The imports of raw cotton by Bangladesh from its global suppliers may increase to eight million bales in Marketing Year (MY) 2024-25 – which starts in August every year, said the US Department of Agriculture (USDA) data.
USDA’s Foreign Agricultural Service said in its “Cotton and Products Annual” report that the import of cotton by Bangladeshi textile millers will see a 6.7% increase from MY23-24, assuming higher utilization of raw cotton by the spinning industry with lower imports of yarn and fabric.
The USDA data also forecast that Bangladesh’s garment industry is expecting RMG exports to increase by 7%-10% in 2024, rebounding from the lower orders during the global economic slowdown.
Moreover, RMG exports during the first two months of 2024 reached $9.47 billion, a year-on-year growth of 13.2% and this growth will continue in MY 2024-25, leading to an increase in the import of raw cotton.
“Industry contacts noted that Bangladesh’s RMG industry is expecting higher numbers of work orders from the second quarter of 2024 with rebounding global demand for RMG products,” said the USDA data.
Referring to data from the National Board of Revenue (NBR), in the first seven months of MY 2023-24, Bangladesh imported 4.1 million bales of raw cotton and by the end of MY 2023-24, total imports will be 7.5 million bales.
However, Bangladesh imported 6.31 million bales of raw cotton in Calendar Year (CY) 2023, down 25.6% from 8.5 million bales in CY 2022.
According to industry insiders, the main reason for the drop in cotton imports was that the mills could not run at total capacity due to a shortage in the gas power supply.
Moreover, a few spinning mills that do not have access to the GoB’s EDF faced difficulties in importing cotton due to the forex shortage. The reduction of the EDF also affected the cotton imports in early 2023.
The report also stated that the yarn and fabric imports will decrease in MY 2024-25 due to the country's dwindling forex reserves, potentially enabling higher consumption of raw cotton to produce local yarn.
“There are many RMG factories in Bangladesh that have their own spinning mills and prefer to import raw cotton to run their mills rather than importing yarn. These RMG companies can open LCs as they have their own sources of US dollars earned from exporting RMG,” the report added.
Companies that solely import yarn and fabric will continue to face forex challenges as they tend to be smaller than the fully integrated cotton spinning mills and have more difficulty opening LCs, leading to a reduction in their imports.
Industry contacts also anticipate a surge in global RMG demand after April 2024, which could increase cotton demand in Bangladesh.
According to the NBR data, as of February 2024, in MY 2023-24, West African countries remain the major suppliers of raw cotton to Bangladesh, about 35% of total imports.
Followed by India (22%) and Brazil (14%), the US supplied 11% of total raw cotton imported by Bangladesh in the mentioned period.
Recently, Bangladesh allowed the import of US cotton without fumigation on-arrival after a mandated fumigation of nearly half a century.
Meanwhile, Bangladesh repeatedly requested the United States for a duty-free market facility for readymade garments (RMG) items made from imported US cotton, as preferential access of its exports has long been withheld.
Bangladeshi apparel exporters said that the rules of abolishing mandatory fumigation tests for the US cotton would certainly make trading easier, and reduce time and cost of importing US cotton.
As Bangladesh has positioned itself as a major supplier of apparel items across the world, there is a clear potential for the US cotton growers and exporters to further tap this market.
They can further explore opportunities, if duty-free access is granted to apparel items made of the US cotton, said the exporters.
