Raw material prices continue to offer a good news-bad news scenario.

Prices continue to show little strength, helping to keep costs down but not allowing for pricing power down the pipeline.

After rising throughout July, benchmark prices for cotton were either flat or lower in the first half of August.

Values for the December New York futures contract climbed to levels over 75 cents per pound in early August, but have since retreated to values below 71 cents per pound.

The A Index followed a nearly identical pattern, with values climbing above 85 cents per pound in early August and then decreasing to levels below 82 cents per pound.

The U.S. Department of Agriculture’s report for the week ended Aug. 11 said spot prices averaged 72.06 cents per pound, down from 72.75 cents a week earlier, but up from 60.92 cents reported the corresponding period a year ago.

After rising steadily throughout most of July, the China Cotton Index also declined slightly in August. In international terms, values climbed as high $1.05 a pound in late July. Recent values have been holding at levels near $1.01 a pound.

Similar slight decreases have been seen in India and Pakistan.

“A series of developments contributed to changes in price direction in different markets over the past month,” Cotton Incorporated said in its August report. “For New York futures and the A Index, the most apparent influence appears to have been the weather. Hot and dry conditions have ruled over most of the U.S. cotton belt for much of the past month. In West Texas, where U.S. planted acres are concentrated and where there is virtually no irrigation, there were concerns about yield. In the second week of August, a series of storms passed through West Texas and brought needed moisture to thirsty crops. New York futures traded down the three cent limit the day after the first set of storms passed through and this month’s increase to the U.S. production forecast has maintained downward pressures.”

The weather has also been a factor affecting Indian prices. With a late onset of the monsoon, there was concern that Indian acres would be driven lower and that yields might suffer. In recent weeks, rains arrived in key growing areas and cotton planting accelerated, the report noted.

The depressed cotton prices have resulted in mixed results for fabric firms and apparel manufacturers heavily seeded in cotton use.

International Textile Group, in reporting a 6.9 percent increase in gross profit to $24.9 million in the second quarter, said profits were helped by lower raw material and energy costs. But the company, which owns Cone Denim and Burlington Worldwide, also cited lower selling prices in denim due to lower cotton prices as contributing to a 5.7 percent decreases in consolidated net sales to $148.4 million.

Gildan Activewear, which saw net income in the second quarter for the quarter fall 4.7 percent to $94.7 million, on sales that decreased 3.5 percent to $688.9 million, said gross margins were up 26.9 basis points in the first half “primarily due to lower raw material and other input costs, and manufacturing cost savings, which more than offset lower net selling prices.”

The same could probably be said for polyester, where staple prices have fallen to about 85 cents per pound last month from $1 per pound a year ago, while filament prices are now about 95.5 cents a pound versus $1.08 in July 2015.

The U.S. Labor Department ‘s Synthetic Fiber Producer Price index fell to 118.7 in July from 119 in June and 121.7 a year earlier.

Men’s and women’s apparel prices rose in July, while overall apparel prices remained flat, largely due to a sharp decline in girls’ apparel prices, the U.S. Labor Department’s Consumer Price Index showed Tuesday.

“I don’t think the apparel industry has a ton of pricing power,” said Ryan Sweet, director of real-time economics at Moody’s Analytics.

Despite some strength in men’s and women’s apparel prices, the “trend in apparel prices is still very, weak,” Sweet said.

In cotton, this month’s U.S. Department of Agriculture report lowered world crop estimates by one million bales for the 2015-16 crop season to 96.9 million bales and decreased its outlook for the 2016-17 season to 101.6 million bales from 102.5 million. The global mill-use figure for the new 2016-17 crop year was reduced 331,000 bales to 111.3 million from 111.6 million.

The cumulative effect of these updates resulted in a 1.7 million bale reduction to the projection for world ending stocks in 2016-17 to 89.6 million bales from 91.3 million.

Cotton Inc.’s report states that with a global stocks-to-use ratio of 80.5 percent, “there is still a lot of cotton in the world, but the process of working off the excess built up in the wake of the 2010-11 price spike has made progress.” That historic spike saw cotton prices rise above $2 per pound.

Cotton Inc. said the latest figures indicate that stocks at the end of the 2016-17 crop year will be 22.5 million bales lower than they were at the end of the 2014-15 season, which could improve the supply-demand ration and strengthen prices down the road.

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