Monsoon rains have well set in and widespread rains with normal to heavy intensity have poured on cotton belts of Central Punjab and Southern Punjab. Sky generally remains overcast with clouds. Heavy rains followed by floods are reported to have damaged cotton crop in Dera Ghazi Khan, Rajan Pur and Fazil Pur cotton belt.
Sindh also received rains and another spell is expected in the month of August. Last fortnight rains generally cotton crop generally in whole of Sindh but specially in middle and Upper Sindh areas where crop is in boll-formation stage.
As a result of decrease in seed-cotton arrivals, more than half-ginning factories have been closed down temporarily till such time adequate supply is restored. Apparently, recent rains have washed out some of the sucking pests thus improving the general health of cotton plants.
In Sindh about 10-12 ginning factories are in operation and more would resume operation as seed-cotton arrivals increase. The token strike of the ginners has been called off reportedly on the assurance of the Ministry of Food, Agriculture and Livestock (Minfal) for acceptance of their demands.
Most of the cotton institutions like, Pakistan Cotton Standards Institute (PCSI), Pakistan Central Cotton Committee (PCCC), Pakistan Cotton Ginners' Association (PCGA) and the Karachi Cotton Association (KCA) are working only the on low level and apparently are not contributing anything concrete towards promotion and development of cotton.
The PCSI has established latest cotton fibre testing labs equipped with latest HVI (High Volume Instrument) machines at 11 places; 4 in Sindh viz: Karachi, Sukkur, Sanghar and Mirpur Khas and 7 places in Punjab viz: Multan, Vehari, Bahawalpur, Sahiwal, Faisalabad, Dera Ghazi Khan and Rahimyar Khan, covering all cotton areas in Punjab and Sindh provinces. Present cost of one HVI machine may be around Rs 15 millions. All the lab stations are working under capacity; hardly 20 percent of their capacity. PCSI has about 120 well-trained and experienced technical officers with total staff around 180 persons. Practically, they are without work and are sitting idle. The new government is requested to look into the affairs of PCSI and decide its fate; whether it should be given work or it should be closed down.
Second phase of timely rains in India's Central zone consisting of Gujarat, Maharastra and Madhya Pradesh States have brightened prospects of a bumper crop. It is interesting to note that in 2007-08 only one Indian State of Gujarat produced cotton more than Pakistan's total production and Gujarat's popular cotton variety Shaker-6 remains in high demand in international market.
In the words of D. K. Nair, Secretary General, Confederation of Indian Textile Industry (CITI), India exports more than 80 percent of its raw cotton to China and Pakistan which its toughest competitors in exports of textile goods. He says when we export cotton to them we are exporting textile jobs and when we are importing textile goods from these countries, we are importing unemployment.
In 2007-08, India is reported to have made export sales of about 10 million 170-Kg bales against its exports of 5.8 million bales last season. As a result of overselling in exports, Indian mills are starving of raw cotton and are now importing cotton and the Textile Commissioner has now been entrusted with job of registration of export contracts to regulate exports of raw cotton.
While cotton remains in the hands of growers, cotton prices remain depressed and after selling to ginners or traders the prices start picking up, befitting the ginners and traders against the interests of the growers. The same trend is seen in Pakistan. In India, the government is considering the scheme of fixing of minimum support price to ensure payment of fixed price to safeguard growers interests.
Lint cotton prices in local market though maintained a steady trend but in last two working days of the week prices turned to be bearish on reports increased arrivals and week NY advices. Globally, prices of commodities such as gold, food-grains, edible oil and crude oil are decreasing and so the cotton prices. Ruling lint prices after touching the highest of the season at Rs 4,300 per maund of 37.324 Kg ex-gin, have come down to Rs 4,000 for 25th August delivery otherwise ready delivery at Rs 4,100 - 4,175 / Maund ex-gin. Pak Rupee is week against US dollar and is quoted around the level of plus Rs 72.0. The FOB price works out to US Cents 74.25/lb.
The recent down trend in New York cotton prices and quotation of December contract at below the level of 70 would make cotton imports viable and the spinning mills would go for imports pending local purchases. The volatility of economic, political and law and order situation in the country does not lend a helping hand in maintaining stability in prices. However, cotton prices in domestic market may be influenced by possible wide fluctuations in prices on reports of crop position, edible oil prices, local political, economic instability and NY cotton advices. The lower limit for lint cotton may be Rs 3,800 by end September.
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