The Vietnam Marketing Year (MY) 2012/13 cotton supply and demand estimates include smaller production and ending stocks compared with last year.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: VM2049
Cotton and Products Annual
Bui Thi Huong, Truong Minh Dao
The Vietnam Marketing Year (MY) 2012/13 cotton supply and demand estimates include smaller
production and ending stocks compared with last year. Production is down 6 percent while cotton
imports are up by 5 percent. Domestic mill use is increasing slightly due to the expanding cotton yarn
spinning sector. While Vietnam requires about 350,000 metric tons (mt) of cotton yearly to serve its
growing textile and garment sector, the country's 10,000 hectares (ha) of cotton farms produce only
4,500 tons, which only meets 1.4 percent of the total demand. Despite recent contract defaults, U.S.
cotton will likely continue to be the largest source of imported cotton in MY 2012/13.
Vietnam relies heavily on cotton imports (1,620 thousand bales or 354,000 mtin MY 2011/12) to feed
the growing textile and spinning industry due to limited cotton production. This reliance is forecast to
grow in marketing year 2012/13 with imports reaching 1,705 thousand bales or 372,000 mt, 97.4
percent of forecast consumption.
Due to favorable cotton prices in August 2011, Vietnam’s MY 2011/12 cotton lint production reached
5,180 mt equivalent to a mere 23.8 thousand bales, a year-on-year increase of 10.4 percent, due mainly
to expanded planted area and increased cotton yield. Domestic production still only meets 1.4 percent
of the total cotton demand from the textile industry. However, in early 2012, cotton prices dropped
significantly and cotton is less competitive than other crops like corn and soybeans. Post forecasts the
2012/13 cotton production to decrease by 11.4 percent to 4,590 mt of cotton lint (21 thousand bales).
Cotton lint demand in Vietnam has remained strong, despite the global economic downturn, as the
textile and spinning industry continues to expand. In 2011/12, cotton imports increased slightly by 3.1
percent in comparison with the previous year, to approximately 354,000 mt. Despite, economic
uncertainty during the 2nd half of 2012, Post estimates Vietnam’s cotton imports in 2012/13 to increase
5 percent over the previous year, to 372,000 mt (1.705 million bales) due to strong exports of yarns to
China and Turkey.
In 2011, the United States, for the fifth consecutive year, remained the largest supplier of cotton to
Vietnam. Vietnam sourced 133,200 tons (about 41 percent) of its total cotton imports in 2011 from the
United States. Vietnam is now the seventh largest market for U.S. cotton at $362.3 million in 2011.
SITUATION AND OUTLOOK
Vietnam is now ranked among the world’s top seven textile, garment, and apparel-exporting countries.
Despite the global economic downturn, Vietnam’s 2011 textile, garment, and apparel exports were well
over the government’s target reaching a value of $15.8 billion, an increase of 26 percent over 2010
(Source: Vietnam General Statistics Office). This growth is mainly due to the sector maintaining its
traditional export markets (USA, EU, Japan), while also expanding to new export markets (Korea,
Taiwan, the Middle East, Singapore, China, Turkey, etc.). Vietnam has set ambitious targets for the
textile industry, with exports projected by Vietnam Textile and Apparel Association (VITAS) to reach
$20 billion by 2020. The Trans-Pacific Partnership Agreement (TPP), if finalized, would help Vietnam
achieve this target.
Vietnam is one of a very few countries in Asia that has expanded its yarn spinning sector in recent
years. Not only foreign investors like Texthong Group (Hong Kong), Kyung Bang Vietnam (Korea);
Itochu (Japan) etc., but also local businesses (Vinatex, Dai Cuong, Phu Bai, Thien Nam etc.) have
increased investments in yarn spinning in Vietnam. Currently, Vietnam is home to 100 spinning
factories belonging to over 80 enterprises. From only 2 million spindles in 2000, Vietnam spindle
capacity reached over 5 million spindles (equivalent) in 2011 creating the potential for voracious
demand for imported cotton.
