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Changes in Chinese Cotton Are Pushing Vietnam to Record Output

To say that cotton spinning in Vietnam is picking up would be an understatement.

According to the United States Department of Agriculture’s (USDA) latest report, cotton spinning in Vietnam has more than tripled in the last four years, with total cotton use forecast to reach 5.1 million bales in 2015/16.

During those four years, Vietnam accounted for half of the total world growth in cotton demand, with rising yarn exports being the main source of the rapid expansion in mill use.

A large part of this growth was a direct result of changes in China’s domestic cotton policy, which has elevated the internal price of cotton enough to render many spinning operations in the country unprofitable.

At the same time, cotton consumption for Vietnam’s domestic yarn use has also shown impressive growth, more than doubling since 2011/12.

“Thus, even as more yarn is being exported to China, Vietnam’s role further up the textile value chain is also growing,” the USDA report noted.

For 2015/16, USDA expects world production to lower substantially, mostly due to changes in Pakistan, India and China, and consumption is forecast to be marginally lower.

U.S. production and use have also been lowered slightly, while ending stocks have been raised, but the U.S. season-average farm price is projected to remain unchanged at $0.59 per pound.