The COVID-19 pandemic has negatively impacted Bangladesh’s marketing year (MY) 2019/2020 cotton imports and consumption. As a result of COVID-19 mitigation efforts, Bangladesh’s readymade-garment (RMG) facilities halted production for nearly a month during the Government-ordered lockdown. Additionally, some global retail brands have cancelled or delayed contracts for garments as a result of a decline in global garment demand. In MY 2020/21, Bangladesh’s raw cotton production is forecast to slightly increase over MY 2019/2020 to 146,000 bales and imports are forecast to rebound to 7 million bales.
In MY 2020/21 (August-July), Bangladeshi farmers are forecast to plant cotton on 46,000 hectares (HA) and production is expected to increase over MY 2019/20 by 2.8 percent to 146,000 bales. Farmers in Bangladesh’s cotton-producing areas (e.g., Rangamati, and Jhenaidah) are slowly adopting new cotton varieties and expanding operations. Local production is expected to moderately increase in the years to come if the current Government of Bangladesh (GoB) support programs continue.
MY 2020/21 (August-July) yarn and fabric production levels are both projected to increase to 730,000 MT and 4.1 billion meters, which represents a 1.39 and 2.5 percent increase over MY 2019/20 figures, respectively. The forecasted increase is based on an expected marginal increase in yarn and fabric demand in the new year as the local RMG sector recovers from the negative economic impact of COVID-19.
MY 2019/20 (August-July) yarn and fabric production forecasts have been revised down to 720,000 MT and 4.0 billion meters, which represent an 11 and 17 percent decrease from 2018/19 figures, respectively. The decrease in production is the result of COVID-19 mitigation efforts (e.g., country lockdown) and depressed demand as the global economy slows. Select RMG factories have also started to shift production to medical personal protective equipment (PPE), which does not require cotton yarn or fabric. According to the Bangladesh Export Promotion Bureau, March 2020 apparel exports declined by over 19 percent compared to February 2020. Bangladesh Garment Manufacturing and Exporter Association (BGMEA) estimated the RMG export revenue to be a mere $366.5 million in April 2020, or approximately 84 percent lower than the same period last year. The textile industry was greatly impacted by some international retailers cancelling and suspending orders as a result of COVID-19. According to BGMEA, the estimated cost of cancelled orders was USD 3.17 billion thus far. The cancelled orders impacted local producers’ ability to pay 2.3 million workers and has resulted in an increase in stocks of yarn and fabric. According to industry reports, stocks of locally spun yarn reached nearly USD 100 million in September 2019 (i.e., pre-COVID-19).
A representative of the BGMEA estimated export earnings to decrease further in May and stated the total loss could be as high as USD 6 billion. Over the MY 2018/19 time period, RMG export earnings were approximately USD 34.4 billion. RMG exports during the first seven months of MY 2019/20 reached USD 18 billion as of February 2020 (i.e., before COVID-19 was confirmed to be in Bangladesh).
MY 2020/21 (August-July) raw cotton consumption is expected to rebound to 7.2 million bales, assuming that demand for garments will start to return to pre-COVID-19 levels. MY 2019/20 raw cotton consumption levels are estimated lower at 6.9 million bales due to reduced RMG consumption in the world market as an impact of COVID-19.
Similarly, MY 2020/21 yarn and fabric consumption is expected to increase by approximately 5.5 percent to 0.95 Million MT (MMT) and 3.33 percent to 6.2 billion meters based on an increase in demand as retail stores and shopping outlets reopen.