Uzbekistan's marketing year (MY) 2014/15 final lint production estimate decreased to 4.25 million bales. Lint exports for MY2014/15 are estimated at 2.7 million bales. MY2015/16 mass cotton sowing is expected to start as usual in the beginning of April and continue through the end of the month, assuming favorable weather conditions. State targets for MY2015/16 planted area and seed cotton production are reportedly set at 1.28 million hectares and 3.35 million metric tons (MMT), respectively, which is unchanged from the last year.

Executive Summary:

Uzbekistan's marketing year (MY) 2014/15 final lint production estimate decreased to 4.25 million bales. Lint exports for MY2014/15 are estimated at 2.7 million bales. MY2015/16 mass cotton sowing is expected to start as usual in the beginning of April and continue through the end of the month, assuming favorable weather conditions. State targets for MY2015/16 planted area and seed cotton production are reportedly set at 1.28 million hectares and 3.35 million metric tons (MMT), respectively, which is unchanged from the last year.

Despite the global economic crisis and relative drop in world cotton consumption over last 5-6 years, local mills continue efforts to increase their capacities. Domestic consumption is estimated at 1.55 million bales in MY2014/15 and exports are forecast to increase to 1.6 million bales in MY2015/16.

The government of Uzbekistan (GOU) continues to maintain tight control over all aspects of cotton production, including plantation area, production targets, prices, inputs, procurement and marketing. Despite government efforts to modernize in recent years, Uzbekistan's cotton ginning industry still consists of predominantly older gins despite investments in new equipment and renovations to existing equipment over the last 7-8 years. Both domestic and export demand have increased marginally in the past 5 years, particularly for cotton yarn. Textile mills are diversifying away from low-value yarn-based exports to pursue value-added products. Most mills now understand that they need to be extremely competitive in order to remain active in the shrinking global market.

As in the past few years, China, Bangladesh and South Korea are still the major buyers of Uzbek cotton.

Production:

In MY2014/15 problems with irrigation water supplies, especially in some southern regions, became a big issue for growers during the vegetation period in summer. Moreover, there was an 8-10 percent replanting of cotton fields due to mid-spring rains right after sowing, which also had a partial negative impact on last year's crop in a few regions. As of today, Post estimates MY2014/15 lint production at 4.25 million bales.

Winter precipitation was close to average levels. Post interprets the situation as positive for the MY2015/16 cotton crop, especially in areas with access to irrigation. Major growing areas in the South, however, did not receive this level of precipitation. Of course, much will depend also on the spring weather conditions, especially during sowing and vegetation. This year, cotton sowing is projected to start as usual in the beginning of April and continue through the end of the month if weather conditions allow.

The MY2015/16 state target for planted area has been reportedly set at 1.28 million hectares. In the past 3-4 years the GOU decided to switch about 35,000-40,000 ha of land to vegetable and fruit production in several districts of the Republic. Reportedly, most of this freed land was under cotton crop previously, and theoretically the total plant cotton area should have been decreased accordingly. Planted area has not changed for the past three years and remains at 1.28 million hectares. MY2015/16 lint production is preliminarily forecast at 4.3 million bales.

As in the past few years, in MY2015/16 farmers are reportedly expected to plant early-ripening cotton varieties on more than 50 percent of targeted planting area. These varieties are characterized by their early-ripening feature, better yields, and resistance to various common diseases.

MY2015/16 cotton plant area and seed cotton production targets by region

Regions

Plant Area (ha)

Production(t)

Karakalpakstan

94700

190000

Andijan

93400

266000

Bukhara

109600

342000

Djizakh

101800

229000

Kashkadarya

160400

417000

Navoi

35800

100000

Namangan

82600

230000

Samarkand

91500

223000

Surkhandarya

119600

335000

Syrdarya

110700

243000

Tashkent

91500

237000

Ferghana

100100

280000

Khorezm

93800

258000

Republic Total

1285500

3350000

Consumption:

Uzbekistan's MY2014/15 domestic lint consumption is estimated at 1.55 million bales. MY2015/16 total domestic consumption is preliminarily forecast to increase to 1.6 million bales. According to the GOU's special program on development and modernization of local textile industry in 2015-2020, the state plans to increase the total domestic consumption to 70 percent by 2020.

Nowadays, roughly 36-37 percent of all cotton is consumed domestically. The spinning and weaving industries continue to invest in new equipment as well as renovations of existing equipment due to improving profitability over the past 6-7 years. Domestic demand has been increasing marginally over the past years, and so did export demand, especially for cotton yarn and textile garments.

