This as its position regarding competitors. 1. Cotton’s share

This section will explain more in detail
the place of the cotton in the world, as well as its position regarding
competitors.

1.     Cotton’s share of the world fibre market

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

If we examine cotton’s share of the world
fibre market, we can confirm that cotton is the biggest selling natural fibre
in the world. To highlight this affirmation, wool account for less than 4% of
the world fibre market while when it comes to cotton, it accounts for around
32%.

However, in a general way, natural fibres
lost market share in the last 30 years to synthetic fibres. The latter are
hardly becoming their first competitor. Inevitably, as cotton is a natural
fibre, it has then lost market share in the world fibre market due to an
overall decrease of natural fibre’s market share. Nevertheless, cotton’s
consumption did not fall as well, considering the fact that the world’s
population is growing constantly. This increase of population growth result to
an increase in consumption of cotton as well.

Regarding the cotton’s competitors
strictly speaking, a huge number of them exist. In this long list of
competitors, we can find Polyester, Acrylic or Nylon for example. As already
stated, synthetic fibres are the main cotton’s competitors on the world market.

 

What differentiate
natural to synthetic fibres?

Examples of natural fabrics are cashmere,
wool, silk and, of course, cotton. All of them are made from fibres that came
directly from animals and plants. The chemical compounds polymers are produced
naturally: we speak about proteins for animals, and cellulose for plants.

On the contrary, examples of synthetic
fabrics are polyester, acrylic and nylon like previously mentioned. They are made
of fibres that are called “man-made” fibres. 
The reason of that is simply because they are not naturally produced. In
these cases of synthetic fibres, polymers are artificially created in
laboratories. They come from petroleum such as coal and oil.

 

 

2.    
Synthetic fibres
competition

Man-made fibre’s consumption, as well as
production, is rising continuously for decades now. Synthetic fibres are
strongly competitive, but not without any reasons. There is an important factor
to take into consideration in order to understand why synthetic fibres are
becoming more and more produced and consumed. This element is the technological
progress.

 

As explained before, synthetic polymers
are artificially produced. With the current constant growth in technological
progress, synthetic fibres are then becoming even more easier and cheaper to
get. This has definitely a huge influence on the competitivity of synthetic
fibres.

To illustrate this competitivity, we can
use the case of the United States. In fact, in the USA’s industrial textiles
sector, the proportion of synthetic fibres has increased of more than 300% in
the space of 30 years, while for the cotton, the proportion has declined by
half at the same period of time. It is a massive example for the cotton
industry to really pay attention to their synthetic fibres competitors.

The clearer representation is definitely the
example given by the International Cotton Advisory Committee. According to the
demand for textiles from ICAC, for each 1 dollar spend for textile, 23 cents go
for the cotton and the rest go for synthetic fibres.

 

 

I.                
PRICE ELASTICITY

While analysing a product on the
international market, studying its price elasticity is a very important step.
In this part, we will discuss the responsiveness of the demand and supply of
cotton to changes in price, that is to say the cotton’s price elasticity of
demand and supply.

Finding any specific number turned out not
to be conclusive, but we still tried to give our best opinion on the topic
addressed. We examined if the cotton’s price elasticity tends to be elastic or
inelastic. More the product is considered of having an elastic demand or
supply, more it means that the quantity demanded or supplied will respond to
price changes.

 

1.    
Elasticity of
supply

Regarding the cotton’s elasticity, it
tends to have a relatively inelastic supply.

Cotton is part of what we called
commodities. Commodities, raw materials, tend to have inelastic supply for many
logical reasons that will be exposed hereinbelow.

–       
If there is a fall
in cotton’s price, the quantity supplied could not increase proportionately. As
everyone knows, cotton is a fibre that surround seeds of the cotton plant. This
means that once the crop has already been harvested, a change in price cannot
change anything of it.

–       
Furthermore,
cotton take time to grow. It is also a reason why a change in price cannot lead
to a corresponding change in quantity supplied. Time needed to grow raw
materials is not something that can be control.

–       
Additionally,
cotton is something essential to manufacturers and consumers who buy it. If the
price changes, there is a pretty good chance that they will still continue
buying it.

 

2.    
Elasticity of
demand

When it comes to elasticity of demand,
cotton tends to have an elastic demand. One of the main factor that influence
the elasticity of demand of a product is its competitors.

If a product has close substitutes, its
elasticity of demand will be undeniably affected. Like some other fibres can be
substituted for cotton, if there is a change of price, the demand will change
also. Standards are that consumers will turn to the cheapest product. This
means that if the price of cotton rise, or the price of its competitors
decline, the demand will switch to the substitutes.

This is what happened with cotton’s main
competitors: synthetic fibres. The price of the latter declined lately for many
reasons, one being the technological progress like already explained. The
declining price of synthetic fibres induce its consumption to increase, at the
expense of cotton.

 

II.             
EXPECTED TREND IN
THE FUTURE

 

1.    
Expected price in
the future

It is very difficult to determine an exact
future price for a product such as cotton, as the results may differ depending
on the sources and their opinions. Nevertheless, there is actually a fact that
cannot be questioned, which is the situation of cotton oversupply. Large
current world cotton inventories of over 80% of annual consumption indicate an
oversupply on the market. Along these lines, market balances call for lower
cotton prices in the future.

What is forecasted in the next few years,
then, is a decrease of the world cotton prices before raising slowly
afterwards. However, this gradual increase is projected to be smaller than for
other agricultural yield. This highlight the fact that cotton has pretty good
substitutes in final fibre uses. 

x

Hi!
I'm Brent!

Would you like to get a custom essay? How about receiving a customized one?

Check it out