Pakistan likely to witness rising cotton import trend by next season

Cotton imports of Pakistan are likely to rise per the figures of the US Department of Agriculture bureau in Islamabad which predicts an import of 2.0m bales of cotton in 2015-2016, the highest in 8 years.

The reason for the rise in imports is mainly subjected to the increase in cotton consumption. Pakistan cotton consumption of 11.35m bales in 2015-16, starting in August, would represent the highest figure since 2007-08 – before the world financial crisis which hit demand for the fibre, as an industrial commodity, particularly badly compared with that for food crops.

Also the demand for the fiber is increasing considerably in lower -ranking importing countries, as China’s purchases wane. The “sizeable” imports reflect in part expectations of weaker domestic cotton production this year, after last year’s bumper 10.5m- bale harvest, although the decline is seen limited to 500,000 bales by the lack of alternative crops for farmers facing lower prices of the fibre.

However, the bureau also estimated domestic consumption of the fibre rising by 6.8% to 11.35m bales, boosted by improved access for its textiles industry to the important European Union import market. The bureau also highlighted government measures to “priorities energy supplies for industries like the textile sector, a step that bodes well for cotton consumption”.

World cotton consumption tumbled 11% to 23.7m tonnes in 2008-09 as the crisis hit, according to International Cotton Advisory Committee data, and will come in only marginally higher this season, at 24.1m tonnes.

The revival in cotton demand has been undermined by high prices of the fibre for much of the post-crisis period – largely thanks to a Chinese subsidy regime which, in offering growers generous prices, encouraged mills to buy abroad, boosting values there too.

Reforms to China’s subsidy regime have, in slashing the country’s own imports, encouraged lower cotton prices, implying improved demand, although this dynamic has been undermined somewhat by the crude market crash which has lowered prices of oil-based fibres such as polyester.

The rising import trend in cotton is seen to be prominent in the financial year of 2015-2016. Reduced domestic production, in the face of lower cotton prices, is also seen playing a role.

USDA bureaux have also forecast raised imports in 2015-16 the likes of Turkey, where they are seen growing by 19.5% to 3.56m bales, and Egypt, forecast soaring by 29% to 450,000 bales, fuelled by improved demand.

In India, the second-biggest exporting country and top grower, USDA staff forecast use rising by 500,000 bales to 24.5m bales, while production eases 700,000 bales to 29.3m bales.

For Vietnam, USDA staff has forecast a 10.0% rise to a record 4.19m bales in imports, although that represents a slowdown for a country whose demand growth has bucked the stagnant world trend.

Pakistan, thus, follows suit to this trend resulting in its cotton buy-ins to will jump by 150% next season