Market Trends of Cotton Trade Analysis
United States Dominates the Global Exports of Cotton
- The United States dominates global cotton exports due to its large-scale production capabilities, advanced agricultural practices, favorable government policies, and well-established trade networks. The country is one of the major cotton producers globally, with around 8.4 million metric tons of seed cotton (unginned) as of 2023. States like Texas, Georgia, and Mississippi account for the bulk of production, with Texas alone producing nearly half of the United States cotton output.
- The United States is the leading exporter in the world's cotton market, accounting for 35.8% of global cotton exports in 2023. This increase is supported by additional investment in textile operations in the United States to address logistics problems responsible for the growth. For instance, in 2024, The United States is focusing on enhancing textile and apparel trade partnerships in Central and South America through four key initiatives aimed at improving supply chain sustainability, addressing forced labor concerns, and enhancing security such as the bipartisan Americas Trade and Investment Act (Americas Act), which includes over USD 45 billion in incentives to promote circularity in the apparel industry. The act is designed to bolster trade and stabilize the region, with a commitment of USD 105 million annually for five years to support the creation of a circular textile industry. The United States exports much of its production to Asian markets for textile manufacturing. However, growing competition from Brazil and the effects of recent trade policies are shifting global market trends.
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Asia-Pacific Dominates Global Cotton Imports
- Asia - Pacific dominates global cotton imports due to significant textile and apparel manufacturing base. Countries like China, Bangladesh, Vietnam, Indonesia, Pakistan, and India are among the largest textile producers globally, driving the need for massive cotton imports. For instance, according to ITC Trade Map, China alone accounted for 27.2% of the global cotton imports in 2023. As the world's leading cotton importer, China has considerable influence over the global cotton trade. The nation's vast textile manufacturing sector drives its growing demand for raw cotton imports. In 2023, China imported 1.9 million metric tons of cotton (neither carded nor combed), primarily sourced from major suppliers like the United States, Brazil, and Australia. To cater to its booming textile industry, the Chinese government has rolled out policies to stabilize domestic prices and ensure a steady supply of premium cotton.
- After a dip in early 2023, textile and apparel exports bounced back, fueling a heightened demand for imported cotton. Coupled with reduced production and rising domestic consumption, China's need for imports intensified. Favorable import prices, like the A-index, compared with domestic rates, further increased demand. Even with a 1% import tariff and a 9% value-added tax, cotton prices delivered to Chinese mills hovered about 5 cents above import prices, amplifying the import surge. Moreover, 2023 witnessed a 12.9% increase in retail sales of clothing, shoes, hats, and knitted textiles. Online sales of wearable goods also climbed 10.8% year-on-year, emphasizing China's strong demand for cotton imports.
- Furthermore, certain nations, including Bangladesh and Vietnam, face production constraints, such as limited domestic cotton cultivation, leading to increased import volumes. Additionally, the geographic proximity to significant cotton producers like India and Australia facilitates the importation of cotton into the Asia-Pacific region.
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