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2011-6-3
Consumption
MY 2010 domestic cotton consumption is now estimated to be about 1.20 MMT (5.5 million bales). Record high world cotton prices increased the cost of textile production and caused a decline in orders. It is reported that reduced orders have caused exports to decline, particularly from Southern European countries due to the economic slowdown and Middle Eastern countries due to political turmoil. As export demand fell, the sudden decline in cotton prices caused some mills to get caught with high cost raw material stocks, making it harder to compete with low cost imports.
Additionally, a decree was announced in January which will increase import duties for textile and garment imports to 20 and 30 percent, respectively, starting on July 21, 2011. Even though the decree is expected to increase utilization of locally produced material in textiles, high local prices persuaded local garment producers to rush to import raw materials from low cost countries beforeJuly 21. Accordingly, while imports of textiles and garments increased in recent months local mills are reported to have received very low orders in the last two months and some are reported to be considering temporary closures. High cotton yarn prices are also reported to have caused an increase in the usage of manmade fibers by the Turkish textile industry.
Even though Turkish textile and garment exports still show 20 and 10 percent increases respectively, sources indicate that these increases are due to delivery of old orders and export growth soon will stop. It is also reported that some mills who ordered new machinery to increase capacity are trying to postpone their purchases.
Mills are hoping for improvement in the overall economic situation in domestic and international markets and also the stabilization of world cotton prices with the new crop, to be able to work competitively again.
Trade
Turkey imported 512,310 MT (2.4 Million bales) of cotton during first eight months of MY 2010, of which 372,000 MT (1.7 Million bales) or seventy-one percent was U.S. cotton. Greece, the CIS countries, Brazil and India were the other suppliers to Turkey. Total year end imports are expected to remain at about 700,000 MT due to a decline in domestic consumption. GSM-102 credit guarantee program continues to play an important role in U.S. cotton sales to Turkey. During FY 2011 Turkish cotton importers bought US$ 235 million worth of U.S. cotton under the program, which represents about fifty-seven percent of total usage as of May 25, 2011.
Turkish cotton exports during the same period were about 5,880 MT (27,000 bales), of which about 5,357 MT (24,590 bales) went to Turkish free trade zones. Some of the cotton in these zones may be imported back into the country. Turkey also exported about 16,130 MT of cotton for medical use during the same period.
Source:USDA''s Foreign Agricultural Service (FAS)
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