Rising price of cotton in the international markets has caused a ripple effect on Bangladesh local yarn, affecting garment shipments, especially of knitwear, during the on-going coronavirus pandemic. The widely consumed 30-carded yarn is now selling for $3.60 to $3.75 per kg whereas it was $2.60 to $2.80 two months ago, according to knitwear manufacturers and suppliers.
Local spinners, traders, millers and consumers import cotton from the futures markets placing booking in advance as local growers can merely supply 2.50 per cent of the annual requirement of 75 lakh bales. Charges for transport add to the local importers' costs, which also has an impact on yarn prices. One main reason rise in cotton prices is increased imports by China, the largest consumer worldwide. Moreover, China and Pakistan, despite themselves being major producers, have increased their import targets because of high prices prevailing in China and lower production in Pakistan.
A United States Department of Agriculture (USDA) report notes Bangladesh too may reduce import by 5 lakh bales in the cotton marketing year (August–July) of 2020-21. Mainly due to apparel businesses not recovering fully yet. Covid-19 had a dramatic impact on nearly every sector of the global economy and cotton was no exception. As the extent of Covid-19 impact became clearer, the 2020-21 world use forecast was slashed. However, as components of the world economy have recovered, use has edged up in recent months and is now only 3 per cent below that of February.
With global use forecast down and production largely unaffected, 2020-21 ending stocks are forecast higher at 97.5 million bales, 19 per cent (15.4 million bales) above the February Outlook.