Bangladesh's cotton consumption is expected to rise marginally to 78 lakh bales in marketing year 2024-25, which began in August, according to a US Department of Agriculture (USDA) report published on Friday.

The US agency, in its initial projection in April this year, estimated cotton consumption in Bangladesh, the world's second-biggest clothing factory, at 80 lakh bales.

One bale equals 480 pounds or 218 kilogrammes (kg).

It revised the projection downwards in August and September before raising the forecast in its latest update.

Although the USDA did not explain the reasons behind the hike in its latest report, titled "Cotton: World Markets and Trade", industry stakeholders said the overall use of cotton by local textile mills may be higher this year.

"Business was unfavourable for various reasons, including the gas crisis and hike in its prices alongside unavailability of US dollars to open letters of credit (LCs) for cotton imports. Now, we can open LCs," said A Matin Chowdhury, managing director of New Asia Group, a vertically integrated apparel manufacturer.

Import and consumption of cotton yarn also grew last year.

It appears that local production of yarn will increase this year as cotton prices are falling in the international market

— A Matin Chowdhury Managing Director of New Asia Group

"It appears that local production of yarn will increase this year," he said, citing falling prices of cotton on the international market.

Cotton prices declined 15 percent year-on-year to $1.79 per kilogramme (kg) in July-September from $2.11 a year ago, according to the World Bank Commodities Price Data (The Pink Sheet).

"But a lot depends on gas and electricity supply," he said.

Insiders said the domestic market had been sluggish in July and August, with demand only starting to pick up by the end of September.

"The overall situation has improved to some extent. But spinners cannot run operations properly due to the gas and electricity crises," an official of the Bangladesh Textile Mills Association (BTMA) said.

Mills run at over 80 percent of their capacity when the energy supply is adequate.

"But they are currently running at half of their capacity because of the gas and electricity crises," the official added.

The USDA said Bangladesh's domestic use of cotton hit 88 lakh bales in MY22 to feed the demand for export-oriented knitwear makers, the main export-earning sector.

However, cotton consumption began declining in subsequent years and overall use stood at 77.5 lakh bales in MY24.

The country is highly reliant on imports because of its low domestic production of cotton, which amounts to around 1.5 lakh bales annually.

Local millers import a good chunk from countries in West Africa followed by India, Brazil, the United States and Australia, according to the USDA.

The US agency estimated Bangladesh's imports of cotton for MY25 at 77 lakh bales -- around 2 percent higher than the 75.75 lakh bales imported the previous year.