The results in processing have been satisfactory. There are approximately 15 local spinners which are currently importing lint. The first sixcompanies 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.
The main exports are inter-company shipments, in hands of a Brazilian textile company which operates regionally and exports lint from Argentina to its branch in Chile. During this period, Chile accounted for approximately 40 percent of the total exports, followed by Thailand, Turkey, and Indonesia. 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 orderto 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.
Cotton production for 2006-2007 is forecast at 165,000 tons, the highest of the past five years. Despite erratic weather, most producers in the cotton area are quite enthusiastic as prices were better than the past year and a great number of producers made good profits in the current crop.
United States Department of Agriculture Foreign Agricultural Service
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