This paper studies the current cotton market situation. The situation is a recent vast increase in cotton fibre price, mainly due to tight supply and demand circumstances. Focus is on two issues; how the fibre price affect companies cost wise and the likely future development of the cotton market. The cotton market has been studied by hard facts and contemporary views from industry people and companies. Factors influencing the cotton market such as economical growth, population and substitute textile fibres are taken into consideration. Besides how companies themselves claim to respond to the cotton price increase cost calculations approximated by thumb rules of the industry are performed. The result is a higher cost, derived from higher cotton price, at the finish garment stage. The magnitude depend on if one sees it relative to retail price or manufacturing cost along with how the participant in the value chain react. The future cotton market is evaluated by what might effect cotton supply and cotton demand and how the market mechanism is likely to answer. Short term the high prices seem to lower the demand and along with a larger harvest next season prices should be lowered. Long term the price is suggested to remain high because of a larger grow in demand then supply.