Consumers and retailers are gaining influence over manufacturers’ decisions on what to produce, how to supply the goods, and how much mills and manufacturers can charge. Changes in the structure of the industry and blurring of the traditional lines separating industry segments have contributed to increase price competition throughout the textile pipeline. This growing influence is evidenced in the changing relationship between raw cotton prices and yarn prices. With apparel price deflation showing no sign of turning around, the price pressures throughout the textile pipeline are likely to continue and move further upstream to manufacturers and suppliers.

Over the last several years, imports accounted for an increasing share of textiles and apparel sold at retail. Similarly, imports of cotton yarns grew faster than domestic yarn production, suggesting that imports account for a growing share of the U.S. yarn supply. Given the increasing volume of yarn imports, price pressures may likewise begin to influence the relationship between raw cotton prices and foreign yarn prices, affecting the margins available to foreign suppliers. If foreign markets follow similar patterns of increasing responsiveness of yarn prices to cotton price volatility as apparel prices fall, the result could be lower profit potential throughout the global textile supply chain.