Cotton sowing operation has almost ended. Field reports indicate that sowing target may fall short from 3.2 million hectares by about 10 percent to 2.9 million hectares; reason for this short fall being delay of six weeks in supply of irrigation water in lower Sindh cotton belt, switch over to rice, sugarcane, sun flower and chilly crops in cotton belts of upper Sindh and Punjab, official version on area sown to cotton is yet to come.
This time, reportedly some area of 65-70 thousand hectares in central Punjab was sown to cotton in last March month much earlier than normal cotton sowing time when potato sown to this area was almost completely damaged. This is why, seed-cotton arrivals have commenced so early in Sahiwal, Okara, Depalpur, Mian Channu, Chichawatni and Arifwala towns even earlier than traditionally earliest sown area of lower Sindh and about 20 factories have resumed ginning operation in new crop cotton in this area.
Total seed-cotton equivalent to some 300,000 bales of 170-kg lint is expected from this early areas. However, normal cotton arrivals may start coming September month. Samples of newly ginned cotton when examined were found somewhat lower than quality of first arrivals from lower Sindh but some samples are quite good. Some 12 - 15 thousand bales are reported to have been produced so far and daily arrival of seed-cotton is estimated equivalent to 200 bales.
The condition of cotton crop in the central Punjab is reported quite promising as it has escaped any pest attack and other adversaries of the weather, being quite early crop. Spinner-buyers are reluctant in buying new crop lint cotton as spinners are facing lot of problems these days on account of very high transport charges, high power rates, increase in salaries, financial expenses and other operational expenses overall increasing cost of production.
The abnormal increase in petrol and natural gas prices are pinching the buyers very much. Taking advantage of the weakness of local currency against US dollar which has crossed the level of Rs 70 per US dollar last week, the local exporters backed international merchants are aggressively buying new crop lint cotton at the prevailing level of Rs 3,700 per maund of 37.324 kg ex-gin which works out to US Cents 65.15 /lb ex-gin while on f.o.b. Karachi basis, export works out to US Cents 70.0/lb and this appears to be quite attractive in competition with equal growths.
Apparently, the buyers may be maintaining long position. The average grade is assumed to be between SLM and Middling with staple length between 1-1/16 and 1-3/32 with Micronaire values between 4.5 and 4.9. The first arrival lots in lower Sindh are generally found high mic up to 5.3 / 5.4. Two ginning factories in Sanghar district have also resumed ginning operation in new crop cotton and are reported to have produced a couple of lots. Presently, seed-cotton arrivals from Badin area is feeding Sanghar factories.
Seed cotton prices in Sindh is reported around Rs 1,700 per 40 kg exgin while Rs 1,600 is quoted for Punjab seed-cotton. Monsoon season has stepped in twin cities of capital and is expected to move down to cotton areas of central Punjab then to southern Punjab then to upper Sindh and lastly to lower Sindh. Monsoon rains have started somewhat earlier this season. The crop may face many adversaries such as excessive / heavy rains and pest and disease attacks till maturity of crop.
The recent abnormal rise in gasoline and gas rates for its use in industries, increase in transportation charges, suspension of up to 6 percent cash subsidy by the government on research and development and general increase other costs are making textile products quite uncompetitive and unviable for spinning, weaving and garment sectors. Producers of yarn, cloth, garments/apparels and other textile products have threatened the government to close down their mills from 11th instant as it has become very difficult for them to continue operations of their units under the burden of high cost of production.
As such, our export targets will not be met and the foreign buyers of textile goods may switch over their supply orders to our competing countries like China, India, Bangladesh and Sri Lanka who enjoy cost benefits over Pakistan textile industry. The political, law and order, business, financial and inflation situation in Pakistan appear quite disturbing and are likely to discourage foreign investment in the country.
The speculators and fund managers have firmly gripped crude oil, grain and gold markets affecting adversely markets of other related commodities. Shortage of food and abnormally high prices are likely to create famine conditions in poor countries of Africa and Asia. In view of very volatile market conditions globally, cotton market may see wide fluctuation and instability as food would by the top priority of the people in developing and least-developed countries.
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