Thailand – Cotton and Products Annual 2017

Thailand – Cotton and Products Annual 2017

A report of the USDA U.S. Department of agriculture highlights the cotton and cotton manufacturing sectors of Thailand, and TextileFuture wishes to bring these data to your attention

MY 2017/18 cotton imports are forecasted to increase 3-4 % from MY2016/17 in anticipation of a sustained recovery by spinning mills that have been in a downturn since 2014. Cotton yarn inventories are likely to decline to a record low in MY 2016/17

Executive Summary

MY 2016/17 and MY 2017/18 cotton imports are forecasted to increase to 1.3 – 1.4 million bales in line with a recovery in the spinning industry. In MY2016/17, spinning mills are expected to run down large inventories of cotton yarn accumulated during the economic downturn over the past couple of years due to a surge in domestic demand for black clothes during the mourning period for the passing of King Bhumibol Adulyadej. Spinners will also likely increase their cotton yarn production capacity utilization in MY2017/18. While large-scale spinning mills still maintain their competitive edge in domestic and export markets, small and medium-scale spinning mills struggle with competition from imported cotton yarn and fabric, particularly from India, China, and Vietnam.

Cotton

 

1.            Production

Cotton production remains marginal in Thailand totalling approximately 1,500 to 1,600 metric tons (2,300 – 2,500 bales) due to unattractive returns compared to other field crops like sugarcane. This production accounts for less than one % of total demand which is unlikely to change as the government does not provide any incentives for famers to expand cotton acreage. Additionally, the government still bans the domestic production of all transgenic or biotech plant varieties, including cotton.

 

2.            Consumption

MY2017/18 cotton consumption is forecasted to increase to around 1.4 million bales, up around 4 % from MY2016/17 in anticipation of a recovery in the spinning industry. Spinning mills are expected to increase their cotton yarn production capacity utilization as their stock-to-use ratio is currently at record lows due to high domestic demand.  Additionally, according to the National

Economic and Social Development Board’s (NESDB) official economic forecast, the Thai economy is expected to grow at a rate of 3-4 % in 2017.

MY2016/17 cotton consumption is expected to increase to 1.3 million bales, up 2 % from MY2015/16 as the Thai economy gradually expands in 2016 (Figure 1). According to the Ministry of Industry’s (MOI) Manufacturing Production Index (Figure 2), total cotton yarn production increased 15 % in the first half of MY2016/17. This increase is due to a 33 % increase in cotton-blended yarn production, which has become an increasingly popular fabric for clothing manufacturers. The increase in total cotton yarn production was also driven by strong demand for black clothes during the mourning period for the passing of King Bhumibol Adulyadej. The mourning period began on October 13, 2016, and will end in October 2017. The demand for black clothes helped spinning mills further reduce cotton yarn inventories by 24 % in the first half of MY2016/17. The stock-to-use ratio has also declined by 30 % from the same period last year (Figure 3).  Despite the increase in total cotton yarn production, pure cotton yarn production declined around 1 % from the same period last year due to competition from imported cotton yarn and fabric, particularly from India, China, and Vietnam. The MOI’s Department of Industrial Works reported that 17 small and medium-scale textile manufacturers, including spinning, weaving, and garment manufacturers, shut down in the first half of MY2016/17 due to liquidity problems. However, large-scale spinning mills have largely escaped these problems and are running at similar average production capacity utilization levels as last year.

Thai Cotton Fig 1

Thai Cotton Fig 2

Thai Cotton Fig. 3 Inventory

 

3.            Trade

MY 2017/18 cotton imports are forecasted to increase to around 1.4 million bales, up 4 % from MY 2016/17 in line with an anticipated recovery in the spinning industry and a run-down of raw cotton inventory. Import demand for U.S. cotton will likely increase to 460000 bales, up approximately 2 % from MY2016/17 due to competitive prices and high-quality standards.

MY 2016/17 cotton imports are expected to increase to 1.3 million bales. This is a 2-3 % increase from MY 2015/16 as spinners have reportedly run down their raw cotton and large inventories of cotton yarn in the first half of MY 2016/17. In the first five month of MY 2016/17, cotton imports totalled 0.4 million bales. This is an 18 % reduction from the same period last year as spinners reportedly limited their purchases while world cotton prices were rising. In the first five months of MY2015/16, average imported prices of cotton increased to USD 79 cents/lb, up approximately 28 % from the same period last year (Figure 4). Imports of U.S. cotton declined around 2 %, much less than Brazilian and Indian cotton imports which declined significantly (Table 2). Meanwhile, imports of Australian cotton increase 42 % due to a recovery in Australian cotton production. Imports of U.S. cotton are expected to increase to 450,000 bales in MY2016/17, up 6 % from MY2015/16 as small and medium-scale spinning mills prefer U.S. cotton to cotton from other origins, particularly for mixed grade cotton due to its competitive prices and high-quality standards.  U.S. cotton is likely to maintain its market share of around one-third of the market.

Thai Cotton Fig. 4

Spinners have faced competition from relatively cheaper imported cotton yarn and fabric. In the first five month of MY2016/17, imports of cotton yarn increased 66 % from the same period last year, mainly from India, China, and Vietnam. Imports of Indian cotton yarn and fabric doubled in 2016 (Table 9). Meanwhile, exports of cotton yarn declined 30 % in 2016 (Table 8) and in the first half of MY2016/17.

4.            Stocks

MY 2016/17 and MY 2017/18 cotton stocks are expected to remain at minimum levels of around 1 to 2 months of use. Despite a 30 % reduction in stock-to-use ratio of cotton yarn in the first half of MY2016/17, spinning mills remain cautious in building up stocks of cotton due to concerns about possible price volatility.

Thai Cotton Table 1

Thai Cotton Table 2

Thai Cotton T 3

Thai Cotton T 4

Thai Cotton T 5

Thai Cotton T 6

Table 7: Thailand Production of Yarn

Thai Cotton T 7

Thai Cotton T 8

Thai Cotton T 9

Thai Cotton T10

Thai Cotton T11

Thai Cotton T12

 

 https://www.usda.gov

 

 

 

 

 


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