The country's textile industry is likely to face a tough situation in coming days as prices of raw cotton is likely to increase in the international market in coming day, despite forecasts of a comfortable stocks at the end of the season. Cotton prices are expected to rise in current fiscal (2013-14), according to new figures released by the International Cotton Advisory Committee (ICAC), which expects a rise in the season average 88 cents per pound in 2012-13 to more than one dollar in 2013-14.

The rise in prices of the staple raw materials will affect the competitiveness of the industry which depends almost entirely on imported cotton. The prices of yarn will also increase as a sequel to increase of the prices of cotton which will ultimately hamper the country’s RMG sector.

The apparel entrepreneurs, however, ruled out the news terming a trick to increase the prices adding that there are good production of crops both in India and China. Meanwhile, the US Department of Agriculture (USDA) on Monday lowered its forecast for US and global cotton production in 2013-14 crop year and reduced its outlook for record global inventories.

The USDA lowered its expectations for global output to 116.38 million bales from a July forecast of 118.02 million bales amid unfavorable weather and reduced output in China.

China—the world’s top cotton consumer—is forecast to use 36.0 million bales in 2013/14, unchanged from the previous year. China, according to sources, will continue to build government reserves, holding 38.8 million bales on July 31, 2014 which will ultimately create pressure on the World stock.

India and Pakistan are expected to consume 23.3 million bales and 11.7 million bales in 2013/14, up 3 percent and 6 percent, respectively, from the preceding year. Cotton consumption in Bangladesh will increase 7 per cent to 7.28 lakh tonnes this fiscal year for continued export growth of garment and yarn, according to the Economist Intelligence Unit (EIU). The country currently consumes 6.8 lakh tonnes of cotton a year.

Production in China in 2013-14 is forecast unchanged from last season, while production in India may rise a few hundred thousand tons because of a good monsoon season. Production in the United States is falling because of dry weather in some states and high prices of maize and soybeans. Pakistan, Brazil, Uzbekistan and most other countries are expected to produce about as much cotton in 2013-14 as they did in 2012-13.

With current apparel exports exceeding US $21 billion a year, Bangladesh needs to import about 700,000 MT of cotton every year. The country imports about 42 per cent of its cotton requirement from India. But India's frequent bans and restriction on export of cotton and sudden increase in prices very often invited criticism from its regular buyers.

Of the rest, about 36 per cent from Uzbekistan and other CIS countries, 8 per cent from Africa (East and West), while 16 percent from other countries including the US, Australia, Pakistan and China, during the period.

According to sources, the cotton prices in the international market continued to surge since February last and are now offered at least 10-12 per cent higher.

Each pound of Shanker-6 variety of raw cotton, which is widely used in Bangladesh, is now being sold at $ 0.91 per pound in Mumbai market as against $ 0.86 in December last registering an increase of about 11 per cent. Cotton market prices in Pakistan also maintain its higher price level despite less trading activities, said daily cotton price update.

Now a days in India, Shanker-6 cotton is proposed in a wide range of Indian Rupee 39,000 per candy (355 kgs) to rupee 42800 as against rupee 35,300 per candy to 35,700 in the first week of February, 2013.

Cotton prices have witnessed a rise allegedly due to increased stockpiling by foreign traders in anticipation of better price expectations. This has also triggered demand from domestic millers, who are expecting healthy yarn exports this year.