In marketing year 2023/24, Turkey is forecast to be the fifth largest exporter and consumer of cotton. Cotton exports have doubled in the past 2 years to the highest level in nearly 50 years while domestic use has fallen to a 5-year low. The decline in domestic use is mostly due to the February 2023 earthquake in southern Turkey, domestic inflationary pressure, and lower global demand for cotton products.
Turkey is forecast to export 1.3 million bales of cotton this year, in part driven by a tenfold increase in shipments to China in the first 5 months of the marketing year compared to the same period in the previous year. Turkey’s competitive prices relative to other major exporters have boosted shipments to China; this contrasts with being one of the more expensive suppliers last year. Turkey cotton exports to Bangladesh, Vietnam, and Indonesia have also risen dramatically due to competitive prices.
The expected rise in exports is offset by a projected decline in domestic use. The fall in Turkey cotton consumption accompanies a lower volume of cotton apparel exports in marketing year 2022/23 and a 15-percent decline in the first 5 months of this marketing year. The volume of cotton textile exports also fell in marketing year 2022/23 but has remained stable so far this marketing year.
One factor pressuring consumption is last year’s earthquake in Southern Turkey which caused damage to regions accounting for approximately half of Turkey’s cotton yarn production. Yarn producers reportedly needed 2-12 months for repairs before restarting production. Additionally, interest rates, labor costs, and other input costs have been rising in Turkey, dampening its competitive edge compared with other exporters of cotton apparel.
In addition to constraints in the production of yarn, demand for cotton apparel exports from Turkey has fallen. Economic growth has stagnated in the European Union, the top market for Turkey cotton apparel exports, and consumers are spending less on apparel and other discretionary purchases. The United Kingdom, another major export market for Turkey cotton apparel, entered a recession in the second half of 2023.
The increase in Turkey cotton exports this year may be an aberration due to competitive prices. Future shipments are expected to decline as Turkey cotton consumption and cotton apparel exports rebound from depressed levels.
Source: USDA-FAS