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  • Jan 5th, 2004
  • Comments Off on Cotton prices post increase on high New York futures rates
The Pakistan Cotton Ginners' Association has released the much-awaited cotton arrivals and disposal figures for December 31, 2003.

During the second fortnight of December, equivalent of some 834,000 local bales (170 kg) seed-cotton was received making cumulative total of 8.382 million bales (Sindh 1.654 million and Punjab 6.728 million) against 8.736 million bales received in the same period last year--shortage being 354,000 bales, or 4.05 percent.

On December 1, 2003, shortfall in cotton arrivals from corresponding period of last year was 1.94 percent which widened to 4.05 percent on January 1, 2004.

Total unsold stocks stood at 1.877 million bales against 2.143 million bales of last season. Arrivals during December , 2003 were 1.795 million bales against which mills / exporters lifted 1.625 million bales--daily average being 52,400 bales.

The arrivals of seed-cotton during the second fortnight were encouraging and trade circles now expect further arrivals of some 1.118 million bales in January and onward, making the total crop around 9.5 million bales ex-gin.

Encouraged by the very handsome cotton prices and discouraged by difficulties in selling sugarcane this season and increasing domestic cotton consumption, the growers appear quite enthusiastic and determined to bring more area under cotton next season.

This season, about 15 percent growers in Lower Sindh have opted to continue with current cotton plants to pick the last cotton bolls till the end of January and skip wheat growing in 2004.

The growers, finding their lands idle, are planning to start cotton sowing one month earlier than normal schedule.

More or less, the same position would prevail in some cotton areas of Upper Sindh and Punjab.

Thus, the next cotton crop would be one month earlier and shortage in wheat production is feared. Arrivals in Lower Sindh are still going on and may continue further.

Third pick arrivals in Upper Sindh may start some time in the middle of January and may continue till the end of February.

Field reports also indicate increased arrivals from some cotton areas in Punjab. Growers in Sindh say that they find third pick cotton better in quality and quantity than their second pick.

However, against earlier estimates, cotton arrivals would continue till March, 2004.

Local spinners are understood to have committed import of some 800,000 to 900,000 bales of 480 lb each mainly from USA, South /West Africa, CIS, Australia and India and may finish their season's imports around 1.2 million bales to meet their cotton shortfall and the requirements of better grade / long staple cotton.

On the point of collection of cotton statistics periodically, one ginner suggested that since cotton is a provincial matter and the provincial agriculture departments issue ginning working licences, collect agriculture fee on cotton from ginning factories and have a large extension network, it would be more appropriate to ask the Provincial Agriculture Departments for taking up this job.

The Government should examine the matter of producing genetically modified (GM) crops for increasing production. India has already adopted this technology and has achieved very encouraging results this season by sowing Bt Cotton.

Every now and then, reports in the press appear that our agri-scientists have evolved very promising seed which would revolutionise our agriculture but all claims prove false as we have not made any breakthrough in cotton production in the last 12 years.

Our domestic cotton consumption is increasing every year and our cotton production appears capped on 10 million bales, resulting in increased import of cotton every year.

Not in cotton only, we also find shortfall in other commodities like wheat, sugarcane, pulses, edible oil, onion etc.

Pakistan should seriously take up the problems and difficulties of agriculture specially cotton, wheat and sugarcane to increase their production at least to the level of our domestic consumption.

On the export front, there have been more cases of default in cotton shipments and complaints of supply of inferior quality cotton this season, perhaps because the exporters failed to procure cotton from ginning factories in right time.

Normally, such complaints are lodged with Export Promotion Bureau (EPB) which forwards these complaints to Karachi Cotton Association (KCA) for necessary action. As a matter of fact, neither EPB nor KCA appear to have any proper system for examining these complaints and for taking action against defaulters.

As a result of this, defaulters get encouragement and the country gets bad name in the international market.

It is worth mentioning that under such unfavourable conditions, Rehmoumer & Company, the top most cotton exporter of Pakistan, honoured almost all its export commitments even at a very high price difference of 20 cents per lb in favour of the importers.

Local cotton market staged strong recovery of about Rs 150 to Rs 200 per mound last week, perhaps encouraged by similar recovery in New York Cotton Futures market.

Now, lint prices are ruling up to Rs 3,400 per mound. Prices of lower grade cotton have also firmed up accordingly.

Market reports indicate mixed trend in yarn prices. Real strength in cotton prices would come when yarn prices would pick up and off-take would improve to a desired level. Larger cotton import commitments also depress local cotton prices.

Being satisfied with the quality of cotton shipments from India, more and more import orders are being placed and the import commitments may go up to 150,000 to 200,000 bales.

India has earmarked one million bales of cotton for export this season, of which about half has been committed. Main buyers of Indian cotton are Bangladesh and Pakistan being next doors.

New York Cotton Futures prices flared up on reports of China's buying. Ruling contracts March and May jumped to 75.07 cents and 76.13 cents, gaining 4.03 and 4.05 cents respectively.

About a fortnight ago, reports from China indicated that fresh cotton import allocations under TRQ to private sector spinning mills were in process.

Trade circles expect that world cotton prices would post robust increase when China would start buying more effectively.

Despite frustration on outbreak of SARS (Severe Acute Respiratory Syndrome) in 2003, Chinese economy has performed well, even better than before.

China's total reported exports in 11 months--January to November--stood at $430 billion and imports at $410 billion.

Roughly, monthly average exports work out to $40 billion while our annual export target is $12 billion.

It means that China's nine days' exports are equal to Pakistan's one year's exports. Even the tiny Hong Kong's annual exports are around $20 billion.

Also look at the per capita income: China $940 in 2002, and in 2003 it may cross the level of 1000; Switzerland $37,950; USA $35,060; Brazil $2,850; Peru $2,500; Iran $1,710; Egypt $1,470; Indonesia $710; India $480; and Pakistan $500 while world average is $5,080.

Just match our performance with other countries.

Copyright Business Recorder, 2004


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