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Cotton trade projected to trend upward at 2.2 % until 2019

19
Feb '10
United States Department of Agriculture (USDA) provides longrun (10-year) projections for the agricultural sector through 2019. Projections cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices.

World cotton trade is projected to trend upward at 2.2 percent a year until 2019, but does not surpass the 2005 record until the end of the coming decade. There have been dramatic geographical shifts in mill use and trade of cotton since the 5 years prior to the elimination of the Multifiber Arrangement (MFA) quotas in 2005. Asia's share of world cotton imports has risen from less than 50 percent in the late 1990s to 72 percent in 2009 and is projected to reach more than 78 percent by 2019. Asia accounts for nearly all of the increase in world cotton imports during the coming decade.

The textile industries in China, India, and Pakistan were the major beneficiaries of textile trade liberalization as a result of the elimination of the MFA quotas in 2005. However, imports have risen in other Asian countries as well, most notably Vietnam and Bangladesh.

China's textile industry and its cotton imports are expected to grow during the projection period, but more slowly than the rapid increases from 2001 to 2005 after joining the World Trade Organization (WTO). Nonetheless, during the coming decade, China is projected to account for half of the global increase in cotton imports.

Pakistan has emerged as a major importer in recent years and is projected to be the world's second largest importing country during the next 10 years. However, if new Bacillus thuringiensis (Bt) cotton varieties specific to Pakistan's cotton sector prove more
productive, imports could fall.

Until several years ago, Turkey's textile industry benefited from favorable trade access to the EU, its major market for textile and apparel exports. However, the end of the MFA quotas gave lower-cost competitors more favorable access to EU markets. Turkey's cotton imports have fallen and are projected to continue declining over the next 10 years.

The EU, Japan, Taiwan, and South Korea all steadily reduce their cotton imports as textile trade reforms or higher wages in these countries, or both, drive textile production to countries with lower wages and other costs.

Globalization is expected to continue to move raw cotton production to countries with favorable resource endowments and technology. Traditional producers with large land bases suitable for cotton production continue to benefit from post-MFA trade patterns, including the United States, Sub-Saharan Africa, India, and Brazil. The importance of technology has been highlighted by the impact of India's rapid adoption of genetically modified cotton, nearly all Bt cotton.

The United States continues as the world's leading cotton exporter throughout the projections. U.S. exports climb 24 percent to more than 16 million bales by 2019, exceeding 35 percent of overall world trade. However, the U.S. share of world ex orts is still below the 40-percent share realized in 2004.


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