Spinners from Argentina may import 35,000 tons of cotton
20 Jun '06
4 min read
A local producer of denim will receive in the next few months a total of 640 tons of U.S. lint (SLM quality), which was purchased in late 2005. This purchaser has already received 60 tons, at an average FOB price of US$1,110 per ton and an average CIF price of US$1,180 per ton. At the moment of purchase, the decision was made based on the suitability of the final cost.
The results in processing have been satisfactory. There are approximately 15 local spinners which are currently importing lint. The first six companies accounted for 75 percent of 2005 imports. Most produce yarn and some denim too.
Argentina, once an important southern hemisphere cotton exporter (350,000 tons in 1996), is expected to continue to decrease its exports to a mere 12,000 tons in MY2006-2007. In the past few years, the conjunction of low world cotton prices, strong competition of profitable soybean production, weather problems, and more recently, strong domestic cotton demand, have resulted in reduced exports.
Lint exports in MY 2005-2006 are expected to total 18,000 tons, somewhat lower than the previous year. Exports during August 2005/March 2006 totaled 11,000 tons, and the balance is expected to be shipped from the new crop which is currently being harvested.
In general, current exports are of medium to low quality cotton. The average FOB price of Argentine lint exports in the last months of 2005 was about US$880 per ton.
One of the Argentine Government's (GOA) main policies is to maintain a competitive exchange rate in order to expand exports and limit imports. The exchange rate for 2006 is expected to range between 3.05 to 3.10 pesos to the dollar. However, with annual inflation rates of about 10-12 percent, the competitive advantage has been undercut.
marketing@alchempro.com
