The ground realities indicate that the flow of cotton arrivals from fields to market places or ginning factories may continue beyond March, against the earlier expectations.
The size of the crop now appears, quite realistically, around 10 million bales. Domestic consumption of cotton is on the increase and is now estimated between 12.5 million and 13.0 million local bales.
While preparing the balance sheet of Pakistan cotton, international agencies fail to take cognisance of the fact that about one million bales of locally produced cotton-waste is re-used by the spinning industry which actually puts the domestic requirements for raw cotton between 11.5 and 12.0 million bales.
Thus, our imports of cotton this season may be between 1.5 and 2.0 million local bales.
New cotton sowing is in progress in the cotton areas of Lower Sindh and would be extending to other areas, on turn of irrigation waters.
The government has not so far declared any projected sowing figure but trade circles expect it around 3.1 million hectares.
There appear better prospects for larger cotton sowing next season in view of better cotton return to growers.
Next cotton ginning season may start earlier, by about one month, in view of expectations for an early cotton crop.
The governments claim to have prepared a cotton policy for 2004-05 season which would take full care of growers' problems.
AS MENTIONED EARLIER, WE HAVE TWO CORE ISSUES IN COTTON ECONOMY VIZ: 1) Stagnated seasonal cotton production around 10.0 million bales against domestic consumption of 12.5 to 13.0 million bales; and 2) Poor quality of our cotton which requires to be improved to international standards by implementing Cotton Grading and Standardisation System at the ginning stage.
Unfortunately, there has not been found any improvement both in production and quality sectors for the last more than a decade.
The Ministry of Food, Agriculture and Livestock (Minfal), provincial agriculture departments, agriculture extension services, seed-breeders, agri-scientists, research institutes and other concerned departments have been claiming every season to be doing better but the results are hopeless.
As per press reports, the other day Cotton Commissioner Dr Abdul Kader Baloch said:
1. Fibre-testing laboratories are being established in important cotton districts throughout the country.
2 Implementation on Cotton Grading is in progress.
3 Cotton Standardisation Ordinance has been issued.
4 Pakistan Cotton Standard Institute has been established and its grading system has been accepted by domestic as well as international institutions / organisations.
5 Pakistan is the first country where Cotton Standardisation Act has been promulgated.
HERE IS THE REPLY TO THE ABOVE STATEMENT / INTERVIEW OF THE COTTON COMMISSIONER:
1) The whole scheme of establishing Fibre-testing Labs is on paper. Two labs, one in Karachi, require replacement of old and obsolete HVI machine which often remains out of order, and the other in Multan is reported out of order.
2) Implementation of Cotton Grading system is not there. No graded cotton is being produced.
3) Cotton Standardisation Ordinance was issued in October, 2002, and since then it is lying idle, without any implementation at ginning stage.
4) Pakistan Cotton Standard Institute was established in 1987-88 and Cotton Standards have been prepared but awaiting implementation at ginning stage.
5) Cotton Grading system is already in practice in China, Syria, Uzbekistan, Turkmenistan and others in Asia. The prime purpose of Cotton Grading/Standardization system is to bring overall improvement in the quality of cotton equal to international standards, but our cotton still remains in the 'most contaminated' group. The nation wants to see solid results in improvement of our cotton quality and increase in cotton productivity which are non-existent.
Trade circles think that as nothing tangible could be done in more than 10 years' period despite tall claims, so there exists little hope for any better results in the coming years.
The government should appoint a 'Cotton Commission' to inquire into all these failures, and recommend revolutionary changes in the existing set-up of concerned departments, institutions, organisations for making our cotton economy a strong sector for driving the national economy.
During last week, cotton prices remained depressed in view of lack of buying interest and poor yarn conditions.
Weak New York Advises also strengthened the bearish sentiment in local market. Lint prices shed about Rs 100 per mound and are now quoted at Rs 2,900-3,000 per 37.324 kg for better quality cotton, Rs 2,800-2,900 for average grade cotton and up to Rs 2,500 for lower grade cotton.
