Reports from cotton belts specially from Upper Sindh and Southern Punjab indicate that seed-cotton arrivals in gins have decreased and cotton arrivals in the second fortnight of January 5, are estimated around equivalent of 400,000 running bales making the total arrivals of the season around 14.1 - 14.2 million bales. Total season's output is now estimated around 14.5 - 14.7 million bales.
In spite of harvesting a record bumper crop of around 14.7 million bales, the buyers are chasing availability both in better grades and lower grades. Although local spinners have procured more than 10.0 million bales from local market and some 600,000 bales from foreign market yet they appear quite eager in inflating their cotton inventories.
All Pakistan Textile Mills' Association (Aptma) estimate total cotton production in this season around 14.0 million local bales. Of these, equivalent to about 1.0 million local bales would be available from imported cotton and 1.0 million bales from Waste cotton. Thus about 12.0 million bales would be available from season's crop. Season's export by private sector is also estimated around 1.0 million bales. About 1.5 million bales have been procured by Trading Corporation of Pakistan (TCP). So far, TCP committed in export sales some 30,000 bales.
The general impression had been that TCP would dispose off its stocks in export but under pressure from Aptma, TCP has disbanded the process of inviting bids through international tenders. A delegation of Chinese National Group Corporations is presently in Pakistan for possibly examining the prospects of buying cotton from TCP stocks. Trade reports indicate that TCP may sell some 800,000 - 1,000,000 bales of raw cotton to China where there is a shortfall of some 8.0 million bales. On one hand, this would satisfy to some extent China's requirements and on the other hand reduce Pakistan's trade deficit with China. This delegation would also meet the private cotton exporters in Karachi Cotton Association office beside, visiting Expo-2005 exhibition at Karachi on 2-7 February, 05.
However, to balance the cotton market, TCP should sell half of its stocks in export and half in local markets. Already some 150,000 bales from Pakistan are destined to China against export sales through International Merchants. Because of recent rains in cotton areas, deterioration in quality of lint cotton is feared. TCP should make all-out efforts for the safety and security of its cotton stocks.
Although, prices in New York Cotton Future Market dropped by more than US Cents 3.50 last week, but prices in the local cotton market did not follow the suit. Better quality cotton is selling around Rs 2, 100 - 2,150 per maund and lower grades around 1,800 - 1,950 per maund ex-gin. There are lot of export inquiries from Bangladesh, Indonesia and other countries of this region but bids are not matching with local prices being lower. A bargain of some 1,500 bales of T-1467 staple 1-1/8 was reportedly concluded around US Cents 49.0/lb CNF Chittagong last week with a buyer in Bangladesh. Yarn prices in local market as well in export market have improved fairly.
Reports indicate that present level of yarn prices favours production of course count yarns and this would increase cotton consumption. The news that European Union does not appear ready for reducing import duties on textile goods and removing anti-dumping duty on imports of bed linen from Pakistan, have shivered cotton and textile market. The report of 13.7 % decrease in the textile exports of December, 04 is another sad news for the local textile industry. These factors along with substantial decrease in cotton vales on New York Market, last week, have caste bearish effect on local prices but this appears to be a temporary phase.
Our spinners are reported to have booked some 40,000 bales of raw cotton from US in the last two weeks and have hopefully have booked some more cotton taking advantage of recent decline in New York cotton prices.
During the last week, New York Futures registered a fall of US Cents 3.43 and 3.39 per lb in March 05, and May 05, contracts respectively. US export sales are now close to the level of 9.5 million 480-lb bales against their export target of 12.8 million bales. China appears quite cautious in buying cotton from USA. Different reports from China indicate very good performance on economic front in 2004. It's GDP increased by 9.45 percent despite Government's instructions to cool down economic growth. * Primary industry increased by 6.3 percent.* Per Capita Income in rural areas rose by 6.8 percent to 355 dollar while in urban areas it increased by 7.7 percent to 1,140 dollar. Investment in Fixed Assets increased by 25.8 percent to 854.0 dollar.
Increase in total out-put of grains was at 9.0 percent to 38.8 million Tons. Total raw cotton production was up by 30 % to 6.32 million Tons and Oilseeds up by 8.8 percent to 30.57 mln Tons. Exports were at 593.4 billions dollar up by 35.4 percent and Imports by 36.0 percent up to 561.4 billions dollar. Thus China's total foreign trade in 2004, amounted to 1.154.8 billions up by 35.7 percent over last year.
Foreign Direct Investment was at 60.6 billions dollar up by 13.3 percent over last year.
On the close of the year 2004, China's forex reserves stood at 609.9 billions dollar up by 206.7 percent from last year.
In its province of Xinjiang, cotton production this season amounted to 1.75 million Tons with Yield of 1,575 Kgs/ Hectare. The province of Xinjiang ranked No. 1 in production and yield of cotton for the last 11 consecutive year.
Exports of cotton fabrics stood at 5.1 million meters up by 3.22 percent while exports stood at 1.72 million meters up by 12.65 percent.
Exports of cotton yarn stood at 765,600 m/tons and exports at 460,800 m/tons. Raw cotton imports stood at 1.9 million tons up 118 % from last year while exports at 9,124 m/tons down 92 percent from last year.
On the social front, China is heading towards reducing its poverty level and increasing the welfare level of its people. China will be celebrating its New year and will be closed for business for a week (February 2-9, 2005). Trade circles think, China may accelerate its cotton buying operation after these week-long holidays which may energise international level of cotton prices.
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