John Hart, Associate Editor 

At a Glance

• Consumers in the United States, Europe and China are struggling financially.
• A stronger global economy is needed to build apparel demand.

The U.S. consumer is holding a historic amount of credit card debt and has significantly reduced new clothing purchases as they work to pay off that debt. This is a big hit to the cotton industry.  

Wayne Boseman reminded cotton farmers suffering from low cotton prices that interest rates affect everything we do, from farming operations to garment manufacturing to consumer spending. He explained that high interest rates have forced apparel supply chains and companies to trim back inventories because carrying costs are high.  

Boseman, president of Carolina Cotton Growers Cooperative, emphasized that high consumer credit card debt is a real problem for the cotton industry because consumers are not buying apparel.  

Demand is weak as mills, apparel makers, and brands are working down inventories and only buying short term. In addition, the economy is still recovering from the pandemic.  

“We were coming out of COVID, demand was strong. Brands and retailers ramped up a lot of inventory to be able to sell stuff. Then things slowed down dramatically, and they were left with a lot of inventory as interest rates went up and that really forced them to pare down a lot of inventory to cut carrying costs,” Boseman said in a cotton outlook presentation at the Southern-Southeastern annual meeting in Hilton Head, S.C., Jan. 22.  

Boseman said the key to building up cotton demand is to get the consumer healthier so they will make more apparel purchases.  

And the problem is not just domestic. He said consumers in Europe and China are also struggling. A stronger global economy is needed to build apparel demand. 

“Wages have not kept up with inflation. Debt that consumers are carrying has been a big burden for them. Until they see their prospects improve it’s going to be hard for them to start buying more apparel,” Boseman said. 

Turning to the cotton market, Boseman said world cotton production is pegged at 120 million bales this year. The challenge is global cotton consumption is forecast at 115 to 116 million bales. Global consumption needs to reach 120 million bales to support higher prices.  

Boseman said the United States had a generally good cotton crop in 2024 of 14.5 million bales, up from 12.4 million bales in 2023. The challenge is American exports are lagging and trending down. The United States is expected to export about 11 million bales this year due to lower global cotton consumption and increased competition from Brazil and Australia. 

“Last year for the first time Brazil exported more cotton than the U.S. They did 13.5 million bales. We did 12.5 to 13 million bales. They are growing another big crop. They are really competitive; they are really aggressive. That’s really our main competition in exports going forward. They have taken some market share and that’s knocked our exports back to what would have been 14 million bales to 11 to 12 million this year. Their currency is so cheap that they are able to sell more cheaply than we are,” Boseman said.  

Boseman expects both U.S. and global cotton acreage to be down this year. 

“Corn and soybeans have rallied quite a bit in the last month or so. That will impact acres some. It would take 80 cent cotton to get cotton acres up. I don’t see that happening well into the summer if it happens then.”