Bangladesh among 3 countries leading recovery: USDA
Bangladesh has joined two other countries to lead the global cotton trade recovery as the demand for the commodity has risen sharply thanks to buoyant apparel shipments, according to the United States Department of Agriculture (USDA).
"Record global trade is boosted, led by robust demand in China, Bangladesh, and Turkey," the USDA said in its June report.
Cotton exports are up for the three largest exporters -- India, Brazil, and the United States. The US forecast has higher exports while stocks are projected at their lowest in four years.
The US season-average farm price has lowered by one cent to 67 cents per pound, the USDA said in its report on cotton for 2020-21.
For 2021-22, the June forecast shows higher trade and consumption with lower production and stocks.
A lower consumption outlook for India is more than offset by the higher-than-expected demand in China, Bangladesh, and Turkey, driving higher imports for these countries, said the USDA.
The recent import growth of cotton in Bangladesh resulted from the skyrocketing demand among local millers, spinners, traders and importers.
For instance, the export of yarn in the local markets is deemed to have grown by 163 per cent year-on-year between April and June this year, data from the Bangladesh Textile Mills Association (BTMA) showed.
This is a result of higher demand from garment exporters, and for resumption of the full use of capacities of mills by spinners and weavers, it said.
In the first 11 months of fiscal 2020-21, the country earned $28.57 billion from garment exports, registering 11.1 per cent year-on-year growth, according to data from the Export Promotion Bureau.
Knitwear shipments fetched $15.36 billion, and woven garments brought home $13.19 billion, clocking 20.55 per cent and 1.80 per cent year-on-year growth, respectively.
The export data shows that the Bangladeshi garment sector is recovering fast with the rise in demand in the western world.
A significant development was the return of woven shipments to the positive territory last month after declining for a year.
The demand for woven items had fallen in the western world as formal events were suspended because of the lockdowns and fears over contracting Covid-19.
Knitwear items maintained 12 per cent growth over the last year because of an increase in demand for more extended stays of people at home.
"The recovery trend is good, and it will not be short-term this time," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
However, it will take long to recoup the industry's losses last year because of the fallouts of the Covid-19, he said.
"We have been receiving a handful of work orders. There has been the reinstatement of previous orders. But many factories are running at losses," Hassan said.
Last year, international clothing retailers and brands either suspended or cancelled work orders worth $3.18 billion, of which 90 per cent have been reinstated so far.
Hassan said the retailers and brands had been paying up, but there were many who had gone bankrupt and were still delaying payment.
The volume of merchandise trade was down 15.5 per cent year-on-year in the second quarter of 2020 when lockdowns in many countries were in full effect. But by the fourth quarter, trade had surpassed the level of the same period in 2019, said the World Trade Organisation on May 28.
On the global cotton trade, the USDA said China's 2020-21 imports were forecast at a seven-year high, driven by the highest projected consumption in three years, robust state reserve imports, and attractive prices for imported cotton relative to domestic supplies.
Imports are expected to support China's record year-over-year rise in consumption.
China's 2020-21 consumption is expected to recover from the lowest level in 16 years to surpass the previous year by 7 million bales, accounting for half of the gain in global use.
Currently, spinners' spot margins are roughly 30 per cent higher compared with that of the previous year due to the robust demand for cotton yarn and significantly lower yarn stocks, said the USDA.
Since Bangladesh is not a major cotton-producing nation, 99 per cent of the requirement for the raw material is met through imports.
Traders, importers and millers may import 8.5 million bales of cotton this year, spending $3 billion this year, said the BTMA.
Last year, cotton imports fell to 7.5 million bales as production came to a halt in many mills after the government had imposed nationwide restrictions to tame the coronavirus pandemic. (One bale equals 480 pounds.)