Cotton Demand Boosts Fabric Costs, Drives Plush Toy Prices Up

The price of plush toys is likely to rise in the near future because of dramatic increases in cotton prices. Not only does plush typically include some cotton fiber in the outer shell, but the remarkable increase in the price of the commodity also is increasing demand for, and thus the prices of, other materials including polyester materials used as filler.

At present, cotton prices are near historic highs not seen since the U.S. Civil War, according to experts. From the beginning of August until early November, for instance, cotton futures nearly doubled, rocketing up from 80¢ a pound to a Nov. 9 high of $1.50 a pound. At this writing, the market has eased a bit and prices have dropped moderately, but the cost of cotton continues to fluctuate well above the 80¢ levels.

"A lot of it gets down to basic supply and demand," said Gary Adams, chief economist of the National Cotton Council. "Cotton gained strength and recovered from the recession of late 2008 and 2009. It continued to recover the first half of 2010. And that recovery was occurring at the same time that we harvested the smallest cotton crop since 2003."

American farmers made planting decisions in spring 2009, he explained, when cotton prices were not attractive compared to other crops, and cotton producers in other countries did the same thing.

With the sudden rise in prices, Adams said, clothing manufacturers began adjusting fabric blends. Shirt manufacturers, for instance, who had previously offered wares of 80% cotton and 20% manmade fiber blends, began bumping up the percentage of synthetic fibers to 30%. That, in turn, has increased demand for those materials.x"When that happens, higher cotton prices can pull man-made fiber prices higher, too," said Adams. "Some of the data we have coming out of China shows polyester prices up 89% from last year's level."

Mark Hollywood, vice-president of product solutions for Redemption Plus, has witnessed the impact of higher cotton prices at first hand.

"I can tell you that, in my experience, I haven't seen anything like this in regard to plush toys, ever," he said. "We've had factories unwilling or unable to give us a quote because there's such uncertainty. Those that do give a quote are doing their best to cover themselves, and the quotes have skyrocketed. The increases we're seeing for plush are exponential, compared to other products such as plastic toys and novelty products."

However, inflated price quotes were not the worst of it. According to sources within in the industry, some overseas plush suppliers revised their pricing estimates upwards after orders were placed. And in a few instances, buyers saw estimates rejected by factories as the costs of raw materials continued their rapid price climb.

Presently, the situation is less volatile but remains in a state of flux. While prices have dropped from their early November highs and stabilized somewhat, buyers remain wary.

"The situation changes extremely rapidly," Hollywood said. "The prices are still higher than what we've seen, but seem to be trending down."