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Cotton Prices Jump After U.S. Cut Exports Twofold


Cotton Prices Jump After U.S. Cut Exports Twofold

IndexBox has just published a new report: ‘U.S. – Cotton Lint – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Cotton prices jumped by +13% to $2.59 per kg in October 2021, according to World Bank’s data. Global supply shows a sign of reduction, as American cotton exports dropped twofold from September to October. Droughts have wiped out a significant part of cotton crops across the U.S., especially in Texas. The U.S. remains the world’s leading supplier, accounting for 41% of global cotton lint exports. China, Viet Nam, and Pakistan represent key importers of cotton lint from America.

Cotton Price Trend

According to World Bank’s data, the cotton price (middling 1-3/32 inch, traded at the Far East) jumped from $2.29 per kg in September 2021 to $2.59 per kg in October. The reducing yields in the U.S. due to unfavourable weather forced American suppliers to slump exports, decreasing global market supply. The U.S. is the leading supplier, accounting for 41% of global cotton lint exports.

Since the beginning of this year, the global price increased from $1.92 per kg in January to $2.59 per kg in October. In 2020, the average cotton price estimated at $1.59 per kg.

American Cotton Exports by Country

Since the second half of 2021, American cotton exports have started to decline steadily. The most prominent drop was recorded in October when the supplies abroad fell from 209K tonnes to 122K tonnes over a month.

In 2020, the amount of cotton lint exported from the U.S. rose significantly to 3.8M tonnes, picking up by +7.3% compared with 2019 figures. In value terms, cotton lint exports fell slightly from $6.1B in 2019 to $6B (IndexBox estimates) in 2020.

China (1.2M tonnes), Viet Nam (782K tonnes), and Pakistan (507K tonnes) were the main destinations of cotton lint exports from the U.S., with a combined 65% share of total exports. In 2020, the supplies to China grew threefold, while shipments for the other leaders experienced mixed trend patterns.

In value terms, China ($1.8B), Viet Nam ($1.2B) and Pakistan ($788M) appeared to be the largest markets for cotton lint exported from the U.S. worldwide, together comprising 63% of total exports.

The average export price for cotton lint from the U.S. stood at $1,56 per kg in 2020, shrinking by -9.5% against the previous year. Average prices varied somewhat for the major overseas markets. In 2020, the highest prices were recorded for prices to India ($2,12 per kg) and Indonesia ($1,62 per kg), while the average prices for exports to Viet Nam ($1,5 per kg) and China ($1,54 per kg) were amongst the lowest. In 2020, the most notable growth rate in terms of prices was recorded for supplies to India, while the prices for the other significant destinations experienced a decline.

Source: IndexBox Platform


Xinjiang Uighur Autonomous Region (XUAR) Withhold Release Order Requirements on Cotton and Tomato Products, Detailed

On January 13, 2021 U.S. Customs and Border Protection (CBP) issued a Withhold Release Order regarding cotton products and tomato products produced in China’s Xinjiang Uyghur Autonomous Region (XUAR) effective February 13, 2021. The agency stated that: “CBP issued a Withhold Release Order (WRO) against cotton products and tomato products produced in Xinjiang based on information that reasonably indicates the use of detainee or prison labor and situations of forced labor.” CBP identified the following International Labor Organization forced labor indicators as a result of its investigation: “debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.”

This finding effectively shifts the burden to an importer to prove that a product produced in the XUAR containing cotton or tomato goods was not produced using any forced labor indicators. Moreover, CBP’s WRO makes clear that products are covered if they use such cotton or tomato inputs “in whole or in part,” with no de minimis exception provided. By placing the burden on the importer to prove that the product it is importing is not produced in whole or in part from such XUAR merchandise, CBP is creating a major hurdle. Detailed information will be required, in our experience, to meet CBP internal evidentiary standards. The Frequently Asked Questions (FAQ) provided by CBP provide some useful examples of the level of detail required in any response:

For cotton products: Affidavit from yarn producer and the source of raw cotton that identifies where the raw cotton was sourced.  Purchase Order, Invoice, and Proof of Payment for the yarn and raw cotton. List of production steps and production record for the yarn, including records that identify the cotton and cotton producer of the raw cotton. Transportation documents from cotton grower to yarn maker. Supporting documents related to employee’s that picked the cotton, time cards or the like, wage payment receipts, and daily process reports that relate to the raw cotton sold to the yarn producer.

For tomato products: Provide supply chain traceability documents pointing to the point of origin of the tomato seeds, tomatoes, or tomato products. Affidavit from the tomato processing facility that identifies both the parent company and the estate that sourced the tomato seeds and or tomatoes. Purchase Order, Invoice, and Proof of Payment for the tomato seeds, tomatoes, or tomato products, from the processing facility and the estate that sourced the raw materials. All production records for the tomato seeds, tomatoes, and/or tomato products that identify all steps, from seed to finished product, from the farm to shipping to the United States.

The above requirements will be difficult to meet, particularly since they may require importers to go back to supplying companies and upstream vendors for information on inputs, when the importer has no relationship with such upstream suppliers. There likely will be great difficulty in obtaining an adequate response from those companies.

While the current WRO applies only to the cotton and tomato sectors, it is also possible that similar WROs could be extended to other merchandise originating in the XUAR. Furthermore, CBP recommends the following in its FAQs: “To combat the risks of forced labor in supply chains, importers should have a comprehensive and transparent social compliance system in place.”

Importers concerned with this or future WROs should consider their options regarding traceability of their products, including implementation of a social compliance system meeting CBP standards. For questions on this or other WROs companies, should consult with their attorneys or consultants specializing in this area.


Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell LLP. He leads the firm’s International Trade Remedies team.

Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.