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  • 1.3.8-THE WORLD COTTON MARKET-PRICES OF COTTON YARN

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  • Prices of cotton yarn

    Chapter 1 - The world cotton market - Cotton prices 

     
     

    Almost all cotton is spun into yarn as the first step in the manufacturing process. (About 5% of world cotton production is used as padding in clothing, mattresses or other home furnishings, and a very small quantity is lost to fire or flood. In addition, use of cotton lint in non-woven applications, such as medical uniforms, non-woven cloth and filters is rising, and may account for another 5% of world cotton use.) Prices of cotton yarn quoted ‘free on board’ (FOB) the textile mill loading dock vary from just 50 cents or 60 cents per pound for low quality coarse yarns used in mops or rope to as much as $15 per pound for extraordinarily high quality fine yarn used in expensive lingerie or shirting fabrics. While the range in yarn prices is wide, the average price for a 20-count yarn to be used in common woven cotton fabric is usually between 1.5 and 2.5 times the price of cotton on world markets. Therefore, when the Cotlook A Index is 60 cents per pound, the average cost of average quality yarn is between 90 cents and $1.50 per pound on the loading dock.

     

    There are no futures contracts in cotton yarn, and so no public trading data are available, and most companies are loath to divulge their private financial results. Further, the range of yarn types and qualities is much greater than the range of qualities for cotton, making it more difficult to determine average yarn price levels. For instance, there are yarns for weaving and knitting, carded yarns and combed yarns, singles and doubles, ring spun yarns, open end yarns, air-jet spinning and other types as well as weights. Therefore, information about yarn prices is gleaned from trade publications based on word-of-mouth reports from the sales yarn industry. In many markets, less than half of cotton yarn production is sold as yarn. Instead, much yarn produced around the world is first woven or knitted into cloth by the same company before being sold. Thus data on yarn prices are difficult to estimate, and ranges are often published by major textile industry magazines and trade journals.

    One published indicator of cotton yarn prices is the Cotlook Yarn Index, published by Cotlook in Liverpool based on reports from correspondents in sourcing countries. Unlike the Cotlook A and B Indexes, the Yarn Index is a true index with a base year. The Cotlook Yarn Index with a base year of 2000 = 100, rose from about 100 in the early 1980s to a peak of 124 in 1994/95 and then dropped to 92 in 2001/02; the Yarn Index is about 107 in 2006/07. The Yarn Index rises and falls with the Cotlook A Index, and the correlation between weekly values of the Cotlook A Index and the Yarn Index is about 80% (see figure 1.29).


    1.3.8-en 

    Source: ICAC