Good current cotton crop (2009-2010) prospects, much higher yarn prices and generally improving political situation have imparted a positive outlook to the overall cotton economy of Pakistan. Though there remain breaches of law, continuing political confrontation and haggling between leading political parties and lingering ill effects of economic downturn in the country, signs of improvement are emerging over a wide range of the socio-economic spectrum.
In recent weeks, rains have lashed large swathes of the cotton belt in the country, but today's assessment indicates the barring some damage to the crop which may increase some moisture in the lint from Sindh, Punjab crop remains basically in good form. In fact, rains in Punjab may have washed away a considerable amount of cotton curl leaf virus (CCLV) infection and may also aid in more development of the bolls on the standing crop.
Thus most observers still say that unless any later damage occurs to the crop (2009-2010), Pakistan may still reap upto 12.5 million domestic size bales on an ex-gin basis this year. Estimates for Sindh indicate a projected output of 3.4 million to 3.5 million bales, while Punjab still has the potential to yield upto 9 million bales.
According to one estimate, seedcotton equivalent to nearly 1.2 million to 1.3 million bales from the new crop has already arrived at the ginning factories in both Sindh and Punjab till now. These arrivals are about 300,000 to 400,000 bales more than the previous year (2008-2009) at the same time period.
Lint prices were said to be steady on Thursday because all supplies available with the ginners found ready buyers in the mills. Generally speaking, lint price from Sindh ranged from Rs 3425 to Rs 3450 per maund (37.32 Kgs), while in the Punjab they were said to have ranged between Rs 3500 to Rs 3550 per maund. Seedcotton (Kapas/phutti) prices in Sindh reportedly ranged from Rs 1725 to Rs 1750 per 40 Kgs, while in the Punjab they are said to have ranged from Rs 1750 to Rs 1800 per 40 Kilogrammes.
Continuing strength of global equity markets over the past ten months, coupled with improvement in local textile condition are influencing the domestic industrial sentiment positively. Reports of good demand for yarns from China, cheaper domestic cotton prices, better supply of gas and power and start of implementation of useful measures of the Textile Policy announced last month by the government are effecting the local textile industry favourably as the leading millers are seeing their profits increase measurably.
Cotton sales in Sindh reported till Thursday afternoon include 200 bales each from Khairpur and Sanghar at Rs 3425 per maund (37.32 kgs) while 400 bales from Tando Adam and 1000 bales from Shahdadapur sold at Rs 3450 per maund each. Under the current scenario where mills consumption is expected to range from 14 million to 14.5 million bales (170 kgs) this year (August 2009-July 2010) and domestic cotton supply could range from 12 million to 12.5 million bales, Pakistan many need to import about two million bales (170 kgs) this season.
Despite increase in potential demand of cotton from China and larger consumption forecast for China, India and Pakistan for the current season (2009-2010), New York cotton futures prices resist moving upwards. Since the beginning of last August, New York futures prices which touched the lofty levels of 66 or 67 cents per pound during the middle of last month have now fallen below 60 cents per pound for the frontal months.
Presently, not much seems to inspire the New York futures prices to adopt a firmer posture. On the foreign front, global equity markets have displayed a remarkable improvement over the past ten months. However, this week they have regressed due to lurking doubts whether the real economic conditions warrant such rise in share values.
No doubt the French, German, Australian, British, Japanese and South Korean economies may have emerged or will soon emerge out of the recession, but growing unemployment figures around most parts of the world tell a different story. No wonder that Wall Street tumbled earlier this week when United States stocks sank on last Tuesday with more bank failures being reported and fears that share prices may have jumped ahead of any actual economic recovery.
Intel, a world giant of computer industry which manufactures computer chips believes that the industry is coming out of recession. The United States Federal Reserve Bank also believes that America is coming out of the recession though it could be a long drawn process. No doubt there are several positive indications at hand, but we still seem to be wandering in a twilight zone with no definite exit strategy available to come out the recession any time soon.
Moreover, leaders of the world's largest economies are still at loggerheads with each other. For instance France and Germany believe that no more stimulus packages should be given, but the United States and the United Kingdom still wish to pump in more public money into their economies should it become necessary.
Moreover, the USA and UK may be reconciled to continue the bonus culture and "partying" enjoyed by the bank executives, France and Germany are advocating stronger measures to curb excessive remuneration to the bank executives. Just this week it was estimated that United States bankers took $20 billions as bonuses following the rise in equity prices as their share of profit.
On the home front, the British Deputy High Commissioner in Pakistan Robert W. Gibson told a gathering of members of the Karachi Chamber of Commerce and Industry on last Wednesday that the law and order situation in Pakistan is much better against what is being potrayed by some of the foreign media people. He is reported to have added that Pakistan is a dynamic country with a large potential for investment and that the media impression is misleading.
With recent thinking which is concomitant with the new Textile Policy announced by the government last month, Pakistan textile industry must enter a phase of consolidation, modernisation and adopting a policy to go for value added goods and improve and enlarge its capacity to produce higher end garments, furnishing materials and more finished goods including those for the fashion industry if it is to survive and prosper.
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