Cotton planted area rebounded in 2017/18, which resulted in a substantial increase from the previous season 2016/17. This increase is attributed to favorable weather conditions, adequate irrigation, continued use of genetically engineered (GE) seeds, and a return to cotton planting as a result of favorable prices, after a year of crop rotations.

Post forecasts 2018/19 total cotton production 2 percent up than the previous marketing year, due to continued favorable prices for cotton than for other crops, such as sorghum and corn. Cotton is the only commercially grown GE crop in Mexico. Farmers have indicated that the use of GE cotton has resulted in better pest control and pest management. Also, higher yields of GE cotton are generally mentioned.

Consumption

Mexico’s apparel industry relies almost entirely on the U.S. market. Mexico is the seventh largest exporter of denim worldwide and the main supplier to the United States for over 15 years, which makes the textile industry vital for the economy. The textile sector represents 1.3 percent of Mexico’s Gross Domestic Product. Total domestic cotton consumption in MY 2018/19 is forecast at 2.02 million bales (each bale weighs 480 pounds). Consumption for MY 2017/18 is revised higher than previous estimates at 2 million bales, based on industry sources.

Geographic proximity to the United States gives Mexican apparel producers an advantage over Asian producers, allowing for quick restocking of items for which time is a critical factor.

Trade

2018/19 total cotton imports are forecast at 925,000 bales due to the expected large crop production. The expansion in production is expected to encourage yarn and textile manufactures to source their needs from the local cotton industry. Production, however, in Mexico now consists of nearly 80 percent of total domestic use.

This trend is expected to continue. Mexico is looking to expand and diversify its imports looking to countries that also offer a zero tariff, like Argentina, Brazil, Greece, and Italy. With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Mexico is expecting to develop a commercial relationship with Australia. The United States, however, should remain the main supplier of cotton to Mexico which accounts for almost 100 percent of Mexico's total cotton imports.

Source: USDA/FAS GAIN Report, September 2018

Source: Bremen Cotton Report, Issue 37/38, September, 28 2018.

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