Cotton sellers prevail upon buyers for higher price

KARACHI (May 31 2004): Cotton planting has almost been completed in Lower Sindh, while it is in progress in Upper Sindh and Punjab. Previously, there was no shortage of canal water, sowing in one area was simultaneously, but now due to shortage of canal waters, cotton growers get water on turn resulting delay in sowing.

If previously, sowing was completed in one fortnight, now it is completed in three fortnights.

As such, cotton harvesting would also be stretched to three fortnights in a area. When harvesting of early sown cotton would start by Middle of July then sowing would be in progress in late areas.

Unlike previous years, cotton arrivals would be stretched to a longer period of about six months and there will not be arrival pressure in November or December months.

This process would help cotton market attain stability and ensuring better return to cotton growers.

At present, the weather is reported conducive, and the sowing operation is going on smoothly. By middle of July, ginning factory in Mirpurkhas may resume operation in the new crop, and first sale of new crop lint cotton may be made in late June or early July month, which is estimated around Rs 2,800 – Rs 2,900 per maund ex-gin.

Field reports indicate larger sowings, but reliable sowing figures may not be available before August 04, but trade circles estimate national sowing around 3.05 million – 3.10 million hectares in the 2004-05 season, producing about 11.5 million bales of 170-kg each.

The size of expected cotton crop in 2004-05 would squarely depend on natural factors such as weather conditions, rainfalls and pest attack, as human efforts have failed in making any sort of improvement in cotton output.

India expects to increase its cotton productivity by over 15 percent through adopting new technologies in agronomy, irrigation, and seed. It also expects to produce 19 million bales of 170-kg in 2004-05 against 16.75 million bales in 2003-04, which if achieved would become the highest record, and India would have some 1 million to 1.5 million local bales surplus for export.

Despite our all-out efforts, we have not been able to make any headway in cotton production in the last 12 years, we should, therefore, think of revolutionising the centuries-old agriculture system, and re-structure it to suit our requirements.

Perhaps, the Ministry of Food, Agriculture and Livestock (Minfal) may be the largest ministry with more than hundred departments/ institutions/organisations most of them without any worth mentioning performance.

Our negligence towards very important agriculture issues is tantamount to economic terrorism, which works as a slow poison for the whole country and its people, while physical terrorism only kills some persons.

During the last week, the local cotton market remained steady to firm and on the close of the last week, the KCA Spot rate increased to Rs 3,100 per maund ex-gin. Lint bargains of better grade were reported up to Rs 3,200 per maund ex-gin.

Average Grade cotton was selling around Rs 2,900 – Rs 3,050, while Low Grade down to Rs 2,700. Spinners have shown good interest in picking up better grade/prime mic. cotton.

Exporters also bought some lots matching with their export types at different rates based on quality. Unsold stocks with ginners are now estimated around 550,000 – 600,000 bales at the close of May.

The market reports indicate import-booking of more than 300,000 bales of 480-lb each of different growths mainly USA by local spinners for the new crop.

The progressive spinners have better idea of real total domestic cotton consumption, which is estimated around 13 million local bales in the 2004-05 season than the official consumption figures.

This season (2003-04), total imports of cotton by the close of this season may touch the record high level of 340,290 tonnes equivalent to 1.56 million 480-lb bales = 2 million of 170-kg bales.

Sensing larger shortage between the demand and supply, the export-oriented spinning mills are trying to secure enough imported cotton supply to meet their long-term requirements.

Local conditions indicate steady cotton market in 2004-05 in view of strong local demand and longer cotton arrival period, while international market conditions appear easy on larger expected cotton production and normal cotton consumption due to depressing political conditions in Middle-East.

The New York Cotton Market depicted a easy trend in prices and July-04 and October-04 contracts closed at cents 61.19 and 59.60 against last week’s closing at 63 cents and 60.35 cents, respectively.

The total US cotton export up to May 20, has reached the level of 13.2034 million bales in 42 weeks and still 10 weeks are left to close this 2003-04 cotton season.

The US domestic consumption of cotton on the basis of April is annualised at 6.179 million bales against 7.058 million bales in the same period last year. It appears that by the close of this current season in July, 04, US annualised cotton consumption would go down below the mark of 6 million bales.

In the coming years, US would have to face disposal problem of even larger export surplus.

Uzbekistan has announced to discount cotton prices by 10 percent for spinning mills established from Direct Foreign Investment (FDI) in the 2004-05 season. This is an attempt to increase its domestic cotton consumption to improve its economic conditions.

China is reported to have imported total 1.28 million tonnes = 5.877 million 480-lb bales up to April 04. It imported 291,000 tonnes = 1,336,175 bales of 480-lb during the month of April 04 – 67 percent from USA, 20 percent from African countries, and balance from other countries, including CIS, Australia and India.

China plans to plant to cotton some 5.60 million to 5.78 million hectares in 2004-05 season up 10 to 15 percent.

Last week, Brazil held a seminar in Beijing, China, introducing its cotton to Chinese market, said that it is competitive in terms of quality and price. In 2004-05, Brazil expects a bumper cotton crop of some 1.24 million tons = 5.694 million 480-lb bales – an increase of 46 percent over the last season by increasing area under cotton by 40 percent and yield by over 4 percent.

In 2003-04 season, Brazil’s total export sales currently stand at 350,000 tonne = 1.6 million 480-lb bales. Next season, its export surplus may be over 2.5 million bales.

The international trade is expecting drastic drop in cotton prices in the 2004-05 season owing to better production prospects and same as this season global cotton consumption, but anything may happen to prospective global cotton production of over 102 million 480-lb bales as we experienced in 2003-04 season..

Curtesy: Business Recorder

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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