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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


24 September 2013

USDA GAIN: Republic of Uzbekistan Cotton and Products Update August 2013USDA GAIN: Republic of Uzbekistan Cotton and Products Update August 2013

Despite replanting 12-14 percent of total planted cotton area in April, weather conditions have been favorable and Post forecasts the marketing year (MY) 2013-2014 production at 4.45 million bales. The government of Uzbekistan continues to encourage investment in higher value cotton products to meet the goal of retaining 50 percent of Uzbek cotton for domestic textiles production.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Post:

Tashkent

Production:

The government’s official targets for marketing year (MY) 2013/14 planted area and seed cotton production are reportedly set at 1.28 million ha and 3.35 million metric tons (MMT), respectively. This year’s sowing campaign finished on-time in almost all cotton growing regions. Most regions experienced normal rainfall during the planting season, although roughly 12-14 percent of the total planted area required replanting due to localized storms in early and mid-April. In addition, in southern regions farmers have experienced certain problems with the availability of irrigation through the very hot summer in June and July.

Uzbek farmers will begin cotton harvest en-mass after September 10, although as usual some southern regions might start harvesting earlier. The recent weather conditions are generally favorable at this pre-harvest stage, and despite this year’s cotton replanting, local experts believe the crop has gotten off to a fairly good start. However, favorable output and yields will depend on weather conditions during the harvest months in September and October in particular. Considering the above-mentioned conditions, Post has set the preliminary MY13/14 lint production forecast at 4.45 million bales.

Domestic Procurement prices

In MY2012/13 the average state procurement price for seed cotton was 801,000 Uzbek Sums per ton ($377.83/ton). Usually the new procurement prices for seed cotton are officially set by the Ministry of Finance at the end of August, before the start of cotton harvest. In MY2013/14 the average seed cotton procurement price is reportedly planned to increase by 10-15 percent compared to the last year. (The current official exchange rate: Uzbek Sums 2120 = USD 1.00).

Consumption

Over the past 5 years the government has often stated that it would like to process more of Uzbekistan’s cotton production domestically, but it has had only limited success. About 26-28 percent of all cotton is consumed domestically despite the government’s plans to increase it to 50 percent. In 2007 the government of Uzbekistan (GOU) launched a special program for the modernization and reconstruction of some old cotton gins to address certain problems facing the ginning industry. As of today, reportedly 80 of 150 gins have been fully modernized under this program.

The spinning and weaving industries continue to invest heavily in new equipment as well as renovating existing equipment thanks to improved profitability over the past years. Domestic demand has been getting stronger with a marginal increase over the past 5-6 years; as is export demand, especially in cotton yarn. Nowadays, the textile industry understands that it must aggressively pursue quality improvements and production diversification to include more value-added products, rather than rely on exports of low-value yarn, if it wants to remain competitive in a shrinking global market.

Currently, there are around 50 joint ventures established in the textile industry with partners from Turkey, Germany, South Korea, Japan and Switzerland. As of 2013, foreign investments in the textile industry exceeded USD 1.9 billion. The main products produced and exported by textile mills remain cotton yarn, gray fabrics and some textile garments.

Stocks

There are no official sources of information on stock volumes, so the numbers indicated in the report are rough estimates.

Trade

Exports of cotton are projected to decline gradually in accordance with GOU plans to increase the share of domestic consumption to 50 percent within the next few years. However, based on various factors, Post still believes the reduction will not take place this quickly. Post estimates MY2012/13 lint exports at 3.0 million bales. MY2013/14 exports are preliminarily forecast at 2.98 million bales. Uzbekistan still remains a primary supplier of cotton to Russia, while Asian markets, namely Bangladesh, China and South Korea are increasingly major markets for Uzbek cotton.

According to the latest official sources Bangladesh is about to finalize a deal to import 200,000 tons of Uzbek cotton in order to ensure steady annual supplies for their local textile industry. 35 percent Bangladesh’s total cotton imports comes from Uzbekistan. Last year both countries signed a memorandum of understanding that stipulates the direct delivery of Uzbek raw cotton to Bangladesh on a regular basis.

September 2013

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