As per Pakistan Cotton Ginners Association figures up to January 15, 2004, released on January 17, total arrivals of seed-cotton were equivalent to 8.870 million bales, against 9.191 million bales received on the same time last year.
Therefore, the shortfall works out to 321,000 bales (3.5 percent). In the first fortnight of January, seed-cotton equivalent to 488,000 bales was received.
Field reports were indicating somewhat larger arrivals in some cotton areas, and trade was expecting total arrivals around 9.0 million bales.
Reported unsold stocks stood at 1.797 million bales, against 2.142 million bales same time last year.
In reaction to these cotton arrivals, ginners firmed up the prices and were quoting Rs 50 higher. Field reports indicated that arrivals might continue till the end of March, 2004.
Now it appears that current crop would finally cross the level of 9.5 million bales ex-gin while some estimates go up to 10.0 million bales.
Practically, the PCGA collects cotton data fortnightly during active cotton season with the co-operation of Aptma and KCA.
Actually, it is the duty of provincial Agriculture Departments to monitor all crops, including cotton, and give crop estimates and actual production figures.
In case of cotton, provincial Agriculture Departments collect agriculture fee on seed-cotton arrived in ginning factories.
From their collection of agriculture fee, total production of lint cotton bales can be worked out.
The Federal Department of Customs and Excise also collects 15 percent as General Sales Tax on all cotton bales sold by the ginners either to local spinners or to exporters.
In the end of the season, actual cotton production can be worked out on the basis of GST collection.
As such, season's cotton production is collected by three agencies--PCGA, Provincial Agriculture (for provinces) and Central Excise Department--and all these three figures would be different.
The Central Government should take notice of the defaults in payment of Agriculture fee and GST and take to task the concerned ginners and the concerned officers/staff of the departments for such defaults.
The correct and reliable cotton data would also help the economists/planners to plan economic policies and forecast more precisely and correctly.
Another matter of great importance is the availability of domestic cotton consumption figures.
Since all spinning units in the country are not members of All Pakistan Textile Mills Association, the non-members do not furnish to Aptma required information.
Textile Commissioner's Organisation's (TCO)prime job is to monitor to work for promotion of textile sector.
The TCO releases monthly cotton consumption figures along detail of installed and operational spindles.
The actual cotton consumption by spinning industry is reported much higher than TCO's reported cotton consumption figures.
Press reports indicate that in the last two years, textile machinery worth more than $ 1 billion had reached Pakistan.
There are reports that textile mills have scrapped a large number of old and slow speed spindles and have replaced them by new and high speed spindles increasing cotton consumption.
These changes in installation of machinery are neither reported to Aptma nor to TCO, timely and properly.
As such, the statistics of TCO are not considered as they lack accuracy and reliability.
Therefore, it appears quite expedient, in the interest of the textile sector and the national economy, that physical survey of all textile mills be carried out through professional private companies to determine the exact details of spinning machinery installed/ operating in each textile mill.
Such information would help in determining more precisely the total annual domestic cotton consumption/requirements.
Some say annual cotton consumption is around 13.0 million bales, others say it is around 12.0 million bales, while TCO gives a third figure--lowest of the three.
Cotton market is unduly manipulated on reports of higher and lower consumption by ginners and spinners.
One press report indicates that due to closure of a large number of knitting and stitching units in the country, a large number of jobs, running up to 400,000, are likely to be lost.
The reason for such closure of hosiery units is reported to be high cost of raw material ie yarn. This would adversely affect the cotton and yarn prices in the local market.
Other reports indicate some improvement in yarn prices in local and export markets.
Local cotton prices remained confined to a narrow range. However, KCA's sport rate on close of the week was quoted at Rs 3,200 per maund ex-gin.
Better grade cotton was selling between Rs 3,100 and Rs 3,250 per maund; average grade between Rs 3,000 and Rs 3100 while low grade was down to Rs 2,800 per maund.
Exporters were quoting 63-64 cents/lb FOB Karachi, for Type Alaka--staple 1-1/32 inches and prime mic.
Some of the exporters were holding long position and in search of a better price to square up their position. Local spinners do not appear to entertain the ginners for high prices and as such prices of better Grade cotton may fluctuate between Rs 3,100 and 3,300 per maund.
With more production of low grade lint cotton, selling pressure would develop and low grade prices may go down to Rs 2,600 / 2,700 per maund in coming months.
Mixed trend was witnessed on New York futures market during last week. Ruling contract March closed at 74.72 cents and May at 75.90 cents against previous week's closing at 74.17 cents and 75.46 cents, respectively.
Because of long holidays in China on the occasion of Chinese Spring Day, cotton prices are reported to have slackened somewhat.
Reports from China indicate that European textile manufacturers are pressurising European Union Council to put some sort of restriction on the import of cheap Chinese textiles for safeguarding local industry, same as US did.
Reportedly, there is a clause in the memorandum of Chinese membership, which authorises any country to put restriction on the import of other country for safeguarding the interests of local industry.
China is considering to impose restrictions on the import of steel from five countries for safeguarding its local industry.
If one country imposes restriction on the import of a commodity from another country on the pretext of safeguarding its local industry then the purpose of implementing provisions of WTO from 2005 would be defeated.
Reports of preparation of land for sowing of 2004-05 cotton crop have started coming in from some countries in the Northern Hemisphere and very encouraged sowing intentions have been reported.
In the next 2/3 months, cotton market is likely to remain steady to firm as final crop figures would be available and every day cotton availability position would face reduction and thereafter reports of large area sowing from all important cotton producing countries would pour in depressing cotton prices.
It is estimated that in 2004-05 season, world cotton production may cross the strong barrier of 100 million bales surpassing the consumption estimates.
Annually, 6 percent increase is seen in fibre consumption globally of which 3 percent goes to cotton but share of cotton in total fibre consumption is reducing, Some years back it was around 50 percent but presently it is around 38 percent only.
The high prices of lint cotton in the world market would adversely affect its global consumption.
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