U.S. Cotton Demand Lowest in 13 Years

U.S. cotton demand last month was the lowest in 13 years as textile mills closed because of overseas competition, the government said.

Mills used cotton at an annual rate of 7.32 million bales, the lowest since December 1988, a report from the Census Bureau showed. Cotton prices have dropped 43% this year as clothing stores such as Gap Inc. had their worst holiday season in years.

“The industry is just reeling,” said Stewart Little, senior vice president of customer development at Unifi Inc., a Greensboro, N.C.-based textile fiber manufacturer. “The reason cotton consumption is down is because of the economy and because of imports. It’s as bad as I’ve ever seen after 26 years in the business.”

Cotton for March delivery fell 0.74 cent, or 2%, to 35.59 cents a pound on the New York Cotton Exchange, the lowest close since Dec. 13. Prices fell to a 29-year low of 28.2 cents Oct. 26.

U.S. mills consumed an average of 27,056 bales a day in November, down 19% from 33,464 a year earlier and 3% lower than a revised 27,886 bales in October, the Census Bureau said. The consumption level was the lowest since the daily average of 26,099 bales in December 1988.

The annualized rate, compiled by the National Cotton Council from the bureau’s figures, was down from a revised 7.55 million in October and also the lowest since 7.29 million in December 1988.

“A lot of cotton is being exported,” said Jim Jamski, chief of the printing, furniture and miscellaneous manufacturing section of the Census Bureau. “It’s cheaper to do business overseas.”

A record 95 U.S. mills have closed this year, compared with 29 last year, according to the American Textile Manufacturers Institute, a Washington-based industry group. In November, Burlington Industries Inc. sought bankruptcy protection.

Gap this month estimated a loss for the fourth quarter after its November same-store sales fell 25% from a year earlier. Americans are purchasing less clothing and goods as the U.S. unemployment rate rose to 5.7% in November, a six-year high.

U.S. cotton exports are projected to reach 9.8 million bales in the marketing year that started Aug. 1, the highest level in 75 years and up from 6.76 million last season, the U.S. Department of Agriculture said in a report this month.

So far this season through Dec. 20, cotton shipments stand at 3.46 million bales, the department said in its weekly export report Friday.