In 2007-08, cotton production was found 11.35 running bales as on 1st. May, 08 which in terms of 170 kgs bales, it comes to 10.68 million bales, lowest out-put in last five years. In eight months of this season, our lint cotton imports is equivalent of 3.58 million 170-kg bales; monthly average being 450,000 bales.
On this basis, season's total import comes to 5.4 million bales but it is expected between 4.5 -4.8 million bales. Season's domestic cotton consumption is estimated around 15.0 million 170-kg bales. Next cotton season may start with almost nil carry-over stocks as some 540,000 bales were unsold on 1st. May, 08 and in next three months it may be reduced to almost nil.
Cotton sowing process has not been completed even in lower Sindh and in Shahdadpur and Tando Adam areas of Sanghar district, less than 50 percent has hardly been completed. Even in some areas, land preparation was not completed. Of course, cotton sowing in upper Sindh is also progressing. This time, new cotton crop sowing period is likely to spread up to three months in Sindh and Punjab provinces whereas normally it should be up to one and a half month both in Sindh and Punjab provinces.
Main reason for this delay in sowing is late supply of canal water. As a matter of fact, water is short in dams as such its supply has been reduced accordingly. In lower Sindh which is early sowing area, sowing target may be missed by a larger margin of 15-20 percent. Growers prefer to water their standing crop of sugarcane rather sowing to cotton. In some areas, growers preferred chilly sowing to cotton sowing on comparative cost benefits.
However, sowing may not be completed in June and may extend to July month. Overall, weather conditions are conducive to cotton sowing except water shortage. In very early sown areas of Thatta, Badin and Nagarparkar areas of lower Sindh, cotton plants may attain maturity in July month and harvesting may be commenced in late next month but on small scale. On national basis, sowing target of 3.25 million hectares may not be achieved and sowing shortfall may be around 10 percent. All depends on weather conditions including rains during crop development period.
All concerned know that this time sowing seed is of poor quality as it was infested by diseases particularly Mealy-bug and CLC virus. The government has fixed its cotton production at 14.10 million 170-kg bales in 2008-09 season while in 2007-2008, Pakistan harvested a poor crop of some 10.68 million 170-kg bales. Cotlook production estimates for next crop are at 1920 thousand tones = 11.30 million 170-kg bales. Indian crop is estimated 5,610 thousand tons = 33.0 million 170-kg bales but private estimates place it at 35.0 million bales against 31.5 million bales in 2007-2008 season.
In 1986-87, Pakistan produced 6.75 million 480-lb bales and India produced a little higher at 7.10 million 480-lb bales but after 20 years, India is producing three times more than Pakistan's production. Just compare the performance of ours and India's agriculture sectors. China produced 19.0 million 480-lb bales in 1988 and after 20 years its production is 35 million bales. On the basis of larger shortage of irrigation water and low quality of sown-seed, some people estimate new crop cotton production even less than 10 million bales.
However, it is premature to precisely say anything about next cotton output as the crop is still at early stage. Reportedly, the new government of Pakistan has signed memorandum of understanding / letter of intent with Monsanto - producer / owner of Bt cottonseed for producing / introducing GM technology in Pakistan. This is a belated measure towards revolutionising of cotton production in Pakistan. The project may take couple of years to come into operation.
The obvious result of the larger spread of sowing period would be that there may be no rush of deliveries but arrivals may be slower against demand. Resultantly, seed-cotton prices may be higher. Ginning factories would face the shortage of power and their daily operational time may be limited to 12 - 14 hours daily instead of 18-24 hours.
Against this, demand from spinning mills would be higher in comparison with lint cotton supply as the spinning mills may be operating on 24 hours basis as most of the mills have their own power supply arrangements. In view of almost zero carry-over stocks, spinning mills would be eager to cover their nearby requirements from the new crop and the early couple of months of new season would be demand oriented and the ginners would be in comfortable position.
Price indications for seed-cotton are Rs 1900 per 40-kg ex-gin and cottonseed prices at Rs 900 per maund of 37.324 kg ex-gin. Some bargains in new crop lint have been concluded between Rs 3,600 and 4,000 per maund of 37.3245 kg ex-gin for August delivery.
In 2007-08 season, Pakistan's total imports of raw cotton equivalent to 170 kg bale is expected around 4.5 million bales of which half of it would be from India and next season cotton imports may be around the same level unless by miracle we harvest a bumper crop. Expectedly, abnormally high prices of petrol and petroleum products in next season would keep the cost of production high.
The high prices of foodgrains and other essential items in local and foreign markets would keep lint cotton prices at high level. Of course, high cost of cloth, other textile products and overall living would tend to decrease local consumption. The export would also be competitive and demand may be on lower side due to high cost of textile goods.
Next season, export of lint cotton may not be easy in view of lower domestic production. National and regional political, economic and law and order situations would have greater impact on cotton / textile markets. Abnormally high prices crude oil, gold and food-grains may adversely effect cotton and textile markets. Uncertain political, law and order and economic conditions in the country and high oil and grain prices in the world may distort cotton and textile markets.
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