Due to Eid festival holidays the Pakistan Cotton Ginners' Association (PCGA) could not make available cotton statistics for the second fortnight of January, 2004 to the cotton trade.
However, field reports indicate total arrivals of seed-cotton up to January 31, 2004, as around 9.25 million local bales.
There were strong indications of final cotton crop size of around 9.7 million bales ex-gin this season.
Textile Commissioner's Organisation office has placed total mills consumption for 12 months (September, 2002-August, 2003) at 11,439,445 local bales, thus monthly average being 953,287 bales.
In 2003-04 season, trade circles estimate total mills consumption 8 percent higher at 12.312 million local bales. Cotton balance-sheet of 2003-04 cotton season is placed as under:
(All figures in million local bales)
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SUPPLY DEMAND
Cotton production: 9.700 -
Mill-use: 12.312 -
Exports: 0.200 -
Imports: 1.500 -
Re-use of Mill-waste: 1.000 -
From Old Stocks: 312 -
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TOTALS: 12.512 12.512
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According to market estimates, import bookings of cotton equivalent to 1.125 million local bales ie 75 percent of total import requirements, have been made by the end of January, 2004, and balance 0.375 million local bales ie 25 percent of the import requirements would be made during remaining period of this season.
Reports from Haroonabad area indicated fresh increased arrivals of seed-cotton in factories and in marketplace (Mandi) and similar reports were pouring in from some other cotton areas which sufficiently support the estimates of 9.7 million bales this season.
Land preparation for cotton sowing is in progress in most of the cotton areas while sowing has commenced in some selected tail areas of Lower Sindh.
Field reports indicate that, encouraged by better cotton return and discouraged by poor sugarcane returns this season, the growers are quite enthusiastic in increasing area under cotton next season which may go up to 15 percent in Sindh.
The recent increase of Rs 4.0 per kg in the local price of polyester staple fibre (PSF) to make it Rs 74 per kg would also encourage higher cotton production next season.
Previously and this season there have been complaints of undue variation in the average weight of bales ginned and pressed in factories.
When lint cotton prices rule quite higher than bargain prices at the delivery time, the unscrupulous ginnners/sellers try to save their loss by delivering bales of weight lower than average standard weight of 375 lb or 170 kg a bale net, while in opposite conditions it is otherwise.
The buyers incur heavy financial loss on its transportation fare/freight inland or overseas.
The government has stressed upon the Pakistan Cotton Ginners' Association to ensure pressing of cotton bales of average standard weight of 375 lbs net but all in vain.
In the Cotton Control Act, there is also provision for producing average standard bale of 375 lbs net.
The Karachi Cotton Association, Pakistan Cotton Ginners Association and All Pakistan Textile Mills Association have never bothered to set the things right, so much so that in the sale/purchase of raw cotton no formal contract is signed between the buyers and sellers.
Reportedly, the buyers and the sellers have failed to draft such terms and conditions of the contract which may be acceptable to both buyers and sellers. All cotton bargains, in local as well as in export markets are not made on amount of cotton but on number of bales.
For example, bargains are made for 300 bales or 800 bales or 3,000 bales and so on so forth. To avoid any confusion in weight of bales, cotton bargains should be invariably made for amount of cotton, say 100 tonnes or 500 tonnes or 2,000 tonnes and so on so forth, in both local and export markets.
The ginners should invariably mention their cotton in terms of tonnes and so the delivery and stocks.
The crop size should also be based on amount of cotton mentioned in tonnage as is done internationally.
The Government and the concerned cotton Associations should take it seriously and ensure implementation of international standards in our cotton business.
The drama of mentioning cotton rates based on old mound of 40 seers = 37.324 kg or new mound of 40 kg should be done away with immediately and all cotton rates should invariably be calculated and declared on the basis of international standards, say on the basis of kilograms.
Pakistan's export of bed-linen to European Union countries is likely to face imposition of 15 percent anti-dumping duty effective from March 18, 2004. If implemented, it would be a setback to our exports.
When after the long holidays of one week due to Eid festival and Kashmir Solidarity Day holidays and MMA call for strike local cotton market opened on Friday and Saturday, there hardly were worth-mentioning transactions.
The mood of the market appeared bearish in sympathy with bearish trend of New York Future Cotton Market.
Some cotton transactions were reported from Rahimyar Khan district around Rs 3,300 per mound ex-gin but now position is reported Rs 50 less.
Low grade is quoted between Rs 2,800 and Rs 2,900 per mound, and average grade cotton between Rs 3,000 and Rs 3,150 per mound.
