Cotton futures exceeded $1 a pound (1 kilogram ≈ 2.2 pounds) for the first time in nearly a decade as adverse weather and shipping problems threaten supplies, driving up costs for clothing around the world, the Bloomberg financial information agency reported on Tuesday.
The cotton crops in several key-growing countries are seeing problems such as rain-drenched fields in the U.S., the world’s largest cotton exporter. At the same time, cotton buyers need more of the fiber. Mexico and China are buying record amounts. Also causing trouble for supplies are high freight rates and geopolitics.
In New York exchange, the contract for December delivery climbed as much as 3.6% to $1.0155 a pound, the highest since November 2011. The price has surged 28% this year.
While the rise to $1 is psychologicallly significant, the rally likely won’t surpass the $2 level reached in 2011, acoording to Louis Rose, a director of research for Rose Commodity Group in Tennessee.
“Ten years prior, China was virtually out of cotton - not so this time,” Rose said.
All of this is coming together to drive up prices, which means the cost of making clothing will be on the rise, according to the report. The prices of apparels from T-shirts to jeans may rise if retailers try to pass on the expense to consumers.