World’s major cotton supplying countries have been affected by extreme weather. Analysts have expressed the fear of a major disruption in the supply of the main raw materials of the clothing and textile sector in the coming days.
The largest cotton producing country India has been severely affected by heavy rains and pest attacks. The production shortfall is so acute that India is forced to meet supply demand through imports.
On the other hand, the fear for upcoming cotton production and extraction has reached highest due to extreme heat in China. The largest exporter of the product is the United States. But severe drought has been devastating for the country’s cotton-growing regions. The second largest cotton exporter Brazil is constantly fighting with excessive heat and drought.
According to Bloomberg, cotton production will decline by 28% in the US and 27% for Brazil. The US cotton production may reach its lowest level since the 2009-10 season. The drought has become so severe in the country, the government has begun rationing water from the Colorado River.
According to the information provided by the Brazilian cotton producer association Abrapa, at least 200,000 tons of cotton production has been damaged in the Latin American country due to the drought.
Half of global cotton exports come from the United States and Brazil. However, both countries are currently struggling with adverse weather conditions that could slowdown global cotton exports.
The cotton price in the international market has skyrocketed due to adverse weather. The price of the product has increased by at least 30 percent so far this year. Earlier in the year, cotton price reached their highest level since 2011 which is shrinking the apparel supply margins across the globe.
Bangladesh Textile Mills Association (BTMA) Additional Director and Chief Executive Officer (in-charge) Mansoor Ahmed told the media that if cotton production decreases due to drought in the United States and Brazil, it will have a severe impact on Bangladesh.
“We import 10%-11% cotton from the US and 4%-5% from Brazil. China imports more cotton from the US, but we import yarn and fabrics from China. So, there is no relief from the negative impact,” he added.
As the global supply of cotton continues to decrease, the demand for the product has started to go in the opposite direction. A downward trend in demand is being observed due to the economic slowdown and the decrease in clothing purchased amount, especially in Europe and Asia the demand is lower. But the general situation of the market including the decrease in production indicating that the price may increase in the coming months even though the demand is low.
Meanwhile, not only the suppliers, but also the global buyers have become a headache due to the adverse weather conditions. Due to the heavy rains in Australia, Pakistan and other countries are worried about cotton stocks.