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Will Unrest in Egypt Cause Unrest in Egyptian Cotton?

James Mammarella -- Home Textiles Today, February 8, 2011

NEW YORKNEW YORK - With the political and at least short-term economic dislocation resulting from the turmoil in Egypt, home textiles companies have to wonder if this will turn into yet another disruption in the cotton market.
     While total annual Egyptian raw cotton exports are a relative drop in the global bucket, the crop is quite meaningful for producers of highend, luxury goods. And the cotton market as a whole is particularly uneasy at this juncture, with both prices and pricing volatility at all-time highs.
     Those who use Egyptian cotton may have caught just a bit of a break, at least in terms of timing. "Planting season is still a month or so away," said Jesse Curlee, president of Supima, the U.S.-based Pima cotton promotion organization that is an alternative to the Egyptian product.
     He added that most, if not all, of last year's export-destined raw crop had likely already been shipped out of Egypt by now.
     Looking ahead at Egypt, Curlee told HTT, "The quick answer is: I don't know - and if anybody tells you they do, they don't."
     Any potential, prolonged disruption of the country's transport infrastructure, or of the financial system, could turn into challenges down the road for the Egyptian cotton growers, the gins, the major cotton merchandisers, and exporters, he observed.
     With a current market price of $3.00 per pound for extra long staple (ELS) Egyptian cotton - "probably the highest in history," said Curlee - there is very little wiggle room for additional upward cost pressure.
     As for any likely maneuvers by mills, manufacturers, or retailers, Curlee said, "I don't think you're going to see a huge shift in blending...a towel's still going to be cotton...if you go to polyester it's like trying to dry yourself with a piece of plastic. You might make the towel a little smaller; maybe you blend it with a Modal wood fiber, or maybe you make the ground out of poly; that doesn't touch your skin."
     The story would be similar in bedding, he said. "In sheeting, people are accustomed to cotton sheets. The thread count might go down," he said, or the proportion of non-cotton fibers in a blended product might rise, particularly within "the lower end of the market."
     Getting back to the raw cotton trade itself, Curlee noted that "farmers are already contracting" for next year, and the market for ELS seems to indicate that "for 2012, the crop is still to be in the $1.80 to $2.00 range" per pound. "Maybe it's $1.50 or $1.60 in the future," he said.

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