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Cotton Inc. CEO Takes a Look at Cotton Demand

Demand for cotton and cotton by-products is linked to the growth – or lack thereof – of the economy. Cotton Incorporated CEO J. Berrye Worsham says three-percent economic growth in the U.S. would be great – but worldwide – that’s just above a recession…

“For 2012 and 2013 its expected that economic growth will be around 3%, it’s a recession not a recovery, but it doesn’t feel like as much of a recovery as it should.”

In the third quarter this year – Worsham says there was a growth rate substantially above three-percent for the first time in several years…

“A number of the quarters over the last several years have been below the 2% line. That’s important because in today’s economy, the US economy must grow more than 2% to create positive growth in terms of apparel consumption. Anything below 2% is a recession in our industry. The third quarter, a lot of that was inventory build, and GDP numbers reflect the goods and services produced not consumed. We did have a bit of a spike in inventories, so whether or not this is the beginning of a much stronger growth remains to be seen.”

Worsham says domestic demand has been improving – and he explains how man-made fibers factor into the equation…

“Typically cotton sells at a premium. The average imported price per square meter is about 1.2 times that of the average of man made fiber products. When the price of cotton spiked in 2010 and that made its way into the system, the import prices were 1.4 times the price. Now that cotton prices have come down, things have equalized a bit, but we are high compared to historical averages. There is a strong inverse relationship between the price ration for cotton and synthetics and cottons overall market share.”

Worsham says the idea isn’t for prices to drop – but the cost of production is key.'

A native of the Texas Panhandle, Rhonda was born and raised on a cotton farm where she saw cotton farming evolve from ditch irrigation to center pivot irrigation and harvest trailers to modules. After graduating from Texas Tech University, she got her start in radio with KGNC News Talk 710 in Amarillo, Texas.