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Wal-Mart Supplier Moves to Short-Term Deals on Cotton Volatility

2011 March 7
by admin
Alok Industries Ltd. , an Indian supplier of textiles to Wal-Mart Stores Inc. and Target Corp. , cut the length of its sales contracts to about three months from one year after volatility surged in the cotton market.

Mumbai-based Alok is selling its textiles to clients with contracts based on cotton prices in the range of $1.80 to $1.90, Agarwal said. The retail price of a towel may rise by as much as 40 percent because of cotton jumping to above $2 from $1 in September, he said.

Higher cotton prices are also prompting several companies to use more man-made fabrics, Agarwal said. The commodity's share of the global textile market will shrink to 20 percent by 2020 as mills switch to polyester and other chemical fibers to remain profitable, according to the International Cotton Advisory Committee.
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