Slowing Growth in Vietnam’s Cotton Import Market

The United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS) in Hanoi forecasts a growth slowdown in Vietnam’s 2018/19 cotton imports. A five percent growth rate is anticipated, which falls starkly below the 28 percent average annual growth rate recorded between 2011/12 and 2016/17. The outlook reflects Vietnamese cotton’s lowest annual growth rate since its dip in 2011/12. Lackluster investment in the cotton spinning sector, uncertainty over global trade deals, and more competition from cotton producing countries have all contributed to slow growth.

Because global cotton demand growth is forecast to remain relatively flat at a two percent year-on-year rate in 2018/19, the US market share of Vietnam’s cotton imports is all the more important to American exporters of cotton. 54 percent of Vietnam’s total cotton imports in 2018/19 will be from US origins, up from just 42 percent in 2015/16. However, new entrants into the Vietnamese textile export market including Canada, Mexico, and Peru—countries that have all opted for free trade expansion with Vietnam by recently entering into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—may threaten the US’ commanding trade position in the sector. The USDA predicts a 20 percent increase in Vietnamese textile and garment exports to CPTPP countries, to be valued at $5 billion in 2018. As Vietnam looks to expand growth in their textile sector, Gro Intelligence will provide the data and analytics necessary to stay up-to-date with global cotton markets.