Egyptian cotton exports are shrinking fast as crops decrease in the country.
According to Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS), cotton exports reached just 112,700 metric kantar (150,000 bales), a 54.2% fall from the previous season’s 246,000 metric kantar (320,000 bales).
The decline, CAPMAS says, comes as a result of the decreasing cotton crop.
A number of spinning factories have shuttered in recent months, Daily News Egypt reported, and the amount of ginned cotton dipped 29.5% between December 2015 and February this year. The amount of pressed cotton fell 46.3% in the same period.
Local cotton consumption is down 56.6% to 76,400 metric kantar (15,757 480-lb bales).
This time last year, Egypt reported its cotton exports up 94.3% year on year thanks to low cotton prices coming off of increased inventory from the season prior.
In July 2015, Egypt put a cotton import ban in place to help boost its domestic sector and said it would no longer give financial support to cotton growers because of the high costs to grow the commodity and low demand for it. Farmers were even asked to grow more short and medium staple cotton varieties, which are cheaper, instead of its once more sought after extra-long staple cotton.
A spokesperson from Egypt’s agricultural ministry told Reuters at the time, “The ministry is keen on Egyptian cotton regaining its glory on all levels.”
The ban lasted one week before the country revoked it for fear the move would be more of a detriment to the industry than a boon for it.
A U.S. Department of Agriculture (USDA) report out last week said Egypt’s cotton exports have plummeted to record lows.
“The drop in production is due to a jaw-dropping decline in area planted of 50 percent to just 50,000 hectares compared to 100,000 last year,” USDA noted, attributing the drop in planted area to farmers’ fears they won’t be able to market the crop. “Egypt’s industry is relying less on the domestic crop which is comprised mostly of extra-long staple and long staple varieties, while users’ needs have shifted to medium and short staple varieties.”
In the 1980s, Egypt grew upward of 500,000 hectares of cotton each year but that number has decreased fairly steadily since, as consumer preferences shift and new technologies take over.
“Consumer preference shifted heavily to garments such as denim, T-shirts, jeans, and others that require short and medium staple cotton, outpacing the demand for higher-end clothing and bed sheets that use extra-long and long staple cotton varieties,” USDA wrote. “Unfortunately, the Egyptian government and the country’s growers failed to adapt to the changing scenario.”
Up to now, nearly 90 percent of Egypt’s cotton production has been extra-long and long staple, and the shorter, cheaper varieties account for only 10 percent.
Prices for Egyptian extra-long and long staple cotton are currently $682/bale, down a touch from last year’s $709/bale, and $600/bale, down from $625/bale last season for short and medium staple.
The dramatic decline in Egypt’s cotton production will weigh largely on its trade, but the 80 percent of its cotton that does get exported is looking more attractive with the devaluation of the Egyptian pound and international cotton prices expected to increase.