The Financial Times has reported a record rise in the number of disputes being arbitrated by the International Cotton Association which holds the ring in agreements between cotton farmers and suppliers, commodity merchants and textile mills.

The rapid price changes for raw cotton have led to twice as many international disputes in the first half of 2011 as in most complete years of trading and is the result of a doubling of cotton price and then a halving of it in the first three months of this year. This means that some buyers have refused delivery of cotton that was contracted for at the higher prices

It’s a complicated scenario, because many manufacturers contract for their cotton up to two years in advance, meaning that there’s a long lag between the time they agree a price and the time they can sell their finished product. At present that’s making mills a little nervous as the gap between the price in 2010 and the price now has almost halved, meaning that they may have to cover a loss on their transactions.

On the other hand, there’s good news for those who are investing in promotional clothing: prices are stabilising and many companies have found ways to soften demand for expensive cotton by, for example, using more crease-resistant polyester in their poly-cotton blends and also by using new technologies to weave lighter fabrics which are more comfortable to wear in summer.

In addition to being cost-effective, poly-cotton promotional clothing is often popular because it is easy to wash and dry, particularly for those who work in the open air, like charity collectors, people who have to drive from location to location and those who are exposed to a range of environmental stressors such as sunlight and water (whether from spray like that at theme parks or surf).

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