It is not strange to know that in some late cotton areas, sowing has not been completed as yet while in some early cotton areas harvesting has already started. One Sahiwal-based ginner, by Saturday, June 25, is reported to have ginned and pressed one lot of lint cotton from new (2005-06 season) crop seed-cotton, received from Jhudo, Digri, Kunri and Noakot areas of lower Sindh.
The lint is reported to have been sold at Rs 2,500 per maund (37.324 kg), and cottonseed at Rs 490 per 40 kg. The seed-cotton (kappas ) cost the ginner around Rs 1,125 per 40 kg ex-gin.
The high temperature, ranging between 42 and 48 degrees Celsius, in cotton areas has helped the cotton crop of early sown areas to reach maturity stage quite early. Such early matured plants give poor yield. The heat wave with high temperature, above 45 degrees Celsius, is not conducive to the development of good cotton crop.
The monsoon season is going to start from next month and weather pundits have forecast more than normal rains this summer. The high temperature is already helping snow at the mountains to melt. The dams and rivers are already full of water and the expected heavy rainfalls may invite floods.
The monsoon has performed quite violently in India, Bangladesh and China recently, and there are fears of similar performance in Pakistan.
The federal and provincial governments should take all necessary measures to meet the possible floods situation and likely pest attacks on cotton crop. The government's target for 2005-06 season cotton production has been fixed at 15.0 million 170-kg bales ex-farm but hopes for meeting the production target appear weak while fears for a lower crop appear strong.
The Trading Corporation of Pakistan would open Tender bids on Monday, June 27, for both local and export sales. Last week, the TCP had sold 5,000 bales each to two foreign merchants at 44.0 cents per lb fob Karachi, and some 18,000 bales in local sales at around Rs 2385 per maund.
In view of good recovery in New York cotton values last week, TCP export bids may receive positive response. However, local sale prices may be adversely affected by the news of start of new crop harvesting while reports of unfriendly cotton weather may encourage buyers to increase their bids.
At present, TCP is holding some 1.1 million bales of raw cotton for sale. It would be very difficult for it to clear its warehouses of cotton stocks even by the end of 2005. TCP may opt to slow down its sales in view of possible increase in cotton prices in the coming months but fears of possible damage by expected heavy rains may induce it to expedite the sales.
New York Cotton Futures recovered loss in values in renewed buying. Retiring July contract and October contract closed at 50.13 and 53.15 cents per pound, increasing by 2.75 and 3.15 cents, respectively.
Doubts about another bumper cotton crop, almost equal to that of this season, are getting stronger on unfriendly weather reports from China, India and Pakistan. The textile trade war between US and China has slowed down and some short-term solution is being sought. On US-China textile trade war, the Federal Reserve Chairman Alan Greenspan has urged Congress not to take any harsh action against Chinese textile imports.
US Treasury Secretary John Snow also does not favour sanctions against Chinese imports and said that tariff increase, if enacted, would not only harm US economy but would also delay any action by the Chinese government to loosen the peg.
On the other hand, Chinese government also wants to settle the trade dispute with US as it has already settled such dispute with European Union. The settlement of textile trade dispute between US and China would not only stabilise cotton prices but also all textile commodity prices.
In the 2005-06 season, cotton cultivation area in China is estimated at around 5.264 million hectares, 6 percent down from 2004-05 season. In China, land holding is very small, while total farmland area is 130 million hectares and the agricultural population is 800-900 million. The per capita farmland area is around 0.15 hectare.
The farmers pay personalised attention on farming and have a record of maximum lint yield of 2250 kg per hectare, while national average yield is 1.5 times higher than world yield of around 1,100 kg per hectare.
In China, the ginning sector requires lots of changes. There were some 12,000 ginning factories in 2003 in China which on average produced 28.0 million bales with average of 500 tons per factory which is about 10 percent of the production capacity of a factory in US.
Quality-wise, over 95 percent of Chinese lint cotton is 27-29 mm in length, more suitable for manufacturing yarn of 32-40 gauge, while it is not suitable for producing coarse to medium coarse count and fine to superfine count yarns. To make the ginning industry more competitive, large capacity ginning factories will have to be installed. But the small land holding is the main problem. However, China would reduce the number of ginning factories by around 25 percent of the existing number of factories.
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