DHAKA, Dec 7 (Reuters) - Textile manufacturers and exporters in Bangladesh expect their products to become more competitive after international prices of cotton and yarn fell by up to 30 percent and 15 percent, respectively, industry officials said.

Photo : Jewel Samad/AFP

Readymade garments are Bangladesh's main export, accounting for $10.7 billion, or 76 percent, of its annual export income in the fiscal year to June 2008.

Cotton is being traded at 62 to 65 cents a pound in international markets, down from 85 cents three months ago, while the 30-count variety of yarn, widely used to make apparel in Bangladesh, sells at $2.60 per kg, down from $3 three months ago.

"The falling prices of cotton will boost our imports and also production costs will become competitive," Abdul Hai Sarker, president of the Bangladesh Textile Mills Association (BTMA), told Reuters on Sunday.

Importers attribute the lower prices to declining freight rates as fuel prices slump amid the global financial turmoil.

Bangladesh spends nearly $1.1 billion to meet its annual demand of 2.7 million bales of cotton, 65 percent of which is filled from Uzbekistan, the world's third-largest cotton exporter, officials said.

The yarn price drop would substantially boost the quantity of garments produced and make exports more competitive, Mohammad Fazlul Hoque, president of the Bangladesh Knitwear Manufacturers and Exporters' Association, told Reuters.

"The falling prices of cotton and yarn will help us to face price pressure from buyers in the recession-hit U.S. and European markets, which account for almost 90 percent of Bangladesh's total export earnings," he added.

Yarn consumption in Bangladesh has been rising in the last few years after new spinning mills and knitwear factories have sprung up in the country, Hai said.

Local yarn makers now supply up to 90 percent of the raw material to the knitwear sub-sector and 40 percent to the woven sub-sector, driven by strong linked industries, he said.

Bangladesh's yarn makers also import cotton from India, Pakistan, Australia, the United States and some African countries. ($1=68.88 taka)

(Reporting by Serajul Islam Quadir; Editing by Clarence Fernandez)