Textile, garment, and apparel exports to the United States, the largest market for Vietnam, accounted for
nearly 50 percent of total sector exports in 2011. This represented a year- to-year increase of 7.6
Post forecasts MY 2012/13 cotton lint production at 21 thousand bales, almost a 13 percent decline
compared to MY 2011/12 as strong competition from other agricultural crops (i.e. corn, cassava, and
soybeans) will reduce planted area slightly. Vietnam’s plan of having a domestic cotton growing area
of 76,000 ha by 2020 is extremely ambitious (Vietnam planted 10,000 ha in 2012). Vietnam will
continue to rely heavily on cotton imports to fulfill its cotton needs.
MY 2012/13 cotton imports are forecast at 1.7 million bales, an increase of almost 5 percent over MY
2011/12. This growth is attributed to the expanding cotton spinning sector and continuing strong
exports of Vietnamese cotton yarn to overseas makers, especially China and Turkey. In 2011, for the
fifth consecutive year, the United States remains the largest supplier of cotton to Vietnam. Vietnam
sourced 133,200 tons (about 41 percent) of its total cotton imports in 2011 from the United States
making Vietnam the seventh largest market for U.S. cotton at a value of $369 million.
Vietnam exports over 70 percent of the yarn (including cotton yarn) that it produces. Main export
markets for Vietnamese cotton yarn are China, Turkey, USA, Korea, Indonesia, Thailand.
Table 1: Vietnam’s Cotton Production, Supply and Demand
Vie 2010/2011 2011/2012 2012/2013 tnam
Market Year Market Year Market Year
Begin: Aug 2010 Begin: Aug 2011 Begin: Aug 2012
USDA New USDA New USDA New
Official Post Official Post Official Post
Area Planted 0 10 0 11 0 10
Area Harvested 9 10 10 11 10 10
Beginning Stocks 375 375 377 315 425 282
Production 22 21 23 24 23 21
Imports 1,630 1,569 1,625 1,624 1,750 1,705
MY Imports from U.S. 0 514 0 717 0 525
Total Supply 2,027 1,965 2,025 1,962 2,198 2,008
Exports 0 0 0 0 0 0
Use 1,650 1,650 1,600 1,680 1,750 1,750
Loss 0 0 0 0 0 0
Total Dom. Cons. 1,650 1,650 1,600 1,680 1,750 1,750
Ending Stocks 377 315 425 282 448 258
Total Distribution 2,027 1,965 2,025 1,962 2,198 2,008
Stock to Use % 23 19 27 17 26 15
Yield 532. 455. 501. 489. 501. 477.
TS=TD 0 0 0
Source: FAS, Official USDA Estimates, post estimates
Note for unit measures:
Planted area/Harvest area: 1,000 ha
Stocks/Production/Imports/ MY imports from U.S/ Total Supply/Exports/Use/Total Domestic
Consumption/Ending Stocks/Total distribution: 1,000 bales (480-lb bale equivalent to 218-kg
PRODUCTION (see Tables 2 and 3 for details)
Vietnam’s 2011/12 Cotton Production
According to statistical data from the Ministry of Agricultural and Rural Development (MARD),
Vietnam’s cotton production in 2011/12 is estimated at 14,200 mt of cotton seed (equivalent to 5,180 mt
of cotton lint, 24 thousand bales, at a ginning rate of 36.5 percent), an increase of 10.4 percent compared
to 2010/11; this is mainly due to higher cotton yield and increased cotton harvested area. Although
harvested area increased it still only reached 11,000 ha in 2011/12. Higher cotton purchase prices led to
better economic returns from cotton farming. The increase in cotton acreage occurred in the primary
growing regions including the Northwest, the South Central Coast, and the Tay Nguyen Central
Highlands, especially in the Tay Nguyen Central Highlands, where the major ginning mills are located.
