Although, weather remained partly cloudy in some cotton areas but generally, it remained clear with good sunshine except rains with gusty winds in non-cotton areas around Lahore in Punjab. Monsoon season is on its end with scant chances of further rains in cotton areas of Sindh and Punjab.
Cotton picking process in early sown areas gained momentum with the passage of time while cotton plants in other areas are well developing. Of course, September month remains crucial for cotton crop as normally there exist fears of attack of pest and disease on cotton crop.
Reportedly, seed-cotton arrivals in ginneries by the end August, 08 are equivalent of 819 thousand bales against 682 thousand bales received same period last year; the increase is 34.75 percent. This increase is due to non-regular potato-replacement cotton crop of some 500,000 bales produced in last June and July months, in cotton areas of Central Punjab.
This was an exceptional phenomena experienced this season. Of the arrival of 819 thousand bales, local spinners lifted 640 thousand bales while exporters picked up some 48 thousand bales. This season, regular cotton crop is late by 4 to 6 weeks due to various reasons. While commenting on the size of cotton, Chaudhry Nasim, an old and prominent cotton professional opined that Punjab may produce around 9.0 million local weight bales and if Sindh produces 3.0 million bales than size of crop may be around 12.0 million bales and this Analyst's crop idea is very close to it.
The damage was caused to crop by heavy rains, floods and pest attack more in Punjab and less in Sindh province. However, crop position may be clear after passing the crucial month of September. Official estimate for crop size stands at 12.6 million local weight bales against initial production target of 14.11 million bales. Domestic cotton consumption is expected to be around 14.5 million bales and Pakistan will have to import some 2.5 million 170-Kg bales this season.
Lint cotton prices in local market staged steady outlook on fears of substantial damage to crop but weak cotton prices on New York Cotton Exchange are working against bullish trend. Local spinners and exporters showed good interest in cotton buying. Exporters who are expected to have sold cotton some closer to 100,000 bales mainly to Bangladeshi, Indian and Indonesian buyers are also keen in covering their full export sales. Lint prices in Sindh are better by Rs 100-150 from Punjab cotton at Rs 4100-4200 per maund of 37.324 Kg ex-gin.
Quality of Sindh cotton appears quite better than of Punjab cotton in terms of grade up to US Grade SM, staple up to 1-1/8 inches or even better and strength normally above 30 GPT. However, in terms of Micronaire values, Sindh cotton is on higher side beyond last free-limit of 4.9. Foreign buyers appear compromising on high Mic. values with better other fibre properties.
Although, New York Future values are showing weak trend with October, 08 contract closing at US Cents 63.26 shedding C/pts 272 and December, 08 contract finished at US Cents 65.84 losing C/pts 262 on the close of the week. The slowdown position of some of the prominent economies including US, EU countries and Japan and drastic cut in crude oil prices to five-month low of US $105 against the highest rate of 147+ coupled with strong US dollar indicate something bearish trend in world commodities prices.
The oil producing countries are likely to persuade Saudi Arabia to reduce its production to keep up the drifting oil prices. Some circles foresee oil prices going down below US $100 level or even up to 80 in coming months. The slowdown economic state if continued for a couple of months, it may turn into recession situation cutting demand and prices considerably.
Pakistan has cleared its last hurdle of electing a new President and Asif Ali Zardari has been notified by the Chief Election Commission of Pakistan as next President of Pakistan after winning the election. With this, the political process has been completed. Asif Ali Zardari is considered perhaps the strongest civilian President of Pakistan. The people of Pakistan hope for better change in economic condition, law and order situation and political stability in the country bringing overall relief to common man. Reportedly, the new government has worked plans for boosting agriculture to get bumper crops of cotton and wheat beside other crops otherwise Pakistan would continue to be a prominent importer of raw cotton and wheat. Let us hope for the better and be ready for the worst.
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