Political uncertainty in the country, approach of Ashura (10th of Moharram) next Sunday and extensive shortages of gas and electric power have put the domestic cotton and textile industry in a predicament. Added to these woes, a relatively short domestic cotton crop and sudden rise in the New York cotton futures market over the past couple of weeks has dismayed the domestic cotton economy.
Furthermore, widespread political disturbances, arson and lawlessness in several parts of Pakistan has brought fear and helplessness to the business community in Pakistan.
Due to shortage of gas, particularly in Punjab, some of the larger textile units have switched their electric power generating units to diesel to meet their deliveries of pending textile sales. However, the smaller and medium textile units are suffering in a major way due to short and intermittent supply of power. The textile finishing mills in the country are also suffering badly and their deliveries for export have to be delayed per force.
With these problems prevailing at present and fear of possible sectarian violence for the rest of this week, business has become slow and there is lack of interest and normal activity in the cotton market. It is hoped that calm will prevail for the rest of this week so that normal business activity may resume at the beginning of next week.
Generally speaking, at present the seedcotton (kapas/phutti) prices are ranging from Rs 1500 to Rs 1600 per 40 kgs in both Sindh and Punjab. Lint cotton prices both in Sindh and Punjab reportedly ranged from Rs 3200 to Rs 3400 per maund (37.32 kgs) according to the quality. However, the better qualities of lint were being quoted from Rs 3300 to Rs 3400 per maund on Thursday.
On the positive note, both private sector as well as official quarters are now estimating the current crop (2007-08) in Pakistan to be better than previously thought. Following a meeting of the Cotton Crop Assessment Committee (CCAC) held last Monday, the latest estimate of the cotton crop in Pakistan has been declared at 11.6 million domestic size bales which is lower by 1.2 million bales compared to the earlier revised target of 12.8 million bales. Government figures are usually given on an ex-gin basis.
Private sector sources have also increased their estimate of the current cotton crop (2007-08) in Pakistan anywhere from half a million to one million bales. Therefore, trade is now talking in terms of an ex-gin output in Pakistan to range anywhere from 10.5 million to 11 million local size bales. This latest assessment of the current domestic cotton crop in Pakistan is clearly a positive phenomenon.
It may be seen that cotton prices in the ready market for the current season (2007-08) have gone up from September 2007 to the present time (17 January 2008) by about Rs 400 to Rs 450 per maund (37.32 kgs) for the average or lower grades and by Rs 550 to Rs 600 per maund for the superior kinds of cotton. This increase in cotton prices is a function of lower domestic crop coupled with increase in international lint prices.
This week cotton prices in our market have shown a stable disposition. The ex-gin price of Grade 3 cotton fixed by the Karachi Cotton Association (KCA) remains stable at Rs 3200 per maund since the past several sessions.
The current revision in crop estimates in Pakistan and some increase in yarn and textile prices in both local and export market may be a harbinger of improvement in the textile industry in the long run. However, presently the textile industry in Pakistan is going through its worst time in running memory.
Goods news came this week from Pakistan's Textile and Commerce Minister Shahzada Alam Monnoo. Monnoo predicted that Pakistan's exports during the current year would be 18 billion US dollars compared to the previous year's (2006-07) 17 billion US dollars.
Monnoo reportedly said that exports of Pakistan would have been higher if the textile sector had been working up to its full potential and capacity. He extolled the resilience of Pakistan's economy. However, he did advise the captains of country's textile industry to diversify their products and manufacture more value added goods. He was hopeful that energy shortages in the country would improve after the winter and economic performance would also pick up in the not too distant future.
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