Vietnam Cotton Production Drops Slightly

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Vietnam Cotton Production Drops Slightly

09 October 2012

VIETNAM - The Vietnam Marketing Year (MY) 2012/13 cotton supply and demand estimates include smaller production and ending stocks compared with last year. Production is down six per cent while cotton imports are up by five per cent.

Domestic mill use is increasing slightly due to the expanding cotton yarn spinning sector. While Vietnam requires about 350,000 metric tons (mt) of cotton yearly to serve its growing textile and garment sector, the country's 10,000 hectares (ha) of cotton farms produce only 4,500 tons, which only meets 1.4 per cent of the total demand. Despite recent contract defaults, US cotton will likely continue to be the largest source of imported cotton in MY 2012/13.

Vietnam relies heavily on cotton imports (1,620 thousand bales or 354,000 mt in MY 2011/12) to feed the growing textile and spinning industry due to limited cotton production. This reliance is forecast to grow in marketing year 2012/13 with imports reaching 1,705 thousand bales or 372,000 mt, 97.4 per cent of forecast consumption.

Due to favorable cotton prices in August 2011, Vietnam’s MY 2011/12 cotton lint production reached 5,180 mt equivalent to a mere 23.8 thousand bales, a year-on-year increase of 10.4 per cent, due mainly to expanded planted area and increased cotton yield.

Domestic production still only meets 1.4 per cent of the total cotton demand from the textile industry. However, in early 2012, cotton prices dropped significantly and cotton is less competitive than other crops like corn and soybeans. Post forecasts the 2012/13 cotton production to decrease by 11.4 per cent to 4,590 mt of cotton lint (21 thousand bales).

Cotton lint demand in Vietnam has remained strong, despite the global economic downturn, as the textile and spinning industry continues to expand. In 2011/12, cotton imports increased slightly by 3.1 per cent in comparison with the previous year, to approximately 354,000 mt. Despite, economic uncertainty during the 2nd half of 2012, Post estimates Vietnam’s cotton imports in 2012/13 to increase 5 per cent over the previous year, to 372,000 mt (1.705 million bales) due to strong exports of yarns to China and Turkey.

In 2011, the United States, for the fifth consecutive year, remained the largest supplier of cotton to Vietnam. Vietnam sourced 133,200 tons (about 41 per cent) of its total cotton imports in 2011 from the United States. Vietnam is now the seventh largest market for US cotton at $362.3 million in 2011.