Karachi Cotton Association fixed Rs 3,000 as Spot Rate on last Saturday. Export bargains in lower grade cotton were also heard. At this level of cotton prices, further export bargains are expected.
The continuing weakness in cotton prices has unnerved the ginners/sellers who are almost surrendering to spinners/buyers.
In view of the present cotton situation, wherein prices have been reduced by about 15 percent, the banks involved in advancing business against pledge of cotton may face a difficult situation in respect of recovery of their advances.
New York Cotton Futures remained under selling pressure during last week. March contract went off the board while May closed at 64.62 cents, down 4.86 cents, and July contract finished at 66.04 cents per pound, down 4.66 cents.
The bulls tried to improve the market but the bears reacted more forcefully. Reportedly, most of the international cotton merchants are holding long positions and presently may be in difficult position.
The China factor appears to have lost its charm in providing support to the market.
US weekly export sales were only 96,200 Running bales, against trade expectations of between 300,000 and 500,000 bales for the week ended Match 4.
Total export sales of the seasons were reported at 11.404 million bales (Upland 10.964 and Pima 0.440 million) while shipments were 6.439 million bales (Upland 6.060 and Pima 0.379 million).
MAIN BUYERS OF US COTTON WERE (MILLION BALES): China 4.238, Mexico 1.625, Turkey 1.092, Indonesia 0.736, Korea Rep 0.431, Canada 0.419, Pakistan 0.375 (including 83,200 bales of US Pima cotton) Thailand 0.311, Japan 0.307, Brazil 0.285, Taiwan 0.250, India 0.186 and Bangladesh 0.130.
US has increased its export sales target from 13.2 million bales to 13.8 million bales in this season and to meet this target it will have to make export sales of about 2.4 million bales in the balance period of 21 weeks with the average sale of 114,285 bales.
THE INTERNATIONAL COTTON ADVISORY COMMITTEE (ICAC) HAS PUT COTTON FIGURES AS ON MARCH 1 AS UNDER:
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World Cotton Production and Disposal Figures(Mln 480-ln bales)
2002-2003 2003-2004 2004-2005 (Proj)
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Production 88.65 92.90 102.10
Consumption 96.98 96.50 97.30
Exports 30.39 31.90 29.50
Ending Stocks 39.56 36.90 40.70
Cotlook A Index 55.70 72.00 60.00
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According to ICAC report, area under cotton in 2004-2005 is projected around 35 million hectares with Northern Hemisphere around 31 million hectares and Southern Hemisphere around 4 million hectares.
World production is projected around 102.10 million 480-lb bales, up 10 percent, with China at 28.9275 million bales, up 29 percent from last season.
China's cotton consumption is projected at 32.60 million bales, up 5 percent, while its imports are projected at 5.5 million bales.
A REPORT FROM CHINA MENTIONS PERFORMANCE OF CHINESE ECONOMY IN 2003 AS UNDER:
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Per Capita Income US$ 1090 Billions
Annual Revenue collection 1993 " 52.52 Billions
1999 " 137.33 Billions
2003 " 241.50 Billions
Unemployment Rate 4.3 %
Foreign Trade 1978 US$ 20 Billions
1984 " 60 Billions
1994 " 236 Billions
1999 " 360 Billions
2002 " 620 Billions
2003 " 851 Billions
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China has attained the Fourth Position in world trade after USA, Germany and Japan.
China has acquired foreign exchange reserves of $403.30 billion, securing Second Position in the world.
Rural population is 800 million and urban 500 million. Total rural income was $316.67 million. State-owned enterprises earned total profit of $55.70 billion.
China's economy is developing by leaps and bounds and economic performance in some years would improve its own records.
The development of Chinese economy is not only directed towards other competing countries but its main benefit perhaps goes towards the amelioration of the economic and social welfare of its people at large.
As the purchasing power of Chinese people would increases further, economic expansion would be fully absorbed.
Instead of making expansion in all sectors of foreign trade, the Chinese government would make choice of some sectors in which it can perform best.
China is expected to play an important role in world cotton and textile market in setting the trend of prices in post-WTO regime.
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