WASHINGTON — December 2015 — Cotton spinning in Vietnam has more than tripled in the last 4 years, with total use expected to reach 5.1 million bales in 2015-16. During this period, Vietnam accounted for half of the total world growth in cotton demand.
Rising yarn exports have been the main source of this rapid expansion in mill use. Net yarn exports increased at an annual rate of over 40 percent from 2011-2012 to 2015-2016. China was the largest market for Vietnam yarn exports even before 2011-2012, and its share of Vietnam’s exports has expanded further over the last few years, now accounting for 80-90 percent of Vietnam’s yarn exports. This growth is paralleled by a large rise in Chinese investment in yarn spinning in Vietnam, alongside wholesale relocations of some firms. The key driver of this trend has been China’s domestic cotton policy which has elevated the internal price of cotton enough to render many spinning operations unprofitable.
Cotton consumption for Vietnam’s domestic yarn utilization has also shown impressive growth, more than doubling since 2011-2012. Thus, even as more yarn is being exported to China, Vietnam’s role further up the textile value chain is also growing.
World Markets And Trade Overview
For 2015/16, world production is lowered substantially, mostly due to changes in Pakistan, India, and China. Consumption is marginally lower. Trade is raised about 700,000 bales. U.S. production and use are lowered slightly, while ending stocks are raised. The U.S. season-average farm price is projected unchanged at 59 cents/pound.
The A-Index and U.S. spot prices continue to drift sideways as the market awaits more information about possible sales from China’s state reserve.
For the week ending December 31, accumulated exports for all cotton rose to 2.44 million running bales versus 2.53 million last year, while outstanding sales rose to 2.53 million versus 5.83 million last year. As of December 31 total commitments were 54 percent of forecast marketing year total exports, the lowest level since 2009/10.
2015-16 TRADE OUTLOOK Major Importers:
- Pakistan is boosted 700,000 bales to 2.7 million on a smaller harvested crop and strong purchases.
- Major Exporters:India is raised 500,000 bales to 5.8 million on expected higher import demand from Pakistan.
- Australia is raised 150,000 bales to 3.75 million on high end-of-season shipments.
- Mali is raised 100,000 bales to 1.2 million on strong demand for West African cotton.
- Brazil is increased 100,000 bales to 4.3 million on reports of higher recent sales.
- Turkmenistan is lowered 100,000 bales to 1.0 million on a smaller harvested crop.
Posted January 19, 2016