Bangladesh to import more cotton as garment exports rise.

Bangladesh, the world's second-largest garment exporter after China, is projected to import more cotton in the 2024-25 marketing year (MY) to meet rising global demand for clothes. The US Department of Agriculture (USDA) predicts imports to reach 80 lakh bales (1 bale = 218 kg), a 6.7 per cent increase from MY 2023-24. This rise is attributed to two factors:

• Increased garment exports: Bangladesh's garment industry anticipates a 7-10 per cent export surge in 2024, bouncing back from a global slowdown. Early 2024 data shows a promising 13.2 per cent year-on-year growth in garment exports, suggesting this trend will continue in MY25 and drive up cotton demand.
• Shift towards raw cotton: Dwindling foreign exchange reserves may lead to a preference for raw cotton over pricier fabrics. Additionally, many garment factories with spinning mills can secure financing (LCs) due to their export earnings, allowing them to import raw cotton directly. This advantage may not be available to smaller importers who rely solely on yarn and fabric.

However, the USDA maintains its current projections of 75 lakh bales imported and 78 lakh bales consumed in MY24. This is likely due to import data showing 41 lakh bales already imported in the first seven months.

The report also acknowledges challenges faced by the spinning industry in the first half of MY23 due to gas and electricity shortages. While the situation has improved, higher cotton imports and utilization are still anticipated for the remaining months based on the garment industry's optimistic outlook.

In summary, Bangladesh's cotton imports are expected to rise in MY24-25 despite economic hurdles, driven by a rebounding garment industry and a shift towards raw cotton consumption.