Bangladesh is a net importer of cotton for meeting the demand for export-oriented garment factories.
The fluctuation of cotton prices also fluctuates the garment prices of Bangladesh as the country is highly dependent on imported cotton.
The local growers can supply less than two percent of the required cotton for nine million bales in a year.

Any kind of externalities can dent the global supply chain of garments and also cotton.
The Russian – Ukraine war just in the time of the recovery of the global economy and supply chain from the severe fallouts of the Covid-19 has started affecting the country’s textile sector.
Current price of cotton in international markets
For instance, in the international markets, the cotton is sold between $1.35 per pound and $1.36 per pound on 4 April, which was between $1.20 per pound and $1.21 per pound in the international markets.

In fact, the cotton prices surged to more than a decade high in the global market in the wake of the Russia-Ukraine war, abnormal hike in freight charges and drought in the US, which will drive up the production cost for readymade garment (RMG) makers in Bangladesh, thus affecting their profitability.
Even before the Russian-Ukraine war, the price of the key textile raw material had surged in the international market for pent-up demand following the reopening of economies after the pandemic-led lockdowns.
Because of the drought in some cotton-growing regions in the US, petroleum price hikes in the global markets, and the high volume of cotton purchased by China pushed up the price of the white fibre by 9.09% in the past month.
Consequences of cotton price hike
As a result, the cost of production for garment manufacturers and exporters will go up further since Bangladesh is fully dependent on imported cotton to feed its main export earning sector.
Local growers can supply less than 2 percent of 9 million bales of cotton consumed annually in the country, forcing the country to spend nearly $3 billion to import the raw material for the growing apparel industry. Some 480 pounds, or 218 kilograms, make a bale.
Importers and millers say if the war prolonges, the price of cotton would jump further. This will ultimately increase the price of yarn in the local markets, which will raise the cost of production for garment manufacturing.
This will put the exporters in a difficult situation because while the cost of production may go up quickly whereas they might not get higher prices from their international buyers since the process involves intense negotiation.
The local spinning sector was running with world heated cotton prices because of the sudden surge in price hikes in the international markets at the time of business recovery from the severe fallouts of the Covid19 since August last year.
What the sector people say
Even the local spinners and garment manufacturers held several meetings to settle the price of yarn for the local markets as the higher prices of yarn eat up the profitability of the local garment exporters.
So another round of price hikes because of the cotton price surge following the outbreak of the Russia – Ukraine war also dent further the profitability of the local spinners.
Ultimately, the local garment export will be affected due to high yarn prices and low offer of prices from the international retailers and brands as they are not ready to pay more although the cost of production is increasing with cotton price hike and expensive shipping charges, the local spinners said.
Bangladesh has 450 spinning mills which are engaged to produce yarn from imported cotton.
If the Russia – Ukraine war continues for a long time the prices of cotton yarn may rise in the local markets, said A Matin Chowdhury, Managing Director of Malek Spinning Mills Ltd, a major cotton importer and user.
The higher freight charge has also been affecting the yarn price as the local spinners have to make yarn from the imported cotton, Chowdhury also said.
Nearly 80 percent of the yarn produced at the mill is purely cotton yarn, while the remaining 20 percent is mixed yarn from cotton and artificial fibre yarn.
Chinese purchase of cotton in bulk quantity and crop loss in the USA is also responsible for price hikes of cotton in the international markets, the local millers also said.
In the next two years, Bangladesh’s yarn production capacity will see an addition of 2.5 million spindles. Currently, 13.5 million spindles are used to manufacture textile raw materials, according to Bangladesh Textile Mills Association (BTMA).
So, if the cotton prices continue to soar in the international markets, production of both cotton yarn and manmade fibre would be surely affected because Bangladesh is also a net importer of manmade fibre.
The spinning sector in Bangladesh witnessed a major jump in investment last year as entrepreneurs set up 26 new mills to meet rising demand despite uncertainty in the global apparel supply chain owing to the pandemic, said Monsoor Ahmed, Chief Executive Officer of the BTMA.
Entrepreneurs invested Tk 5,970 crore in the new manufacturing plants, adding more than 745,400 new spindles to their combined capacity, Ahmed said.
Currently, the total investment in the primary textile sector is $15.0billion and the local spinners and millers want to take the total investment in the primary textile sector to $20 billion by 2025, Ahmed also said.
The spinning mills have an investment of $11.0 billion, he said adding any kind of disruption in the supply of cotton may affect the investment and production in the primary textile sector.
Shahadat Hossain Sohel, Chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, the Russia – Ukraine war will help increase raw materials which will ultimately affect the production and squeeze the profitability.
The cotton price is like the situation of 2010 and 2011 when the cotton price rose to even $2.50 per pound, he said.
The Russian market was growing at a faster rate, he said adding between July-December of the current fiscal year the garment export to Russia grew by 36 percent year on year, he said.
Bangladesh will miss a good emerging market of Russia if the war is not stopped, he added.