The MARD’s statistical data estimates the average cotton yield of 2011/12 crop at 1.34 mt of cottonseed
Vietnam’s 2012/13 Cotton Production
Since the end of 2011 / early 2012, cotton prices have dropped sharply. At the same time, prices of corn
and soybean have been increasing gradually (see the “Prices Section” including the tables 7 and 8 for
more details). As such, Post expects farmers to switch from cotton to more profitable crops like corn
and soybeans. Post estimates Vietnam’s cotton area in 2012/13 will fall 9.4 percent over the previous
year to just 9,600 hectares. MY 2012/13 cotton yield is projected to decrease 2 percent from the
previous crop, to about 1.31 mt of cottonseed per hectare. Therefore, Vietnam 2012/13 cotton
production is estimated at 12,580 mt of cotton seed or 4,590 mt of cotton fiber (21 thousand bales), a
year-on-year reduction of 11.4 percent (see tables 2 and 3 below).
Table 2: Vietnam’s Cotton Production (from 2010/11 to 2012/13)
2010/11 2011/12 2012/13
Crop area (THA) 9.80 10.60 9.60
Crop yield (MT/HA) 1.31 1.34 1.31
Seed cotton production (TMT) 12.84 14.20 12.58
GOR (%) 36.50 36.50 36.50
Cotton fiber production (TMT) 4.69 5.18 4.59
Quantity (1,000 bales, 218kg/bale) 21.49 23.78 21.06
Source: MARD, GSO, other trade sources and Post’s projection
Table 3: Vietnam’s cotton production by region, 2010 – 2012
2010 2011 2012*
Growing Regions Area Yield Prod. Area Yield Prod. Area Yield Prod.
THA MT/HA TMT THA MT/HA TMT THA MT/HA TMT
North East 0.82 1.2 0.98 0.90 1.24 1.12 n/a n/a n/a
North West 1.80 1.2 2.16 1.90 1.16 2.20 n/a n/a n/a
North Central Coast 0.12 1.1 0.13 0.12 1.20 0.14 n/a n/a n/a
South Central Coast 0.80 1.6 1.28 1.70 1.63 2.77 n/a n/a n/a
Central Highlands 3.90 1.34 5.23 4.12 1.35 5.56 n/a n/a n/a
South East 2.40 1.3 3.12 1.85 1.3 2.41 n/a n/a n/a
Mekong River Delta 0.00 0.00 0.00 0.00 0.00 0.00 n/a n/a n/a
Total Vietnam 9.8 1.31 12.90 10.6 1.34 14.20 9.6 1.31 12.58
Source: MARD; General Statistics Office (GSO); and other trade sources.
THA: Thousand Hectares
MT/HA: Metric Ton per Hectare
TMT: Thousand Metric Tons n/a: not available
Cotton production in Vietnam is highly susceptible to weather conditions and can fluctuate widely year-
to-year. More than 90 percent of the cotton production area in Vietnam is rain-fed, with planting
initiated in the rainy season (May/June – August) and harvesting taking place from October -
December. In areas where irrigation is possible, cotton may be planted in the dry season
(November/December), thereby allowing for harvesting from March through May.
Calendar year 2011 saw almost an 8 percent decline in the quantity of cotton imports as high prices and
the global economic situation resulted in the demand for textiles slowing. U.S. exports in 2009-2011
remained relatively stable, between 132,900 and 141,300 mt. However, Post forecasts the volume of
exports in calendar year 2012 to drop below 130,000 mt.
