NEW YORK — The U.S. cotton industry has been battered by the global recession and faces a tough road to recovery without a significant spike in consumer spending.
U.S. farmers have seen the incentives to plant American cotton dwindle in recent years, as a consistent global oversupply helped keep prices low. That situation has only been exacerbated by the drastic pullback in consumer spending, which resulted from the global economic downturn. According to WWD’s monthly fiber price sheet, the price for a pound of cotton reached 71.82 cents in February 2008, but fell to around 37 cents a pound by November 2008. Prices have since rebounded to between 55 cents and 60 cents last month, but aren’t high enough to encourage farmers to commit to cotton.
According to the United States Department of Agriculture’s National Agricultural Statistics Service, 8.9 million acres of cotton were planted this year, down 40.4 percent from a high of 14.9 million acres planted in 2006. Production has fallen by more than 44 percent to an estimated 13.7 million 480-lb. bales from 23.3 million bales in 2005.
“The biggest reason for that is not so much about what’s happening with cotton as much as it’s got to do with what’s happening with other crops,” said J. Berrye Worsham, president and chief executive officer of Cotton Inc.
In addition to falling global demand, Worsham noted cotton has faced stiff competition for farmers’ attention from two other crops over the last five years. Corn, led by skyrocketing demand for ethanol, was the first to make a dent.
“The price of corn went off the charts, and we lost acres to corn,” said Worsham.
No sooner had corn prices stabilized than the price of soy beans began to rise. The average price for a bushel of soybeans was $6.43 in 2006, according to the USDA. Today, a bushel fetches closer to $10.
“Cotton’s prices haven’t come up nearly to the point that would be attractive compared to some of these,” said Worsham.
Despite the turn to higher profit crops, cotton supply continues to outpace demand by a significant margin. In mid-August, the USDA put the supply of U.S. cotton at 19.3 million bales, while demand was expected to be 13.7 million bales. In comparison, demand for U.S. cotton stood at 23.4 million bales in 2005.
The picture is similar for the global cotton industry. The USDA said that as of August, the global cotton supply stands at 167.7 million bales, while consumption is expected to be 112.8 million bales.
Worsham said cotton demand in the U.S. has been down around 10 percent this year compared with a traditional growth rate of between two percent and three percent.
“A 10 percent reduction is massive by historical standards,” acknowledged Worsham.
While prices have rebounded and small signs of broader global economic stability are beginning to appear, the contraction in cotton is unlikely to reverse itself rapidly. Farmers who’ve left cotton behind aren’t likely to return to the crop unless assured of the potential for decent profits.
Aside from that, Worsham noted many of those farmers made significant investments in equipment and other infrastructure when they shifted to farming corn or soybeans. They’re unlikely to turn their backs on those investments after such a short amount of time. Worsham added that if production continues to stay low, more cotton ginning operations will also be forced to close, removing another level of infrastructure in the process.
“Another three or four years of this and there could be a significant problem,” he said.
Robert Antoshak, president of FC Stone Fibers & Textiles, a commodity risk management and consulting services firm, believes there is good news in the kind of U.S. cotton being sold for export.
“What’s telling is that there really has been a shift in quality being shipped overseas,” said Antoshak. Mills in India and China have sought better qualities, and U.S. growers have been in a position to satisfy those needs. “What’s happened over the last five years is a shift into longer-staple, higher quality upland cotton.”
Antoshak believes U.S. cotton growers stand to benefit by positioning themselves as the world’s supplier of higher quality product. He also believes some farmers have not gotten the return they expected with corn and, as a result, may reconsider cotton.
“I’m a little more optimistic because I think this is better because the crop is better than it had been,” he said.
Still, Antoshak doesn’t see the U.S. cotton market returning to producing the more than 20 million bales it did prior to 2007.
“I see it coming back up, but I don’t see it hitting those numbers,” he said.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)