From Monday, February 9, cotton market may resume normal activity. Karachi Cotton Association (KCA) had fixed Spot Rate at Rs 3,250 per mound ex-gin for Saturday, February 7, 2004.
According to KCA report, 137,705 bales were reported to have been registered for export sales till Jan 23, 2004 in this marketing year, while shipments of 115,541 bales have been reported in five months' period from August to December, 2003.
Our spinners/buyers are estimated to have booked foreign cotton equivalent to 359,148 local bales, of which 359,148 bales have reached mill site in four months period August-November, 2003.
The import booking and shipment figures are not up to date and so require to be updated.
New York Cotton Future Market remained under selling pressure. In the week ended January 30, 2004, future market lost heavily.
March contract lost 5.21 cents and May contract yielded 4.43cents, while in the week ended February 6, March contract lost 1.66 cents and May contract 1.22 cents to settle at 69.07 and 71.37 cents respectively.
Two weeks before these two contracts had closed at 75.94 and 77.02 cents respectively.
By the week ending January 9, 2004, US had made total export sales of 9.669 million 480-lb bales (Upland 9.251 and Pima 0.418) against which total shipments of 4.834 million bales (Upland 4.518 and Pima 0.316) had been made.
Main buyers of US cotton were: China 3.381 (million) bales, Mexico 1.584 bales, Turkey 0.822, Indonesia 0.632, Canada 0.419, Korea Rep 0.378, Pakistan 0.308, Thailand 0.278, Brazil 0.271, Japan 0.270, Taiwan 0.204, India 0.179 and Bangladesh 0.107 ( all in million) bales.
In 26 weeks period August 1, 2003 to January 29, 20004, US made export sales of 6.812 million bales, while export sales of 2. 841 million bales made in 2002-2003 were carried forward to MY 2003-2004 being unshipped.
Thus, total export commitments of the Marketing Year 2003-2004 till Jan 29, 2004 stood at 9.653 million bales.
To meet the export target of 12,774,000 bales in 2003-2004 season, US has to make fresh export sales of 3.121 million bales in next 26 weeks (Weekly Average Sales of 120,038 bales) till July 31, 2004.
In 26 weeks' period up to Jan 29, 2004, US had made total shipments of 4.834 million bales which is 50 percent of total export sales commitment of 9.669 million bales.
Annualised US mill consumption is around 6.7 million bales which is likely to go down below the level of 6.0 million bales resulting increased surplus for export.
China's cotton market remained closed for 8 days ( from Jan 21 to 28) for New Lunar Year holidays. Market reports estimated China's cotton import commitments are around 5.0 million bales (US share around 68 percent).
Reports from China point out that during calendar year 2003, China exported 112,020 tonnes equivalent to 514,358 bales of 480-lb mainly to Thailand, Indonesia, South Korea and Pakistan.
China produced 9,284,100 tonnes cotton yarn in 12 months period (Jan-Dec, 03), up 784,000 tonnes (8.44 percent more than last year). It produced 839,000 tonnes yarn only in December, 2003, up 5.4 percent from November, 2003 and 17 percent up from December, 2002.
China is progressing fast in export of information technology products and in the year 2003 (Jan-Dec,03), it earned $110 billion, up 34 percent from last year, through export of IT products which is about 25 percent of China total annual exports. Now China is the third top most country in exports of IT products in the world.
China received FDI (Foreign Direct Investment) of $57 billion in 2003. China's foreign trade increased 30 times in last 24 years from 1980. Its GDP growth rate in 2003 was 9.1 percent which very robust.
Cotton growers of the province of Shandong (East China) intend to increase cotton area to 1.04 million hectares, up 18.63 percent from last season, while in Jiangxi province cotton sowing will be increased by 25 percent.
According to a Chinese report, this season cotton was sown on an area of 13.48 million acres and next year an increase between 5 to 8 percent is expected.
India is expecting a crop of 16.5 million bales of 170 kg against earlier expectation of 17.0+ million bales.
Its domestic consumption is also around 16.5 million bales. It has committed export sales of some 700,000 local bales against its target of one million bales. Simultaneously it is importing cotton.
The East India Cotton Association is holding All India Cotton Trade Associations' Conference on the theme of 'Challenges facing cotton trade and issues involved in cotton financing' in Coimbatore (South India) on February 21-22, 2004.
The conference will be sponsored by South India Cotton Association, Coimbatore.
In this conference two special sessions will be held on 'Contract Farming in Cotton' and 'Bt. Technology in Cotton'. Encouraged by good results of the performance of Bt cotton varieties in its six states, India is very much interested in increasing cotton area under Bt cotton.
