news, features, articles and disease information for the crop industry

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

29 April 2014

USDA GAIN: Indonesia Cotton and Products Annual 2014USDA GAIN: Indonesia Cotton and Products Annual 2014

MY 2013/14 Indonesian cotton production is estimated to decline to 25 million bales as farmers switch to more lucrative food crops. Despite the rupiah’s 7.6-percent appreciation since January 2014 and higher cotton supplies on the international market, Indonesian cotton imports and consumption are expected to grow slower than previously estimated. Post revised MY 2013/14 cotton imports and consumption to 2.6 million bales.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Situation and Outlook


The Indonesian Meteorology, Climatology, and Geophysics Agency (Badan Meteorologi, Klimatologi, dan Geofisika, BMKG) predicted in January 2014 that Indonesia may experience an El Nino phenomenon by middle of 2014. El Nino will reduce dry season rainfall (April to October) and will lead to lower yields. Therefore, Post estimates that in MY 2013/14 and MY 2014/15, Indonesia’s cotton production will decline to 25,000 bales and 23,000 bales respectively.

Indonesia produces 0.3 percent of its total domestic cotton demand. The Ministry of Agriculture reports that Indonesian cotton production has decreased an average of 24.79 percent annually since 2008. Farmers are reluctant to grow cotton due to agronomic concerns. With its high rainfall intensity, cotton growers face a high risk of harvest failures and high production costs. These costs, coupled with better profits from alternate crops, have led to cotton cultivation being marginalized to intercropping systems or marginal lands, mostly found on South Sulawesi, East Java, West Nusa Tenggara, and Central Java. Increased land conversion to nonagricultural uses also reduces the area dedicated to cotton. Farmers have very limited access to high yielding varieties and efficient cultivation practices due to financial constraints.


The Indonesian textile industry plays a significant and strategic role in Indonesia’s macro-economy. According to industry sources, the Indonesian textile and textile products sectors employ about 1.5 million workers, a little more than 10 percent of the 2012 Indonesian manufacturing workforce. The number of textile and textile companies increased to 2,930 in CY 2012 with a total investment of Rp. 164.8 billion, compared to 2,880 in CY 2011. The Indonesian National Statistics Agency (Badan Pusat Statistik, BPS) estimates that textile products comprised 1.41 percent of Indonesia’s national gross domestic product (GDP) in 2012.

Figure 1. Characteristics of Indonesian Textile and Textile Products Industry

Source: Indonesian Textile Association (Asosiasi Pertekstilan Indonesia, API) in 2014 Facts and Figure of Indonesia Textile Book, Ministry of Industry.

Indonesian spinning mills primarily produce spun yarn and sewing thread. In CY 2012 there were 251 spinning companies in Indonesia, compared to 234 companies in CY 2011. Total Indonesian spinning mill capacity in CY 2012 was 3.094 MMT of yarn, compared to 3.045 MMT of yarn in CY 2011. Indonesia exports approximately 30 percent of its yarn production. In CY 2012, Indonesian spinning mills ran at about 70 - 80 percent capacity, with a total of 10.8 million spindles and 175,513 rotors, compared to 10.2 million spindles and 175,113 rotors in CY 2011. Indonesia’s spinning industry consumes approximately 1.2 MMT of fiber as raw material annually. This breaks down to cotton (45 percent), synthetic fiber (45 percent), and rayon (10 percent).

Despite Chinese policy changes resulting in higher cotton supplies on the international market, the Indonesian cotton spinners association reports that cotton prices have remained high. Conversely, yarn prices are declining and the Indonesian Rupiah is strengthening. As of March 17, 2014, the Indonesian rupiah stands at Rp. 11,272 per $1, compared to Rp. 12,227 in January 2014. Cotton spinners are taking a wait-and-see approach, hoping for lower cotton prices in order to maintain yarn margins. Spinners note that cotton yarn prices remain high relative to viscose and rayon yarn. In March 2014, cotton yarn prices fell to $650/bale from the January price of $670/bale. The Indonesian cotton spinners association expects the situation to continue until June 2014.

Based on declining yarn prices and strong cotton prices, Post revised the MY 2013/14 Indonesian cotton consumption estimate from 2.7 to 2.652 million bales. MY 2012/13 consumption remains at 2.6 million bales. Reasonable margins for cotton yarn relative to man-made fibers are expected to prevent further cotton consumption declines in MY 2013/14.


Current high cotton prices and declining yarn prices have led spinners to maintain stocks sufficient to cover one month’s production. Post therefore estimates MY 2013/14 Indonesian cotton ending stocks at 374,000 bales, a dIn response to the current market situation, industry reports that in order to maintain cash flow, spinners are:ecrease from the previous estimate of 529,000 bales. Following higher expected imports in MY 2014/15, cotton ending stocks are pegged to grow slightly to 391,000 bales.


In response to the current market situation, industry reports that in order to maintain cash flow, spinners are:

  1. Concentrating their efforts on cotton and away from man-made fibers.
  2. Switching production from coarse count yarns to fine counts to maintain volume while reducing production costs.

Some small spinning mills are suffering from high price contracts in 2011, although some large manufacturers are expanding their operations. While textile exports to the United States and European countries are stagnant, this is offset by rising demand from Japan. Strong domestic demand for Indonesian textile products remains despite competition from lower-priced, high-quality imported textile and textile products.

Based on trade data and information from the Indonesian Cotton Spinners Association, Indonesian cotton import growth is expected to slow in MY 2013/14. Post therefore revises MY 2013/14 Indonesian cotton imports from 2.7 to 2.6 million bales. This marks a four percent increase over MY 2012/13 imports (2.5 million bales). Assuming higher cotton supplies on the international market will lower prices and an improving world economy will increase demand for textiles and textile products, Post forecasts MY 2014/15 Indonesian cotton imports to increase to 2.7 million bales.

According to Global Trade Atlas, Australia was the leading supplier of cotton to Indonesia with a total market share of 30 percent during the first quarter of MY 2013/14. This is followed by Brazil (19 percent market share), and the United States (12 percent). Despite high contamination levels, cotton from India, Brazil, and African countries are considered adequate by Indonesian industry standards. During the period of January – November 2013, Indonesia exported most of its yarn to India (42 percent), South Korea (25 percent), China (24 percent), and Hong Kong (7 percent).

April 2014

DOWNLOAD REPORT:- Download this report here

Share This

Related Reports

Reports By Country

Reports By Category

Our Sponsors