Table 4: Import Trade Matrix
Imports for: 2009 2010 2011
U.S. 141,300 U.S. 132,900 U.S. 133,200
Others Others Others
Africa 53,000 Africa 71,339 Africa 50,000
India 32,000 India 65,917 India 43,000
Brazil 15,083 Brazil 14,893 Brazil 29,000
Pakistan 9,104 Australia 10,364 Pakistan 17,400
UAE 2,878 Pakistan 10,300 Australia 10,800
Australia 1,904 Malaysia 4,647 Malaysia 10,000
Mexico 1,736 CIS 4,030 Argentina 5,800
China 800 Argentina 2,537 China 2,700
Taiwan 750 Mexico 1,070 Mexico 1,850
CIS 700 Taiwan 950 Taiwan 1,100
Total for Others 117,955 186,047 171,650
Others not Listed 40,857 33,953 22,150
Grand Total 300,112 352,900 327,000
Source: Vietnam Customs Department; MARD; World Trade Atlas, Traders & Post’s estimate
Unit: Metric Tons
In MY 2010/11, Vietnam imported 343,000 tons (or 1.57 million bales) of cotton fiber, valued at over
$1 billion. Cotton imports for MY 2011/12 were about 354,000 tons (or 1.623 million bales) for $871
million, a slight increase of 3 percent in quantity but a sharp decrease of 18 percent in value over the
previous year due to plummeting world cotton prices (see Tables 7 & 8).
Due to the expanding cotton spinning sector, strong exports of yarn to China, and lower prices relative
to the last 18 months, Post estimates Vietnam’s cotton imports in 2012/13 to increase by 5 percent to
372,000 tons (1.705 million bales).
Table 5: Vietnam’s Monthly Cotton Imports (MY2010/11 and 2011/12)
August 2010-July 2011 August 2011-July 2012
Qty (1000MT) ($ million) Qty (1000MT) ($ million)
Aug 32 64 21 58
Sep 31 59 14 53
Oct 24 50 30 80
Nov 23 49 33 93
Dec 30 76 25 63
Jan 37 104 18 47
Feb 29 85 33 77
Mar 38 131 38 86
Apr 29 107 32 73
May 29 121 38 84
Jun 21 82 35 75
Jul 20 78 37 83
TOTAL 343 1007 354 871
Sources: Vietnam General Statistic Office, Vietnam Customs Department, and other trade sources.
Vietnam’s Primary Cotton Suppliers
According to Table 4, in 2011, Vietnam imported about 327,000 tons of cotton, a year-on-year decrease
of approximately 8 percent. The United States remained the number one cotton supplier to Vietnam,
with over 41 percent share of Vietnam’s total cotton imports (note: this marked the fifth consecutive
year that the U.S. was the leading supplier of cotton to Vietnam). African countries ranked second and
India was the third largest supplier.
U.S. Cotton Exports to Vietnam
In 2011, U.S. cotton exports reached 133,200 tons for a value of $362 million, a year-on-year increase
of 0.4 percent in quantity and 45.6 percent in value due to spiking international prices.
During Jan-July 2012, U.S. cotton exports were 76,338 mt valued at $161.9 million, a significant
reduction of 20 percent in quantity and 41 percent in value (see table 6 below). Several factors in the
international cotton market have caused volatility in world prices. Unfortunately, this volatility led some
mills and other purchasers in Vietnam to default on contracts with US cotton suppliers. The contract
default situation made most U.S. cotton suppliers hesitate to sell cotton to the Vietnam market. This is
the main reason for the big drop in U.S. cotton exports to Vietnam in the first seven months of 2012,
and the results of that situation will likely restrict exports into 2013.
Table 6: U.S. Cotton Exports to Vietnam
2007 2008 2009 2010 2011
2011 2012 % change in compared with
the same period 2011
66.7 125 141.3 132.9 133.2 95.9 76.3 -20
88.2 192.6 165.1 248.8 362.3 275.4 161.9 -41
US Exports of Cotton to Vietnam by Quantity and Value
Vietnam’s domestic cotton consumption continues to increase in order to meet strong demand from its
expanding textile industry. Demand for textiles is strong, for both export and domestic markets.
Vietnam is currently home to 100 spinning mills with 5 million spindles (equivalent) for a total capacity
of 400,000 tons of fiber. Domestic cotton consumption has been increasing at an average rate of 7-8
percent, per year, for the last five years. Post revises estimated domestic cotton consumption for
2010/11 at 360,400 tons (or 1,650 thousand bales), and for 2011/12 at 366,000 tons (or 1.68 million
bales) (see PS&D Table 1). This revision reflects the stronger exports of cotton yarn to overseas
markets, especially China and Turkey.
