Typically, December is the one of the best months for the stock market. But the current trend is flat to downward (could this be the market searching for a bottom?).

Textiles popped up on the radar screen today as it was reported that China the world’s largest, will decrease next year because of higher production costs, slumping prices and competition from grains, industry groups said.

China’s cotton-growing area, Planting will drop 10 to 30 percent, the China Cotton Association said today. Cotton futures in China have slid 19 percent this year.

A separate report by CNCotton, another industry group, showed an 18 percent decline in the growing area. Land devoted to the fiber may decrease 15.6 million acres to 71.3 million next year.

Using this year’s yield, the projected area indicated a crop of 30 million bales in 2009, the lowest since 2005 and down 18 percent from 2008.

Beijing-based China Cotton Association said by Nov. 30, farmers sold only 54 percent of the fiber collected since Sept. 1, the start of the harvest season, compared with 74 percent a year earlier, the group said. The National Cotton Market Monitoring System survey sampled 4,067 farmers and farming companies in November and December.

Here is the kicker: China is the world’s biggest textile exporter.

This sort of cutback could drive up the costs of U.S. textile manufacturers and force them to increase their costs of goods. Companies like Hanesbrands, Inc., (NYSE:HBI) and Ralph Lauren (NYSE:RL), Columbia Sportswear (NASDAQ:COLM) and Gilden Activewear (NYSE:GIL) could be in for a rough patch ahead as consumers are buying as many non-essentials as they once were.

Clothing could get hit even worse in the U.S. than it already has and those Christmas sale prices might look pretty good this summer. I am inclined to think that considering a short-sale due to crop production might be worth some due diligence on retail suppliers.

MarketMan