Extreme weather conditions are hurting virtually all of the world's largest cotton suppliers, Bloomberg reported.

In India, the largest producing country, heavy rains and pests have reduced the cotton harvest so much that the country is importing supplies. A heat wave in China raises fears about the upcoming harvest. In the United States, the commodity's biggest exporter, a worsening drought is devastating farms and could push production to its lowest level in more than a decade. And Brazil, the world's second-biggest exporter, is battling extreme heat and drought that have already reduced crop yields by nearly 30%.

This confluence of extreme weather events caused by climate change has sent cotton prices skyrocketing by 30%. Earlier this year, they hit their highest level since 2011, squeezing the margins of clothing suppliers around the world and threatening to drive up the cost of everything from T-shirts, diapers, to paper and cardboard.

The prospects for Brazil are not encouraging. The drought there has already dried up an estimated 200,000 metric tons of supply, according to Abrapa, a group representing farmers' interests. With the 2021-2022 harvest close to completion, the country's production is now estimated at 2.6 million tonnes or even less.

Bom Futuro Group, one of the largest cotton producers in Brazil, which accounts for about 10% of the country's acreage, reports a 27% drop in yields compared to the previous season.

Meanwhile, US cotton production will fall 28% in the season that began this month. The US expects production to hit its lowest level since the 2009-2010 season, bringing stocks to near-historic lows due to a drought that has become so extreme that the US government is rationing water from the Colorado River. Together, the US and Brazil account for half of the world's cotton exports.

The contraction in global supply has become so sharp that it dwarfs the winds of demand. The US government and analysts are forecasting a drop in demand due to a decrease in clothing purchases and a slowdown in economic growth, especially in Europe and Asia. Still, all signs point to much higher cotton prices in the coming months as the crop shrinks, said Andy Ryan, senior account manager at Hedgepoint Global Markets in Nashville.

The weather has created an additional headache for cotton buyers around the world. Untimely rains in regions such as Australia, Pakistan and even Brazil have also lowered the quality of stocks, said the director of Plexus Cotton Ltd. Peter Egli.