With the completion of sowings in the late sowing areas, cotton sowing in 2004-05 season has come to an end. Cotton harvesting in early sowing areas of Lower Sindh and some areas of central Punjab in Sahiwal, Chichawatni and Mian Chunnu has already commenced.
Sindh ginners have not yet started their operation in new crop but some ginners in Sahiwal, Chichawatni and Chishtian areas of Punjab have commenced ginning operation in new cotton crop.
Field reports indicate that a couple of thousand bales from new crop seed-cotton have already been pressed by Punjab factories. Seed-cotton from Sindh is being transported to Punjab for ginning because Sindh has yet to start ginning in new crop.
The Pakistan Cotton Ginners’ Association had decided not to commence ginning operations in new crop in Sindh and Punjab before September 1 and October, respectively, to give a breathing space to those ginners who are still holding unsold stocks from 2003-04 crop.
Crop is developing well under conducive weather conditions and it is hoped that friendly weather forecast would help in harvesting a bumper crop of around 11.5 million 170-kg bales in 2004-05 season.
Quality of lint cotton ginned and pressed from new crop seed-cotton appears to be of better grade and quality. Monsoon is likely to enter Pakistan in a couple of days as per Met Office forecast.
Monsoons in South Asian countries like India, Bangladesh, Japan, Nepal and China have played rough and rain waters have flooded causing heavy loss to property, crop and lives. We anticipate that while entering Pakistan, the Monsoon would lose some force.
However, there are crucial months ahead of harvesting stage and we should be ready to meet any eventuality.
The Punjab government is reported to have prepared a scheme which would provide crop insurance to growers to cover their risk of loss or damage to crops. Let us see how far this scheme works for the benefit of the growers.
Local cotton prices remained under pressure and during the last week Spot Rate was slashed down by Rs 100 to Rs 2,500 per maund ex-gin.
The ginners and exporters holding unsold cotton stocks were greatly perturbed on very poor buying interest. New crop cotton was selling around Rs 2,450-2,500 per maund and running crop lint of prime stations was quoted at the same rates. Lower grade cotton was selling around Rs 2,200-2,400 per maund ex-gin.
Foreign inquiries are almost non-existent. Other reports indicate that bankers appear quite worried about recovery of funds advanced to cotton / textile companies against pledge of cotton / yarn as the valuation of pledged cotton and textile goods stocks may be far below their advances in view of 20-25 percent fall in cotton and yarn prices.
The bankers are understood to be working on some plans / methods including taking over of the stocks to safeguard their interests. If 2.5 million bales of raw cotton are taken as pledged stocks, the loss in valuation may be over Rs 8,000 million.
This season (2003-2004), the ginners, exporters and spinners have generally lost heavily and many in tens of millions. Perhaps only growers made money as they were able to get best price of their seed-cotton–up to Rs 1,600 per 40 kg ex-gin. Still the ginners may be holding unsold stock of some 350,000 bales and picking of new crop cotton has already commenced.
Stocks of yarn are piling up and there is very little buying. Prices have gone down considerably and foreign buyers are indicating to reduce yarn prices to compensate their loss.
The season: cotton prices rocketed high–around to 84 cents–and nose-dived to 46 cents 46 at the close of the season. Now, new season is taking a start from low level of prices and is likely to finish at high level. China factor played a very important and significant role in cotton marketing this season.
New York Future Market resisted further fall in values during last week. October contract lost 85 c/pts, December 76 c/pts 76 and March 91 C/pts to close at 46.45, 46.62 and 48.39 cents respectively.
Running cotton season (2003-04) will be closing on July 31 and new cotton season (2004-05) will commence from August 1. As per US rules, subsidy will be allowed only on such cotton which will be shipped on or before July 31, 2004.
The international merchants holding unsold stocks are dumping it in other countries for earning export subsidy so it does not mean that all cotton shipped before August 1 is actually sold. US may attain the export target of 13.8 million bales this season.
In view of conducive weather conditions in almost all prominent cotton producing countries, prospects for a record high world crop have brightened which is presently estimated around 104.73 million 480-lb bales in 2004-05 season–10.84 million bales more than the estimated production of 2003-04 season and 4.57 million bales more than its consumption in 2004-05 season.
China is understood to have prepared a plan for providing subsidy to its cotton and textile industry to make it stay against international price pressure. As the implementation of WTO regime is drawing closer, most of the textile importing and exporting countries are afraid of big competition from China.
There are silent protests and lobbying by some countries in favour of postponement of WTO regime. It is certain that marketing practices / policies would undergo drastic changes on implementation of WTO regime.
TABLE NO 1
USA & World Cotton Figures
USA million 480-lb bales World
2004-2005 2003-2004 2004-2005 2003-2004
Beginning Stocks 3.60 5.38 32.93 36.65
Production 18.00 18.26 104.73 93.89
Local consumption 5.80 6.30 100.16 98.39
Exports 11.30 13.80 - -
Imports 0.04 0.05 - -
Ending Stocks 4.50 3.60 37.79 32.93
Source: USDA, July-2004.
TABLE NO 2
Million 480-lb Bales
2004-2005 2003-2004 2004-2005 2003-2004
China 30.00 22.30 34.20 32.20
India 12.50 13.20 13.60 13.30
Pakistan 8.75 7.75 9.90 9.60
Central Asia 7.40 6.84 1.95 1.89
West Africa 4.42 4.43 0.20 0.20
Turkey 4.25 4.10 6.10 6.00
Australia 2.40 1.50 0.07 0.08
Brazil 6.50 5.80 3.90 3.75
Curtesy: Business Recorder