Cotton Prices: How They Impact Your Brand's Costs (And What You Can Do)
Behind your favorite t-shirt lies a complex story of cotton prices.
Behind your favorite t-shirt lies a complex story of cotton prices.
It is easy for your supplier (whether it be a factory or a wholesale blank provider) to blame rising costs on cotton prices. But cotton is a commodity, and its pricing is transparent. I'll give you resources below to track it yourself.
Sometimes cotton prices spike due to floods, droughts, etc. – and your supplier will pass those costs onto you.
Understanding Cotton's Impact
Cotton can represent up to 40% of a 100% cotton tee shirt's cost. Other factors (shipping, labor) make up the rest. If cotton prices increase by 10%, expect your tee costs to rise by 4%.
Current Market Snapshot
Fluctuating Prices: Cotton prices change frequently [https://tradingeconomics.com/commodity/cotton]. They recently surged, but as of March 2024, are around 89 cents per pound [https://www.ams.usda.gov/mnreports/cnwwcmr.pdf].
Factors at Play: Weather, global demand (especially China's), government policies, and the economy all influence prices.
Key Trends Impacting Cotton Prices
The Sustainability Imperative: Demand for sustainable cotton (organic, Better Cotton Initiative [https://bettercotton.org/]) is rising. This could lead to higher prices for these types of cotton.
Competition from Synthetics: Cheaper fibers like polyester compete with cotton, impacting its price.
What Goes Up... Doesn't Always Come Down
Suppliers rarely offer price decreases when cotton costs fall. I've never seen it in 22 years!
Protect Yourself
Benchmark cotton prices when doing your costing – use current market data or historical trends. This gives you leverage for negotiating accurate pricing based on real market data.