| Introduction of alternative spinning technologies with greater tolerance for short staple fiber has implication for the relative demand for cotton fiber; and specifically the relative demand for cotton fiber characteristics. Use of an average cotton fiber price across all qualities, or a single price for one quality with the assumption of a homogeneous product, precludes analysis of demand differentiated according to end-use fiber characteristic requirements. Mill demand for cotton fiber is disaggregated into eight end-use categories: (1) denim, (2) duck, (3) towelling, (4) corduroy, (5) 100% cotton sheeting, (6) polyester/cotton sheeting, (7) printcloth, and (8) apparel.;Lancasterian demand theory is used to derive blend prices for each end-use and spinning technology interaction. The impact of the new spinning technologies and the resulting change in the relative importance of grade, length, strength and micronaire in spinning is considered. Introduction of High Volume Instrument (HVI) testing of cotton fiber, and subsequent economic availability of fiber strength information, had a profound impact on ranking of fiber characteristics. The derived marginal implicit prices of the fiber characteristics provide a strong argument in favor of the inclusion of a fiber strength factor in determining market grades and hence, in determining market spot prices.;Quarterly mill demand for cotton fiber is estimated for all eight end-use categories, such that the quality price differentials enter into the demand parameter estimates. Responsiveness of fiber demand for each end-use to price and non-price (fiber characteristics and spinning technologies) factors is considered. The estimations of mill demand for cotton used in coarse yarn end-uses indicated a significant change from the use of ring-spinning for coarse yarn counts to open-end rotor systems around 1980.;The results from both the blend price derivations and associated implicit fiber characteristics prices, and the mill demand estimations by end-use, indicate that disaggregated categories do not all respond to the same market factors. |
