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Jürg Rupp, Executive Editor

The Rupp Report: Rising Demand For Cotton

Jürg Rupp, Executive Editor

According to the cotton report of Germany-based Baumwollboerse Bremen, the world import demand for cotton has expanded some 34 percent over the past six years, mainly because of growth in China, Pakistan, Bangladesh and Turkey. In 2005-06, China unexpectedly imported a record 19.3 million bales, but dropped back to 10.6 million the following year. Global cotton imports have trended up, but China's erratic imports and the changing global economic climate cause greater uncertainty in today's market.

Imports To Asia Went Up ...
During the period 2001-02 through 2006-07, 17 countries raised their imports by 15.9 million bales. China, Pakistan, Bangladesh and Turkey accounted for 86 percent of that growth. The reason for that growth is obvious: These countries have large labor supplies that make them favorable to expansion in textile processing with labor-intensive, low-wage jobs.

Cotton use in China and Bangladesh has nearly doubled in the past six years, whereas Pakistan's use is up nearly 50 percent and Turkey, close to 20 percent. Among the other 13 countries are Vietnam, Egypt, Iran and Brazil. Of these, Vietnam showed the most rapid growth in imports as consumption almost doubled.

... And Imports To Europe Went Down
Over the same period, imports in 50 countries dropped by 8 million bales for a number of reasons. In some European countries - including Italy, France, Germany, Portugal, Spain and Poland - imports dropped by 21 percent because cotton use has steadily declined. In Canada, Chile and Venezuela, imports fell because of declining processing, but Mexico's imports dropped off because production expanded. Also in Korea, Japan, and Taiwan, imports declined by 1.3 million bales. This is another result of the ongoing move of the cotton processing to mainland China.

Increased Yield For India
Declining imports in India were caused by increased production. The Indian cotton production for 2007-08 is forecast at a record high of 25 million bales, up 0.5 million or 2 percent from last month and up 3.2 million or 15 percent from last year. The year-on-year increase is attributed to a much higher sown area, a generally favorable monsoon rainfall, and a forecast record yield.

The area is estimated at a record 9.5 million hectares, unchanged from last month but up 0.3 million or 4 percent from last year. According to the US agricultural attaché in New Delhi, the record area is the result of strong cotton prices and positive returns received by farmers in 2006-07. It is widely acknowledged by officials and other specialists that the strong upward trend in India's cotton yield in recent years is due largely to the increasing adoption of insect-resistant Bt cotton. In 2006-07, the government of India approved 62 new Bt varieties for commercial cultivation. In 2007-08, Bt cotton will likely account for more than 60 percent of the total cotton area.

Given the year-on-year increase in Bt area, 2007-08 yield is forecast to reach a record 573 kilograms per hectare. The harvest of the 2007-08 crop is on the way, and another report from the Cotton Corp. of India indicates that some 21.9 million bales had arrived at ginning facilities by April 6. Compared with the same date last season, arrivals had reached 18.7 million bales, or 86 percent of final 2006-07 output.

April 29, 2008




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