Bangladesh may overtake China as the world’s biggest cotton importer in the current crop season thanks to strong demand from apparel makers, according to data from the US Department of Agriculture.
In the year ending July 31, 2016, Bangladesh may import a record 5.75 million bales of the fibre, up 6.5 percent from a year earlier, said the USDA last week. One bale weighs 480 pounds, or 218 kilograms.
China is projected to import 5.5 million bales, the lowest since 2003, according to Bloomberg.
Bangladesh’s share of the global cotton-export market doubled from 1995 to 2012, mostly because of the strong performance of the garment sector, the World Bank said in an October report.
Since 2009, the country has been the world’s second largest exporter of clothing after China.
There are several reasons for the steep drop in Chinese imports.
China is grappling with wage inflation. It has more-than-ample stock: most of the 104.4 million bales of global stockpiles predicted by the USDA in the current crop year are in China.
Also, unlike Bangladesh and several other Asian nations, China has curbs on imports in the form of quotas and tariffs. Like Bangladesh, Vietnam and Indonesia are gaining market share too.
While cotton use by Bangladeshi mills is forecast to rise 10 percent in 2015-16, it will jump 20 percent in Vietnam, according to the International Cotton Advisory Committee. The International Monetary Fund’s most recent macroeconomic outlook projects global income growth in 2015 at its slowest in 6 years.
Low polyester prices relative to cotton, issues associated with China’s transition to new cotton policies and adjustments to higher wages are also factors limiting consumption growth in recent years, the USDA report also said.
World cotton production in 2015-16 is forecast to be 103.7 million bales, which is 13 percent below last season, as lower area combined with a reduced yield will push the global crop to its lowest since 2009-10.
Considerable production declines in 2015-16 for all of the major producers will reduce the supply of the crop by more than 15 million bales.
Global harvested area is estimated at 31.2 million hectares, in contrast to 34 million hectares in 2014-15. The world cotton yield is forecast at 723 kg/hectare, compared with 763 kg/hectare last season, the USDA report also said.
Production for the top two producers — India and China — is projected to account for a combined 51 percent of the world total, with forecasts of 28.5 and 24.3 million bales, respectively. For India, production will decline for the second consecutive year in 2015-16.
The decline is more dramatic for China, as production is forecast to fall by 5.7 million bales to 24.3 million bales in 2015-16.