Due to strong demand from China and Turkey for Vietnamese cotton yarn, Vietnam cotton yarn exports
will continue to increase in 2012/13. This will result in stronger cotton lint demand in 2012/13. Post
estimates cotton consumption in 2012/13 at 365,800 tons (or 1.75 million bales), an increase of 4.2
percent over the previous year.
During 2011, and the first 7 months of 2012, Vietnamese businesses suffered high interest rates on bank
loans. The average interest rate in 2011 was 20 percent, while in 2012 it has been about 15-16 percent,
which is among the highest in Asia. As a result, cotton users and traders have tried to minimize costs by
reducing carry-over stocks of cotton. Ending stocks in 2010/11; 2011/12; and 2012/13 are estimated at
315 thousand bales, 282 thousand bales, and 258 thousand bales, respectively. Stocks-to-use is forecast
to fall to 15 percent in 2012/13 as users and traders shed excess inventory.
Fluctuations in cotton prices over the last 18 months have had two effects on the Vietnamese cotton
market. Firstly, high prices in 2011 resulted in an expansion in planted area and increased production in
MY 2011/12. Secondly, the rapid decline in prices in 2012 -- following their record run up in 2011 --
resulted in a number of contract defaults which affected U.S. cotton exports to Vietnam. Table 6
illustrates the sharp increase in cotton import prices during Jan-Nov 2011 (in comparison to monthly
prices in 2010). Import prices reached a staggering $4.17 / kg in May 2011, well over double the price
in January 2010.
However, beginning in May 2011 prices began to fall and by June 2012 reached $2.14 /kg, the price
level in November 2010. Table 7 shows the decline in average cotton import prices during Jan-July
2012. Prices decreased by 35 percent in comparison with prices in Jan-July 2011.
This wide fluctuation in prices over the last 18 months has caused great upheaval in the world cotton
trade. Worldwide contract defaults grew exponentially as prices reached record highs and then dropped
precipitously in 2012. Vietnam is one of a number of countries that had a significant number of cotton
contract defaults listed on either the International Cotton Association (ICA) or American Cotton
Exporters Association Default lists.
Table 7: Cotton Average Import Price in 2010 and 2011
Price in USD per Kg
2010 2011 % Change 2011/2010
Jan 1.58 2.81 78
Feb 1.64 2.93 79
Mar 1.67 3.42 105
Apr 1.55 3.69 138
May 1.78 4.17 134
Jun 1.88 3.98 112
Jul 1.97 3.89 97
Aug 2.00 2.76 38
Sep 1.90 3.67 93
Oct 2.08 2.67 28
Nov 2.13 2.84 33
Dec 2.53 2.52 0
Calendar Year Average Price 1.88 3.24 72
Exchange Rate 20,900 Local Currency/US$
Source: Vietnam Customs Department and Vietnam Ministry of Industry & Trade
Table 8: Average Cotton Import Price for the first seven months of 2011 and 2012
Prices in USD per kg
Year 2011 2012 % Change 2012/2011
Jan 2.81 2.58 -8
Feb 2.93 2.31 -21
Mar 3.42 2.24 -35
Apr 3.69 2.27 -38
May 4.17 2.19 -47
Jun 3.98 2.14 -46
Jul 3.89 2.24 -42
Average Price from Jan-July 3.49 2.26 -35
Source: Vietnam Customs Department and Vietnam Ministry of Industry & Trade
Presently, the Vietnam Cotton Company (VCC) is buying seed cotton at an average price of VND
12,000/kg, equivalent to $0.576/kg (or 26.2 U.S. cents/lb), a decrease of 29.4 percent in comparison
with the previous crop (note: in the previous crop, VCC bought seed cotton at VND 17,000-18,000/kg).
