T.J. Tell us about World cotton supply-demand situation in 2023
A.E. The 2022/23 Marketing Year (August/July) was characterized by a race to production destruction vs consumption destruction, and consumption seems to have won. While initial production estimates were 121 million bales our most updated projection is 112 million bales. On the consumption side we saw an even bigger fall from initial projections of 120 million bales to current projections of 107million bales provoked by a global fight against inflation and central banks raising interest rates. Meantime as we began 2023, consumption deterioration seems to have stabilized, and we even see a slow recovery, but still not to pre-covid levels. For 2023/24 Marketing year our initial projections are quite balanced, production recovering to 113 million bales and consumption recovering to 114 million bales, but meantime many things can happen in the coming weeks and months that could negatively impact these projections, like bad weather conditions on the production side, and a recession on the consumption side, so we remain cautious.
T.J. If I ask you to predict overall cotton price in this year, how would you describe it?
A.S. Frankly speaking, the market mood right now is not very friendly. We see a banking crisis in the two main markets, USA and Europe, and we see this reflected in the way markets are behaving. We see any eventual consistent market recovery only in 2024. This year will be a tough year from a macroeconomic point of view, which is the main driver of prices. In this environment, we should see prices test the lows while the upside will be limited. Let´s say a range over the next 3 months of 70 to 90 cts/lb.
T.J. Ecom Agroindustrial Corp Ltd. being an active cotton merchant in the world, we would like to know Ecom’s business experience in Bangladesh? What is your expectation from Bangladesh Market and have you filled up your expectation in past years? What is your plan for 2023 for Bangladesh market?
A.S. Bangladesh is a very important market for Ecom as it normally would consume 8 million bales this marketing year, the vast majority imported, and therefore commanding approximately a 20% market share of world cotton international trade. As Bangladesh has a strong vocation and competitive advantage in textiles, we expect this share to grow even further in the coming years. We have many strong and loyal customers that we deal with, and we expect to further expand our client base and market participation in the coming years. Meantime, we are somewhat concerned with Bangladesh´s Balance of Payments and US$ Reserves issues that disrupts the opening of LCs and the settlement of contracts. We also look forward to improved logistics at the port of Chittagong, which has been a bottleneck to efficient imports, in order to avoid delays and detention. An idea which we think could be very beneficial to Bangladesh’s textile industry would be to promote legislation that would allow to establish a bonded warehouse, from which we could service the textile industry with just in time deliveries.
T.J. I wish to know from you, the strength of Bangladesh spinning sectors and what would be your advises to Bangladeshi spinners regarding fibers when they choose to consume?
A.S. Bangladesh is very strong in apparels and garments, particularly knitted products, but also has a competitive participation in home textiles. Without a doubt, we recommend the use of cotton which is a natural sustainable fiber, biodegradable, that breathes and has a soft touch on the skin … you can feel how good it tastes!!!
T.J. As far I know, Bangladesh was one of the largest consumer of cotton from Uzbekistan but due to some reason, these volume are getting lower day by day, despite of the finest quality they have in mid-staple cotton? Why is that so?
A.S. Since the last 5 years Uzbekistan has been restructuring the government policy on Cotton production and exports. Production has moved to private clusters from being totally controlled by the State. The Uzbek textile sector has seen foreign investment inflows from China, South Korea, Russia, India, Turkey and more, that has helped the country to pivot from a producer of raw cotton to added value yarns. As of today, domestic consumption has grown to about 750K MT and Uzbekistan, from being one of the largest cotton exporters, has now become a yarn exporter. Meantime, supply of cotton has also decreased from historically producing 1.2-1,3 mln MT to about 800K MT now. We expect we might soon see flows of Uzbek yarn into Bangladesh and Uzbekistan actually becoming a raw cotton importer.
T.J. What is the specialty of Ecom Agroindustrial Corp Ltd.. That people have their trust on you.
A.S. Ecom was founded in 1849, trading cotton, so we have a 174 year history of tradition and service to the global textile industry. Today we have a global footprint in 40 countries around the world, and we are leading traders of coffee and cocoa beans and products, in addition to cotton and other goods and services. We focus on building partnerships, long term relationships with our customers, based on mutual reliability and trust. We believe in meeting our customers needs the best way we can, and delivering the right quality of cotton on time. We believe in saving the planet, so we have a strong focus on supporting and promoting sustainable agricultural practices, and building sustainable and traceable supply chains.
T.J. If you have any message to tell our readers, I am sure, among them many are dealing with cotton spinning, you may say something to them.
A.S. We wish a very successful 2023 year to all our Bangladesh textile industry friends, and we look forward to serving you in the best way possible and strengthening our partnerships. Do not hesitate to contact us for any of your requirements.
Comment here