do not have complete information at this time and will continue to update you as we receive further details.

We appreciate your continued support. Our Customer Care Center is available at 800.426.6399 to answer any questions you may have.

Best ,

 

 

Marty Lott, President

 

OttoCap

Champion

 

Colorado Timberline

Colorado Timberline

Heritage 

Heritage Sportswear, Inc.

Price Increase Notification

 

 

 

Dear Valued Customer,

 

Our mill partners, Anvil, Gildan and Hanes, have once again increased their prices, resulting in price increases to you, our customers.  Effective Monday, November 8, t-shirt prices will increase by 5% while other categories of apparel will reflect increases up to 10%.  Please take advantage of our weekly email sales to keep your projects on time and under budget.

 

Our customer service team is available 7am to 7pm EST, Monday through Friday to answer any questions you may have or assist with orders.  If you do not receive our email sales, call and get added to our database today. 

 

We appreciate your support  and your patronage. 

 

Sincerely,

 

The Heritage Sportswear, Inc. Team

 

 

Brand Logos

 

 

 

 

 

 

 

 

Dear Valued Customer,

Due to recent price increases from our mills, Alpha, Broder and NES will implement new pricing on mill T-shirts, sport shirts, fleece and all other apparel categories. T-shirt price increases will generally range from 4-6%. Sport shirt, fleece and other apparel category pricing will increase up to 10%. New pricing will go into effect on Monday, November 1, 2010. Retail and private label brands will not be part of this price increase.

At Alpha, Broder and NES, we always value your business and thank you for your continued support. If you have any questions, please call customer service or e-mail a member of your sales support team.

Sincerely,

The Customer Support Team at Alpha, Broder and NES