Recommendation for ginners: Do not stock cotton in season 2011-12

HASILPUR: It is recommended for ginners not to stock cotton during the current season as the price is expected to remain under pressure due to high production estimates.

According to research, cotton production in Pakistan this year is likely to remain about 13.6 million bales (each bale is of 155 kg lint) as against 12.7 million bales last year.

According to the current situation, there is surplus cotton in Pakistan.

Pakistan will see a rise in cotton production with increased area under cotton and better weather conditions compared to last year. Though a lot of crop has been destroyed in Sindh due to rains and floods, there is bumper crop in Punjab.

As per Pakistan Cotton Ginners Association (PCGA) figure on November 15, 2011, so far almost 7.96 million bales have came in the market which is half a million more compared to last year's report on the same date.

If the current scenario remains we are expecting 2 million more bales in the market till November 30, 2011.

However, last year from November 15 to November 30, 2010. 0.8 million bales came into the market. As per our research, it would be higher because of the high yield percentage and faster arrival this year.

Besides, this year export is also very slow. As per PCGA figures, export is 100,000 bales less as compared to last year. International market is not interested to buy cotton from Pakistan unless it's good quality. Local consumption is expected to be the same.

This year the Trading Corporation of Pakistan (TCP) is also not interested to support the cotton market due to lack of funds. Because the government will not allow TCP to buy cotton due to political instability.

All these circumstances show that there will be more pressure in the market.

"We had considered all national and international factors of the cotton market, estimated production and demand for the current cotton year, hence we recommend ginners not to stock cotton. However, it is the ginners who have to decide what they want to do with their crop."

As per the International Cotton Advisory Committee (ICAC) report, global cotton (lint) production is expected to rise by 8 per cent to 26.9 million tonnes (2011-12), the largest crop since 2004-05. Global utilization by textile mills is expected to increase to the extent of 2 per cent or about 25 million tonnes.

Copyright Business Recorder, 2011