Cotton production may plunge 17%

07 May '09

5 min read

Exports in 2008/09 are expected to decline dramatically and reach 100,000 bales, from 619,000 bales in the previous year. This expected sharp decrease in exports is a direct result of the world financial crisis and recession affecting the textile industry. Most textile mills are using low quality imported cotton in order to be more competitive in the market. In addition the Egyptian extra long staple cotton continues to loose its price competitiveness in the world cotton market due to severe competition from other subsidized sources.

Cotton imports in 2008/2009 season are forecasted to increase by about eight percent over the 2007/08 level and are expected to reach 420,000 bales. With about 52 percent of total cotton imports Greece continues to dominate the Egyptian cotton import market . The import price for Greek cotton is reported to be $0.76 per pound C&F, including fumigation at the loading port. The rest is imported mostly from Sudan.

In 2008/09 Egypt imported 51,000 bales of Acalla and Barakat cotton from Sudan at a reported price of $ 0.54 per pound and $0.75 per pound respectively. Imports for 2009/2010 are forecasted to increase slightly to 450,000 bales. Currently imports of cotton are permitted from eight approved areas: Sudan, Syria, Greece, Uzbekistan, Turkmenistan, California and Arizona with other U.S states in addition to California and Arizona under consideration.

To be approved an area must be shown to be boll weevil free. Post is currently working with the Egyptian government authorities (Plant Quarantine) and APHS in order to approve cotton imports from states in addition to California and Arizona.

This will allow Egyptian mills to import greater quantities from the US. Short staple cotton is used in the production of coarse yarn, which most Egyptian textile mills use. Once the area has been checked and approved, cotton imports must be fumigated at port of loading under vacuum with methyl bromide, or if vacuum is not available, atmospheric fumigation at port of loading followed by a second fumigation at port of arrival under vacuum. Given international sensitivity about the use of methyl bromide (not normally approved for use in the EU), alternative chemicals are under investigation.

Stocks are expected to decrease in 2008/09 to 380,000 bales as production decreases. A further decrease in stocks is expected for 2009/2010.

At the beginning of the 2008/09 cotton harvesting season, cotton prices increased from the previous season's level. This was due to trader speculation for a good export season. However, due to the collapse of cotton exports, most farmers were not able to sell their cotton. Market prices for the 2008/09 season were reported at LE 870 ($155) for Giza 86, LE 850 ($152) for Giza 88 and LE 750 ($134) for Giza 90. This compared to LE 650 ($ 118) for Giza 86, LE 750 ($136) for Giza 88, and LE 540 ($98) for Giza 90 (prices are per kentar of 50 kg) in 2007/08.

U.S. Department of Agriculture's Foreign Agricultural Service

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