According to one report of the International Cotton Advisory Committee, Washington, about 34 percent of world's exports are of Genetically Engineered varieties. In USA sowing of Bt cotton varieties cover almost 75 percent of its cotton area.
India has harvested a pest-free crop this season while Pakistan's cotton crop was damaged by pest attack, specially boll worm to the extent of 15-20 percent.
World cotton production which is estimated at 93.1 million 480-lb bales this season may go up to 102.0 million bales up by 9.56 percent next season.
Here, below are the three cotton tables. Tables No 1 and 2 provide details of six seasons' (1998/1999 - 2003/2004) cotton production and cotton consumption of the world including individual performance of some prominent countries, and the third one reflects details of World Cotton Balance-sheets for six seasons (1998/19999 - 2003/2004) which gives enough food for studying world cotton situation and arriving at some rough idea as to the trend of world cotton prices next season.
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WORLD COTTON PRODUCTION
(MILLION BALES OF 480-LB EACH)
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Country 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
China 20.7 17.6 20.3 24.4 22.6 22.0
USA 13.9 17.0 17.2 20.3 17.2 18.2
India 12.9 12.2 10.9 12.3 10.6 12.7
Pakistan 6.3 8.6 8.2 8.3 7.8 7.6
Uzbekistan 4.6 5.2 4.4 4.9 4.6 4.2
African Fr.zone 4.0 3.9 3.2 4.5 4.1 4.7
Turkey 3.9 3.6 3.6 4.0 4.2 4.1
Brazil 2.4 3.2 4.3 3.5 3.9 5.2
Australia 3.3 3.5 3.7 3.2 1.7 1.2
Greece 1.8 2.0 2.0 2.1 1.7 1.6
Egypt 1.1 1.1 0.9 1.4 1.3 0.9
Syria 1.6 1.5 1.7 1.7 1.1 1.3
Turkmenistan 1.0 1.1 0.8 0.9 0.7 0.9
Iran 0.6 0.6 0.7 0.6 0.5 0.4
Argentina 0.9 0.6 0.8 0.3 0.3 0.5
Paraguay 0.3 0.4 0.5 0.2 0.3 0.4
Others 6.1 5.6 5.5 3.9 5.6 6.2
World total 85.3 87.5 88.7 98.5 88.2 92.2
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WORLD COTTON CONSUMPTION
(MILLION BALES OF 480-LB EACH)
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Country 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004(Jan)
China 18.7 21.3 23.5 26.0 29.5 30.2
India 12.6 13.5 13.5 13.3 13.3 13.2
Pakistan 7.0 7.6 8.1 8.5 9.2 9.4
USA 10.4 10.2 8.9 7.7 7.3 6.2
Turkey 4.6 5.6 5.2 6.1 6.3 6.0
EU 4.8 4.8 4.7 4.4 4.1 3.8
Brazil 3.8 4.2 4.2 3.8 3.5 3.7
Indonesia 2,2 2.0 2.4 2.3 2.3 2.2
Mexico 2.2 2.4 2.1 2.2 2.1 2.1
Thailand 1.3 1.6 1.7 1.9 2.0 2.1
Russia 0.9 1.5 1.6 1.8 1.7 1.6
South Korea 1.5 1.5 1.5 1.5 1.5 1.4
Taiwan 1.4 1.3 1.2 1.2 1.2 1.2
Uzbekistan 0.8 0.9 1.1 1.2 1.3 1.3
Japan 1.2 1.3 1.2 1.1 1.0 0.9
Others 11.2 11.2 11.4 11.3 11.8 12.0
World Total 84.6 91.0 92.2 94.4 97.9 97.1
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WORLD COTTON BALANCE-SHEET
(MILLION BALES OF480-LB EACH)
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1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Beginning Stock 45.8 48.1 45.6 42.6 47.2 37.0
Production 85.3 87.5 88.7 98.5 88.2 92.2
Consumption 84.6 91.0 92.2 94.4 97.9 97.1
China 18.7 21.3 23.5 26.0 29.5 30.2
Non-China 65.9 69.7 68.7 68.4 68.4 66.9
Ending Stock 48.1 45.6 42.6 47.2 37.0 32.4
China 23.0 17.8 14.4 12.9 8.1 6.8
Non-China 25.1 27.8 28.3 34.3 28.9 25.4
Stock-Use(%) 56.8 50.1 45.5 50.0 37.8 33.4
China 123.0 83.6 61.3 49.6 27.5 22.5
Non-China 38.1 39.9 41.2 50.1 42.3 38.3
Source USDA
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