VCC is currently selling ginned cotton to mills at $1.97-1.99/kg (89.4-90.3 US cents/lb). However, it is
quite difficult for mills to accept these price levels due to the current slump in cotton international
Current Offer Prices (based on CNF Ho Chi Minh City, prompt shipment, quoted on Sep 10):
Current indicative offer prices ($/kg or US cents/lb) for cotton (quality equivalent to Strict Middling
1.1/8”) from various sources are as follows: West Africa – $1.94/kg (87.9 US cents/lb); USA – $1.95/kg
(88.5 US cents/lb); and India-$1.97/kg (89.4 US cents/lb). Table 9 below shows that the U.S. remains
competitive in the Vietnamese import market.
Table 9: Indicative Cotton Quote Prices
CNF Ho Chi Minh City, Prompt Shipment
Indicative Indicative % change in comparison with the prices
price price Indicative of March 10, 2011
March 10, March 10, price
2011 2012 Sep 10, 2012
USA 230 102 88.5 -61.5
Africa 220 105 87.8 -60.1
India 238 99 89.4 -59.0
Source: indicative quote prices from various cotton traders
Tariff on Cotton
Cotton has a zero tariff on [cotton lint], but a 10 percent value added tax is assessed.
Biotech Policy and Cotton Production
Vietnam has identified and approved three crops (cotton, soybeans, and corn) for biotech development
in Vietnam. Currently, however, commercial production of those genetically engineered (GE) crops,
and trade in GE seeds, is still not yet allowed as the commercialization of GE crops is not yet approved.
However, despite the lack of a biosafety certification process, MARD issued the first permission for
conducting confined and multi-location field trials of Bt corn to three companies in 2010 and 2011. To
date, these trials have not yet resulted in certification of any GE varieties. Although cotton is one of the
three crops identified for GE production in Vietnam, to date, no confined or multi-location field trials
for cotton have been undertaken.
Vietnam Cotton Development Plan for 2015-2020
On January 8, 2010, the Prime Minister signed the Prime Minister’s Decision No. 29/QD-TTg,
approving the Vietnam Cotton Development Master Plan for 2015-2020. Table 10 below shows the
main targets of this plan.
Table 10: Vietnam Cotton Development Plan 2015-2020
Total crop area (THA) 30.00 76.00
Irrigated cotton area (THA) 9.00 40.00
Averaged crop yield (MT/HA) 1.50 2.00
Yield of irrigated cotton (MT/HA) 2.00 2.50
Cotton fiber production (TMT) 20.00 60.00
Quantity (1,000 bales) 91.86 275.57
Under the program, the Government of Vietnam (GOV) will encourage larger-scale cotton farms and
intensive cotton farming in order to increase cotton output and cotton quality. The planned key areas
for cotton cultivation to include Dak Lak, Dak Nong, and Gia Lai provinces in the Central Highlands;
Ninh Thuan, Binh Thuan, Binh Phuoc, Dong Nai, and Ba Ria-Vung Tau in the south-east and central
coastal regions; and Dien Bien, Son La, and Bac Giang in the northern region.
The GOV plans to establish a fund to help farmers with extension work and cotton price stabilization.
Low-interest loans will be made available to cotton farmers. The GOV also plans to invest in building
infrastructure and irrigation in cotton growing areas. The Ministry of Trade and Industry (MOIT) has
also approved plans for garment & textile development for 2015 and its plan for 2020.
Post believes both these plans are ambitious. Previous efforts to promote cotton development have been
unsuccessful, due to limited land resources and competition from other crops.
Table 11: Vietnam’s Projections for the garment and textile industry to 2020
Description Unit 2010 2015 2020
1. Export value $ million 12,000 18,000 25,000
2. Number of employees Thousand persons 2,500 2,750 3,000
3. Key products
- cotton lint 1000 mt 20 40 60
- Fiber, polyester yarn 1000 mt 120 210 300
- all kind of yarn 1000 mt 350 500 650
- all kind of fabrics million m2 1.000 1.500 2.000
- Garment products million pieces 1.800 2.850 4.000
4. for domestic market % 50 60 70