How cotton and polyester serve as a microcosm for globalization

April 1, 2015

The markets for the world’s fungible commodities are necessarily woven together, the global textile trade providing a fine example. A tug here tightens the market in Asia; a tweak there can unravel demand in the U.S.

As this Reuters graphic shows, cotton prices have fallen one-third and polyester is off more than 10 percent since the beginning of 2014. The global nature of both industries means that a Chinese oversupply of polyester impacts prices internationally, while lower cotton prices can impel farmers to switch to more profitable crops like sorghum, corn and soybeans.

Last year, for the first time in a generation, more American consumers cottoned to imported synthetic fibers than cotton. “After years of demand erosion, cotton has lost its top spot to synthetic competitors. Yarn mills have switched spindles to polyester and its cohorts due to years of high cotton prices and improving synthetic technology,” Chris Prentice wrote for Reuters in November.

While the two commodities primarily compete with one another in textiles, they impact price and availability in a broad array of products. According to the National Cotton Council, a little more than half of the cotton produced is  converted into apparel, with the rest being used in home furnishings and industrial products. Polyester is used for all manner of goods, from packaging materials to recyclable bottles to liquid crystal displays. In sum, hundreds of products impacted by the ebb and flow of American fashion tastes and the ripple effects of Chinese innovation. Globalization at its finest.

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