The cotton crisis broke out in the world: raw materials died and rose in price

Russians are advised to dress in nettles

The planet is experiencing a cotton collapse. Due to climate problems in the main exporting countries – the United States, Brazil, India, Pakistan, world prices for this strategic raw material rose by 30%, a record value since 2011. For Russia, the situation is fraught with an increase in the price of a huge range of goods in the production of which cotton is used – from medical cotton and gauze to clothing and cardboard.

In the US and Brazil, two of which produce half the world’s cotton, extreme temperatures and consequent drought have reduced yields by almost a third. In America, according to the Wall Street Journal, the proportion of abandoned cotton fields reaches 40%. India this summer, in addition to a heat wave of 50°C, has faced an abundance of rain and an invasion of insect pests. In Brazil, due to drought, about 200,000 tons of cotton stocks have deteriorated. Since mid-June, monstrous monsoon rains have not stopped in Pakistan. As a result of all these natural anomalies, exchange prices rose to $3,470 per ton.

So far, Russia is saved only by the fact that the main supplies of raw cotton come from other countries – Uzbekistan (50%), China (15%) and Tajikistan (6%). Textiles are sold to us by China, Bangladesh, Uzbekistan, Turkey and Belarus. Every year our country consumes about 30 thousand tons of cotton fiber, but the full cycle of cotton production has been preserved only at a few enterprises, still of the Soviet type.

“Cotton does not grow in Russia because there are no suitable climatic conditions,” says Alexander Anfinogenov, an independent expert on the FMCG (consumer goods) market. – There is nothing to replace this raw material, we depend on world prices for a number of positions, respectively, the general cotton crisis may ultimately hit the wallets of consumers in the Russian Federation.

Cotton fabric is the undisputed leader in popularity, people reasonably prefer to wear clothes made from natural fibers – from T-shirts and underwear to formal suits. So the textile industry will have a hard time, and sellers, according to the classics of the genre, will surely take advantage of the market situation and raise prices to the highest possible levels. No matter how we had to return to the wildly popular nylon and crimplen in the USSR.

Anfinogenov sees only one way out: to produce more fabric from alternative, primordially Russian raw materials – flax, hemp and even nettles. Resources are renewable, and such a fabric, due to its high qualities, belongs to the premium segment. By the way, the linen industry, where Russia could easily be ahead of the rest, has long been in stagnation. Enterprises are not competitive in comparison with imported ones and need state support, investments, and equipment modernization.

“Global problems with cotton began back in 2020, against the backdrop of a pandemic, lockdowns, rupture of supply chains,” said Artem Deev, head of the analytical department at Amarkets. – Today they are exacerbated by weather disasters, which lead to crop failures, shortages of raw materials and rising prices. It is not only about cotton, but also about grain, vegetable oil, tea, coffee, legumes, vegetables. As for Russia, it buys most of its raw cotton (130,000-140,000 tons per year) from Uzbekistan, where this year the weather does not bring any surprises. Probably, our clothes will rise in price, but at a gentle pace.

In principle, Deev argues, Russia is in the global trend: in recent years, clothing made from natural fabrics (cotton, linen, wool) has become increasingly premium in all countries. These materials will be replaced in a wide consumer segment by synthetic and artificial fibers, in the production of which cellulose is mainly used. That is, the products of the forest industry, and not the cotton industry or animal husbandry.

“The growth of exchange prices for cotton will only slightly affect the cost of final products,” said Mark Goykhman, chief analyst at TeleTrade. – In the structure of clothing fabrics, it occupies only 30-35%. The rest is artificial fibers, viscose and so on. And the fabric itself is far from the only and often not the main component of the price of clothing. Purely cotton items – T-shirts, children’s clothing, bedding – can hypothetically rise in price by 10-15% maximum.