The main player in this industry is "Uzbekengilsanoat", a State Joint Stock Company which unites 280 textile, sewing and knitting enterprises - most of which are joint ventures. In accordance to GOU program, the company is planning to invest $1 billion into the local light industrial sector with the aim of increasing domestic consumption and decreasing lint exports. The company plans to increase textile exports from $800 million (current value) to $1.5 billion by 2020.

According to "Uzbekengilsanoat", the successful implementation of targeted projects in the textile industry will allow them to increase cotton yarn production to 562,000 tons (+2.6 times) compared to 2014 production volumes, cotton fabrics production to 340 million square meters (+2.8 times), knitted fabrics to 110,000 tons (+2.9), knit-wear to 296 million pieces (+2.1) and apparel to 20.1 million pieces (+3.3). The financing of these projects will be provided by direct investments of local textile mills and partly by foreign investors, as well as loans issued by local Uzbek banks.

Trade:

Post estimates MY14/15 lint exports at 2.7 million bales. During 10th International Uzbek Cotton and Textile Fair last October, Ministry of Foreign Economic Relations, Investments and Trade (MFERIT) officials announced the signing of contracts for 580,000 tons of cotton lint exports. In addition, according to official reports, during the Fair the Uzbek Textile Industry concluded contracts for exporting more than $1 billion in textile products. The Fair once again showed that Asia is the leading destination of Uzbekistan cotton, with Bangladesh (35%), China (25%), and South Korea (7%) as the major markets.

Reportedly, in 2014 the government of Bangladesh (GOB) signed a MOU with Uzbekistan which allegedly has agreed to export 200,000 tons of raw cotton to Bangladesh on an annual basis. As of today, Bangladesh 2014 cotton imports from Uzbekistan are estimated at 175,000 tons, which is 12 percent lower than in 2013.

Nowadays, Uzbekistan has a well-established local system of logistics, consisting of 21 specialized cotton terminals with a storage capacity of 410,000 tons, and a good transportation infrastructure and shipment corridors that facilitate timely deliveries of Uzbek cotton to buyers.

Export trade matrix*

Commodity

Cotton

Units

Metric tons

Time period

CY2012

CY2013

CY2014

U.S.

0

0

0

Others

Bangladesh

250,000

198,000

175,000

China

310,000

227,530

155,000

Russia

19,100

11,200

20,000

South Korea

27,000

33,000

42,000

Turkey

8,760

7,220

17,000

Iran

41,980

22,850

32,000

Italy

1,000

2,270

2,000

Total of Listed

657,840

502,070

443,000

Others not Listed

29,160

118,730

157,000

Grand Total

687,000

620,800

600,000

*Note: Data in export trade matrix is from trade related sources, as official statistics on cotton exports by destinations is not available.

Stocks:

There are no official sources of information on stocks volumes, so the numbers indicated in the report are rough estimates.

Policy:

The Government's overall cotton policy is still aimed at maintaining stable production, and improving quality and fiber characteristics. As of today, all state farms have been privatized and reorganized into private farms. However, despite implementing structural reforms in the agricultural sector, the government still maintains tight control over all aspects of production, including planted area, production targets, prices, inputs, procurement and marketing of nearly all of the cotton in Uzbekistan.

The local ginning industry has made some improvements in their ginning technology, and as a result ginned lint has less trash content than in the past. About 80-85 percent of all produced lint is of higher grades with strict and good middling, and the volume of lower grades has decreased. The cotton ginning industry nevertheless is one of several sectors of the country's economy where new investments are needed.

Production, Supply and Demand Data Statistics:

Cotton Uzbekistan

2013/2014

2014/2015

2015/2016

Market Year Begin: Aug 2013

Market Year Begin: Aug 2014

Market Year Begin: Aug 2015

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

1,285

1,285

1,285

1,280

0

1,285

Area Harvested

1,285

1,285

1,285

1,280

0

1,285

Beginning Stocks

1,348

1,348

1,248

1,498

0

1,498

Production

4,100

4,450

4,000

4,250

0

4,300

Imports

0

0

0

0

0

0

MY Imports from U.S.

0

0

0

0

0

0

Total Supply

5,448

5,798

5,248

5,748

0

5,798

Exports

2,700

2,800

2,300

2,700

0

2,750

Use

1,500

1,500

1,500

1,550

0

1,600

Loss

0

0

0

0

0

0

Total Dom. Cons.

1,500

1,500

1,500

1,550

0

1,600

Ending Stocks

1,248

1,498

1,448

1,498

0

1,448

Total Distribution

5,448

5,798

5,248

5,748

0

5,798

Stock to use %

30.00

34.84

38.11

35.25

0.00

33.29

Yield

695.0000

754.0000

678.0000

723.0000

0.0000

731.0000

1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA