MUMBAI (Commoditiescontrol) – Turkey cotton production during 2018-19 (Aug-Jul) forecast to increase 5.75% to 9.20 lakh tonnes versus 8.7 lakh tonnes a year ago due to higher acreage, according to USDA’s Turkey arm.
Planting area was larger than early season estimates, due to the higher returns in recent years, but yields are reported to be lower due to excessive rains in June that forced farmers to re-plant their cotton crops. Increased pest outbreaks, such as of Aphis gossypii, also adversely affected yields.
In order to promote cotton planting, the Turkish government had increased the seed cotton production bonus during the previous six years in a row until MY 2017/18 but kept it the same for MY 2018/19 crop. Accordingly, MY 2018/19 seed cotton production support is TL 0.80 per kilogram (paid on seed cotton). This support is provided only to certified seed users.
Turkish textile industry had a good year during MY 2017/18, and domestic consumption of cotton increased to 1.6 MMT (7.3 Million bales), up from 1.4 MMT (6.5 Million bales) the year before. However, since the beginning of MY 2018/19, the Turkish economy has been is going through a major downturn, and the Turkish Lira is experiencing devaluation, in addition to increases in inflation. While devaluation will help Turkey’s exports to foreign markets, particularly to countries in the European Union, the increase in domestic inflation will limit domestic consumption of textiles. As a result, MY 2018/19 domestic consumption of cotton expected decline to about 1.55 MMT (7.1 Million bales).
Total cotton imports for the first eleven months of MY 2017/18 (Aug-July) were about 800,000 MT (3.6 Million bales), which is up about fourteen percent compared to the same period last year. The U.S. provided about forty-three percent of the imports, which is 340,000 MT (1.56 million bales), despite the three percent antidumping charges. Turkey generally imports high quality cotton needed for Turkey Cotton and Products Update August 2018 3 the textile sector from the United States. Brazil (105,000 MT), Greece (103,000 MT), and Turkmenistan (50,000 MT) were the other leading suppliers during MY 2017/18. Despite the ongoing conflict in Syria, about 20,000 MT of Syrian cotton also found its way to the Turkish market.
Policy
Cotton is imported to Turkey with zero tariffs, as it is the key input of Turkey’s textile sector. Presently, U.S. cotton imports are subject to a three percent antidumping duty imposed by Turkey, while cotton from other sources is not subject to any import taxes. Turkey Cotton and Products Update August 2018 4 For textile producers that export their final products though, they have been able to import U.S. cotton without this additional duty.
Recently, Turkey removed the use of the inward processing regime for cotton imports from the United States. Since mid-May 2018, cotton importers in Turkey have had to pay the three percent import tax on U.S. cotton even if they are exporting the final textile product. This policy is expected to have an adverse effect on U.S. cotton exports to Turkey in coming months.
(By Commoditiescontrol Bureau; +91-22-40015533)