KResearch is of opinion that the recent global surge in cotton prices to a 15-year high has hurt Thai textile and garment industries considerably. This problem is being felt across upstream industries (mainly cotton fiber producers) and downstream industries (apparel and garment manufacturers), because Thailand is highly dependent on cotton imports, constituting as much as 90 percent of our total production requirement. The major reasons driving global cotton prices upward would be ebbing production – resulting partly from reductions in land under cotton cultivation – and natural disasters; meanwhile, demand is growing steadily due to capacity expansion seen in major textile producing nations, especially China. Another factor is the decision by India to suspend their cotton exports, though they are normally the world's largest cotton supplier.
Having foreseen this problem, many key cotton producing countries, including the USA, India, China and Pakistan, have accelerated plans to boost production. Amid that, it is likely that India will resume cotton exports toward the end of 2010. If so, prices may soften and this will help ease any impact on our textile and garment industries. Nevertheless, Thai manufacturers must monitor cotton production and consumption trends in the international market closely because price hikes may resurface. In addition, relevant public and private sectors may have to place greater importance on R&D to help sustain the competitiveness of our textile and garment industries over the long-term.
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