What is in this article?:
- Winning the blend in China is big for U.S. cotton growers
- Worldwide cotton demand problem
- Chinese can manipulate prices
• Speaking at the recent Southern Cotton Growers and Southeastern Cotton Ginners annual meeting, Joe Nicosia said a big part of the loss of cotton use in China comes from changes in the blend rates used by Chinese mills.
• A few years back Chinese blends were more typically in a 60:40 ratio of cotton to polyester. Today the ratio is moving toward 60:40 in favor of polyester.
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COTTON ACREAGE in the Southeast may not take as big a hit as projected based on prices, according to cotton marketing expert Joe Nicosia.
China is the biggest buyer of U.S. grown cotton and of long-term critical importance to our cotton industry is convincing the Chinese to use more cotton in their domestic production, and in the past few years they have gone the other way, using more polyester, says Joe Nicosia, global senior platform head for Louis Dreyfus Commodities.
Speaking at the recent Southern Cotton Growers and Southeastern Cotton Ginners annual meeting, Nicosia said a big part of the loss of cotton use in China comes from changes in the blend rates used by Chinese mills. A few years back Chinese blends were more typically in a 60:40 ratio of cotton to polyester. Today the ratio is moving toward 60:40 in favor of polyester.
The reason, Nicosia says, is primarily the price of raw materials. Chinese mills can buy all the cotton they want from a huge domestic reserve supply, but the cotton costs $1.20-$1.25 a pound. Polyester, by contrast, has remained remarkably stable at less than $1.00 per pound for the past several years.
“China is making more cotton products than ever before, but they are expected to use about 30 percent less cotton in their apparel production this year, compared to last year. All of the losses in cotton usage in China could be restored simply by winning the battle of blend — getting the ratio of cotton to polyester back to a 60:40 balance in favor of cotton,” Nicosia says.
“Even in the United States, where our domestic use of cotton is only about 3.5 million bales per year, we are losing the battle of the blend. The ratio here is expected to be about 50:50 for the upcoming year.
“To get cotton use up in China, U.S. growers must win the blend in China,” he says.
“What China makes, the market buys. The fashion industry might think they determine what fabrics are used, but for the masses of people worldwide, China drives that market,” Nicosia adds.
To stress his point, the cotton marketing expert notes China is by far the biggest user of polyester. “Ten years ago, the Chinese used less than 10 million tons of polyester. Last year they used 12 million tons and are expected to use 14-15 million tons next year — that’s roughly equal to 60 million pounds of cotton, Nicosia says.
