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  • 1.3.9-THE WORLD COTTON MARKET-RETAIL PRICES FOR CLOTHES

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  • Retail prices for clothes

    Chapter 1 - The world cotton market - Cotton prices

     
     
    Another phenomenon recent to the fibre industry has been deflation in retail prices of clothing products. Data from the United States indicate that prices of clothing at retail peaked in the early 1990s and actually fell by about 8% in nominal terms from the late 1990s through 2005. Retail industry analysts suggest that reduced barriers to trade in textile and apparel products, and increased efficiency in retailing in the United States contributed to the declines in retail clothing prices. Many of the same analysts suggest that similar patterns are being repeated in Europe and Japan, and perhaps also in developing countries such as India. Regardless of the cause, the decline in prices for consumer goods is placing increased pressure on suppliers within the chain of businesses producing clothing products, including increased pressures on textile mills to reduce the costs of cotton procurement. Therefore, some analysts speculate that competition at the retail level could be contributing to declines in real prices of cotton paid to farmers.

    Because of improvements in technology, competition with polyester and increased competition within the retail pipeline, one of the first points in any discussion of expectations of the future of cotton prices is that in the long term they will be lower in real terms. The Cotlook A Index averaged 55 cents per pound during the eight years between 1998/99 and 2005/06. Over the next 10 years, the average Cotlook A Index may be lower, resulting in average prices in today’s dollars of between 45 cents and 55 cents per pound.