Cotton Market Analysis
The cotton market is set to witness a volume growth of more than 5MT with spend momentum accelerate at a CAGR of more than 3% between 2019-2024. Consumer's preference shift towards fashion that has variety, has value, and is sustainable is popularizing the concept of refurbished fashion. This will create substantial demand for cotton fabric that befits the concept of refurbished fashion. Carbon fiber is witnessing its extensive usage across the aerospace, automotive, and wind energy industries. These factors will have cumulative impacts on spend growth in the cotton market during the forecast period.
Top Spending Regions in the Cotton Market
APAC will be the largest contributor to spend growth in the cotton market followed by North America.
APAC
Nearly 70% of cotton products are produced and are consumed across the countries in APAC. Initiatives undertaken by governments to boots the cotton textiles industry will allow this region to cement its position in the global cotton market. Despite an initial slowdown in the demand for cotton in China owing to the ongoing US-China trade war, government initiatives to promote cotton production will boost demand growth in the Chinese cotton market during the forecast period.
North America
The US is the largest exporter of cotton in the world. The demand for cotton is expected to increase in North America during the forecast period owing to the developments in the textile and apparel sector in the region. The production of cotton increased from 2018 to the third quarter of 2019, owing to rainy weather that led to low prices for competitive crops such as corn.
Subscribe to our free web-based procurement platform to get instant and regular insights on the factors that are changing the dynamics of the cotton market across regions.
What are the Key Price Trends in this Market?
- Cotton price trends hint at gradual stabilization of price with chances of gradual decline. This decline is attributed to the surge in the production of cotton against a decline in demand. Factors such as overcapacity at warehouses, the US-China trade war, government subsidies, and competition from synthetic fibers will result in the gradual decline in demand which will have a deflationary impact on the overall cotton price in the market.
- The raw material cost will act as a substantial cost component of cotton supplier's OPEX. comprises a major cost component for the manufacturers of cotton. The price of raw materials such as cotton seed is expected to increase which will inflate cotton price in the market.
- Volume-based pricing is the most adopted pricing model in the cotton market where buyers can capitalize on market fluctuations by optimizing the time of purchase. This pricing model allows better transparency, as it is based on variable costs of production and market prices.
Download the free sample of this report to know what the key cotton procurement best practices that you must adopt to address price dynamism in this market.
Insights Offered in this Cotton Market Report
- Global and regional spend potential for the cotton market for the period of 2019-2024
- Supplier relationship management practices in the cotton market
- Supplier margins and selection criteria in the cotton market
- Top cotton suppliers and their cost structures
- Top cotton suppliers in the US and their cost structures
- Cotton market spend analysis in the US
- Cotton price trends, and forecasts
- Cost drivers influencing the cotton prices
Insights into the Cotton Supply Market
- The global cotton supply market is highly fragmented with the substantial presence of local, regional, and global suppliers. During the forecast period, the supply market is expected to witness a slight consolidation owing to a rise in the focus of the suppliers on M&A to increase their production capacity and market shares.
- In the cotton market, buyers are advised to engage with suppliers for inventory planning by using systems such as VMI. It will enable the buyers to make high-volume procurements to mitigate price risks. However, in times of inefficient planning, the inventory might increase, which will lead to high holding costs. Hence, systems such as VMI will help in effective demand planning, according to the application requirements of buyers.
- Cotton suppliers are entering into long-term strategic partnerships with raw material providers. This help suppliers in achieving assured supply in times of fluctuations in production caused by adverse weather conditions, geopolitical tensions, and trade wars
Insights into Some of the Leading Cotton Suppliers
The supply market dynamics hint at a substantial hike in suppliers' OPEX which will drive buyer's procurement spend. Keeping such dynamics in mind, strategic selection of suppliers and maintaining an effective supplier relationship management are observed to facilitate buyers with optimized procurement expenditure and better category management in the cotton market. This cotton market procurement intelligence report has enlisted the top suppliers and their cost structures, SLA terms, best selection criteria, and negotiation strategies for the top cotton suppliers. The top cotton suppliers highlighted in this report include:
- Cargill Inc.
- Louis Dreyfus Co. BV
- COFCO International
- Olam International Ltd.
- Glencore Plc
- Bunge Ltd.
Criteria to select suppliers in this dynamic cotton market is subject to change based on the day-to-day market outlook. Get a free demo of our procurement platform to gain immediate access into real-time insights to the changing suppliers selection criteria.
