The Turkish economy appears to have at least stabilized, and the Lira/USD exchange rate is now back at 5.3 per USD, which is close to the crisis low of 7.2362. US relations are better, but volatile, as the Syrian war solution remains a difficult issue.
The Turkish textile and apparel sector appears to have made it through the darkest days of the crisis, with exports providing the cushion when the Lira’s collapse provided a boost.
Cotton spinners seem to have used up all inventories, moved to take up the remaining local supplies, and now reentered the markets for imports in some volume. Local supplies are now at a premium to international values after falling to sharp discounts, which moved a large block of cotton to export. Importers are focusing on the very aggressively priced US 41/42/52 color grade, long staple lots that are presently heavily discounted.
Turkish mills are well experienced with US cotton and can always utilize discounted US lots. The volume of US cotton sold during the past 30 days is unknown, but has likely exceeded 100,000 bales. The purchases could also mean that steady offtake may continue through the end of the season.
Turkey apparel exports for 2018 reached 17.6 billion USD, and combined textile and apparel exports reached 26.1 billion USD which reflects an increase in shipments from 2017. Europe has taken more than 70% of all exports, but the USA has moved up into the top ten markets.
Turkey is in an excellent position to take business from Chinese exporters. Its modern, fully integrated operations can offer US brands and retailers a turnkey solution, something they have been used to with China.
Turkey is also expanding apparel exports to Russia with shipments up 48% year to date. The improved apparel exports bode well for cotton use, and domestic yarn has replaced imported yarns since the crisis, which is helping domestic cotton use to rebound.
The volume of cotton exports has also increased the deficit in supply, which should help maintain demand for the discounted US styles through the end of the season until new crop moves. Turkish buyers will remain
Source: Jernigan Global