Cotton exports to HK in MY 2006 forecast at 50,000 MT

20 May '06

3 min read

USDA Foreign Agricultural Service announces Report Highlights: The U.S. is the largest supplier of cotton for the Hong Kong market. In MY 2004, the US exported $60 million worth of cotton to Hong Kong, occupying a volume market share of 77 percent. However, between August 2005 and March 2006, the import market share of U.S. cotton was drastically reduced to 51 percent. There were two primary reasons.

First, U.S. cotton shipment deliveries were greatly affected by hurricanes in the U.S. last year and second, India has had abundant price competitive cotton readily available for export. U.S. cotton may face a great challenge in the Hong Kong market in the near future because of the expected increase in India cotton exports to Hong Kong in MY 2005 and MY 2006 and the elimination of Step-2 program.

Hong Kong spinners may find it difficult to afford higher priced U.S. cotton because of the prevailing low cotton yarn prices, which result from severe competition of cotton yarn supplies throughout the region.

As such, U.S. cotton exports to Hong Kong in MY 2005 and MY 2006 are forecast at 40,000 MT and 50,000 MT respectively, lower than the import level of 53,479 MT in MY 2004. Due to the relocation of local weaving plants, cotton consumption is expected to remain in the range of 66,000 MT of 300,000 bales in the coming years.

Hong Kong is taking the trend of shifting yarn production from open-end to ring production. The share of ring production has been increasing over the years. It rose 14 percent between 2004 and 2005, presenting a market share of 27 percent and 34 percent respectively.

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