Yet Another Column About Cotton
October 20, 2011,
Warren Shoulberg Publisher/Editorial Director
Who knew a guy could spend his entire career in business journalism and be reduced to endlessly ruminating about a little pale gray bud that grows in very hot fields and somehow has come to dominate virtually every discussion taking place when the conversation turns to sheets and towels?
So, if you've been on the planet Uranus the past two years and haven't been following this soap opera, maybe you don't know that cotton, the most widely used raw material in home textiles products, hit historically high price levels last winter at exactly the time when orders were being placed for goods hitting retail shelves right now.
The price then subsequently dropped almost as quickly as it rose, indicating to most people that the pricing scenario had a lot more to do with speculation than agriculture. Prices are about half what they were last February, but still nearly twice as high as they were two years ago.
Retail prices, in the meantime, went up a minimum of 10% on most cotton-based products and much higher on others. Cotton's share of market was reduced as vendors and retailers moved to alternatives, like blends and 100% polyester products.
OK, so now that you're back from Uranus, you can pick up the story from here as we get ready for September market week.
Here is what could ... and could not happen:
1. Some retailers are going to come in kicking and screaming and wanting price rollbacks to reflect the lower cotton prices. They will want this on the goods now being delivered to their stores. These retailers will be deemed insane and will be treated as such.
2. Some vendors will try to justify their higher prices by explaining the many nuances and deviations in the worldwide futures market for commodities, bringing in the complexities of international agri-politics and cultural references. These suppliers will be deemed as crooks and will be dealt with harshly by their customers.
3. Many people on both sides of the buying equation will continue to look to polyester as the great emancipator of cotton slavery, claiming the products are every bit as good and the consumer every bit as satisfied with sheets and towels made out of old, dead dinosaurs. These people will be deemed idiots and will be banished from the marketplace.
4. A very few businesspeople will understand that cotton is a volatile crop subject to very real climatic, financial and political factors and that they need to make the best of a situation, knowing that higher prices for products that have sunk to unsustainably low levels is not necessarily the worst thing that could happen to the American home textiles industry. These people will be deemed few and far between and will no doubt look for their first available opportunity to get out of the home textiles business.
And so, the cotton pickings continue