Cotton Prices Soar 20 Percent Amid Mideast Crisis
World Bank data shows cotton, which traded at $0.65 per pound before hostilities began, has since climbed 18.5% to $0.77 per pound, fueled by geopolitical shockwaves and deepening supply chain fractures.
Zafer Ergezen, a futures and commodity markets expert, told media that the price spike is the result of a "perfect storm" of geopolitical and environmental factors, as the conflict and the effective blockade of the Strait of Hormuz caused massive cost-push inflation, driving up energy, transport, and fertilizer costs while delaying global shipments.
The collapse in synthetic fiber competitiveness has compounded the crisis. Oil prices have doubled since the war began, and severe disruptions to mono-ethylene glycol (MEG) supplies — a core input for polyester manufacturing — have driven synthetic production costs sharply higher. With cheaper alternatives no longer viable, textile manufacturers have pivoted back to cotton to defend their margins, injecting fresh demand into an already strained market.
"Each day that MEG prices remain high, cotton demand will surge even further, since producers may switch directly to cotton instead of polyester," Ergezen said.
Climate pressures are amplifying the supply crunch. Prolonged droughts across Mexico and Texas — which together account for roughly 40% of American cotton output — have cut into both yields and planting areas, according to the US Agriculture Department's Economic Research Service. Ergezen drew parallels between these weather-driven shocks and the recent price crises that rocked the cocoa, coffee, and sugar markets.
Even a diplomatic resolution in the Middle East may offer little near-term comfort for buyers, he cautioned.
"Even if the war ends, it doesn't seem feasible for cotton to return to pre-war levels, at least for now," he said. "Meanwhile, without economic growth returning to its previous pace alongside rate cuts, it seems unlikely to see a sustained increase in demand for cotton."
Quality is emerging as another fault line in the market. Dwindling stocks of high-grade cotton have triggered a sharp premium divergence, with top-tier varieties commanding disproportionately higher prices globally.
"Premium cotton prices are on the rise much more sharply, and since it's not easily accessible worldwide, there are massive payments made for it, but during such turbulent periods, it's possible that the quality differentiation we're seeing now in the premium segment will come to the forefront much more prominently," Ergezen added.
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