Final cotton crop estimates of 2004-2005 season are now focussing around 14.5 million running bales. The abrupt fall in cotton arrivals appear to have reduced the earlier production estimates of 15.0 million bales. The recent winter rains are likely to brighten the production prospects for wheat crop and would also ensure regular irrigation water supply during next cotton season.
However, high prices of sugar cane this season up to Rs 80 per maund may divert some of cotton area to sugarcane. Globally, cotton area in 2005-2006 season is likely to be reduced by 10-12 percent.
The latest world crop estimates are: Beginning stocks 35.53 million bales, production 116.72 million bales, Mill-use 105.80 million bales and ending stock 46.74 million bales. Pakistan should maintain cotton production at 13 - 14 million bales level to comfortably feed local spinning mills, spare half a million bales for exports and a consistent ending stock.
This season, TCP has procured about 1.6 million bales and is holding almost all the cotton stocks in hope of getting better prices and to decide where and how to dispose it.
Although, initially, TCP had made cotton procurements for export sales but there is pressure from local spinners for local sale. The matter is awaiting decision from Executive Co-ordination Committee. The growers are ginners are in favour of export sales while All Pakistan Textile Mills Association want to buy these TCP stocks. The market views are for 50: 50 between export sales and local sales so as to keep equilibrium in cotton prices.
The recent heavy rains are likely to deteriorate quality of lint cotton in factories as well as in warehouses. TCP should arrange early and expeditious disposal of its stocks before present spell of rains cause great damage to cotton stocks beside increasing warehousing expenses.
China is reported to have shown interest in buying TCP cotton stocks. Some upcountry reports indicate that recent heavy rains in Upper Sindh and Southern Punjab have deteriorated quality of lint cotton and heavy moisture in seed cotton has started the process of heating in cotton. As such, the buyers have become very cautious in selecting good quality of cotton.
In sympathy with increase in New York Cotton prices and possibly quality deterioration due to rains, lint prices have firmed up but the spinner-buyers are resisting the increase in prices.
However, price broke the level of Rs 2,200 by Rs 25. Even low grade cotton is reportedly steady around the level of Rs 1,900 - 2,000 per maund ex-gin. Exporters are almost out of the market because of price difference. The spinners are very active in booking of foreign growths specially US and in the this calendar year import booking estimated around 150,000 bales season's total booking around 700,000 - 800,000 bales.
The matter of free-import of cotton may not allow local lint prices register any remarkable increase but lean stock position may not let the prices drop beyond this level. Still, TCP policy of cotton disposal would be important for determining the course of cotton prices.
Last week New York Cotton Futures staged some recovery on renewed buying interests. Ruling March 5, contract finished at US Cents 44.95 gaining 1.75 while May 5 contract settled at 46.19 up 1.66 on last Friday. For the week ended 3rd. February 5, US total export sales (2004-2005 season) stood at 417,200 Running Bales; Main buyers were: China 1,59,000 bales, Turkey 69,300 bales, Pakistan 47,000 bales, Indonesia 24,600, Thailand 23,700 and Thailand 20,700 Running Bales. Season, total Export Sales stand at 10,222,600 bales, including 633,200 bales of PIMA cotton and total shipments are at 4,727,200 bales inclusive of 482,800 bales of Pima cotton.
Main buyers of US cotton are: (Figures in thousand bales) Mexico 1,669, Turkey 1,464, China 1,418, Indonesia 1,003, Thailand 635, Korea Rep 634, Pakistan 518 thousand bales including 146,800 bales of US Pima cotton, Taiwan 435, Canada 420, Japan 336, Hong Kong 235, India 172 and Bangladesh 126 thousand bales.
India is producing some 21.3 million 170-Kg bales this season - all time high record. Last year it produced 17.7 million bales. In the last three years, India has improved its cotton productivity greatly by adopting latest cotton breeding technologies such Hybridisation, Bio-technology and Genetic Engineering along with improvement / up-gradation in farm-technologies, pest-monitoring, marketing systems and farm-inputs. India has the highest number of cotton farmers in the world.
With a view to ensure better return to its cotton growers, Indian government directed its Federal as well as State agencies to procure seed-cotton from growers at fixed price. The central agency namely Cotton Corporation of India (CCI) and State agency namely Federation of Maharashtra Federation of Marketing Co-operatives by February 6, 2005, reportedly procured jointly approximately 5.0 million bales.
The Maharashtra State has sought central government's advice on discontinuation of this scheme otherwise at the close of the season their losses may run in to billions of rupees.
Cotton activities in cotton exchanges in China are to resume on 14th February after long Chinese Lunar New Year holidays. On the international front, China is enough active in booking cotton from different sources specially USA where it has already booked some 1.418 Million bales.
According to US report China may require import of 9.0 million bales to meet its shortfall in domestic requirements. So far China is understood to have covered some 4.0 million bales from different foreign sources inclusive of 1.4 million bales of US origin. Unlike last season, China is exploiting non-traditional sources for importing cotton.
INDIA: Area, Production and Yield Position (2004-2005).
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States Area sown Production Yield
(Mln Hectares) (Mln Running Bls) (Lint Kg/Hectare)
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Punjab 0.549 1.750 524
Haryana 0.626 1.650 434
Rajasthan 0.300 0.900 494
Total Northern Zone 1.475 4.300 480
Gujarat 1.995 6.700 552
Maharashtra 3.040 4.500 244
Madya Pradesh 0.585 1.500 422
Total Central Zone 5.620 12.700 372
Andhra Pradesh 1.141 3.300 476
Karnataka 0.553 0.800 238
Tamil Nadu 0.125 0.600 790
Total Southern Zone 1.819 4.700 425
Total Production 8.914 8.914m Hctrs 21.700m
running bales
=21.000 Mln bls of 170-Kg =400Kg/Hect
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