The Pakistan Cotton Ginners' Association (PCGA) announced the periodical cotton arrival report up to the month of September,09. According to this report, seed-cotton equivalent of 1.787 million running bales arrived in ginneries during the month of this September while total arrival was 3.079 million running bales.
Of this, local spinning mills lifted 2.222 million bales while exporters lifted 0.254 million bales leaving unsold stock of 0.603 million bales. As compared to same period last season, the increase is of 715,246 bales ( +30.25 %). This time exporters appear more active as they purchased 253,889 bales against 105,600 purchased last season. Spinning mills also purchased more cotton at 2.222 million bales against 1.831 purchased last season. If we look at the arrival figures of previous years, we find that cotton arrivals on 1st October every year are on increase viz: on 1st. October 2009 = 3.079 million bales, in 2008 = 2.364 million bales, in 2007 = 1.816 million bales and in 2006 = 1.103 million bales.
This shows that for the last many years, cotton sowing is becoming earlier to earlier. This is perhaps because of the fact that earlier sown crop gives better yield and remains almost free from pest-attack and heavy rains while the agriculture people discourage early sowing. However, the trend of early sowing is benefiting the growers and every year early sowing is increasing.
Weather during the last fortnight of September month remained pretty hot and it continued the same or even hotter above 40 degrees in cotton fields till writing of this report on Sunday, the 4th instant. The present heat wave almost across the cotton areas of Sindh and Punjab provinces has pushed temperature above 40 degrees Centigrade resulting early maturity of crop and forced opening of bolls. This phenomena has increased cotton arrivals into ginneries but may reduce ginning out-turn, negatively affecting the quantum of crop and also deteriorate fibre properties specially the staple length and fibre strength. Field reports indicate that cotton arrivals during October month may touch peak level. The September month, which is called Sitamger month, did not spare cotton from damage this season too. Cotton crop in Punjab has been damaged by pest-attack, but Sindh crop remained almost safe. Now, the matter of determining the extent/size of damage to cotton crop has become controversial. Sindh cotton crop is safely taken between 3.0 and 3.5 million bales while Punjab crop is considered between 8.0 to 9.0 million bales.
Thus, realistically the national cotton crop should be between 12.0 and 12.5 million statistical bales. However, with the passing of every fortnight, the picture of the size of cotton crop would become clearer. Unfortunately, we have again missed the opportunity of harvesting a bumper cotton crop. It appears that we are destined to harvest a crop between 11.0 and 12.0 million bales or production potentiality is limited. As a matter of fact, we wholly and solely depend on nature without completing our homework. The most important factor is of seed.
Unless we have new Bt/hybrid seeds suiting to our land and weather, we cannot hope for any substantial increase in yield and production. We have been hearing about it for the last many years. Some years ago, reputed nuclear scientist Dr Samar Mubarkmand, while delivering his lecturer in the Karachi Cotton Association, had declared that next explosion would be made in cotton production but we are still waiting for it. Why we cannot make progress in cotton productivity and production when our neighbour country India has increased its production from 14.0 million 170-kg bales in 2000 to 310 million bales in 2008 and during this period has increased its lint yield from 278 to 539 Kgs / hectare.
This season India would have 15.0 million 170-kg bales surplus to its domestic cotton requirements and may export its 50 % safely, keeping 50 % as carry-over for next season. Hopefully, Pakistan's cotton import may be between 2.5 and 3.0 million 170-kg equivalent bales in 2009-10 season costing Pakistan exchequer between USD 600 and 700 millions.
On the reports of damage to cotton crop, local cotton prices remained steady to firm around Rs 3,550 and 3,600 per maund of 37.3245-Kg ex-gin. Despite abundant availability of cotton, the local spinners are quite active in lifting cotton bales. The trade fears deterioration of lint quality in coming fortnights due to pest attack and inclement weather. The present level of lint price very suits the spinners as comparable growths would cost them more and that the yarn selling price are quite lucrative. The demand for course count up to 20s in local as well as in export markets specially in China are very encouraging. China is reported to be the bulk buyer of course yarn to replace import of rough cotton but would import fine cotton to produce fine count yarn. Thus, the yarn manufacturing appears quite profitable business.
However, the cotton exporters are in hot soup as they had not covered all their export sales in hope of lower cotton prices and the quality has also deteriorated. The presence of a few prominent international cotton merchants in Pakistan's cotton market has supported the prices as they are understood to have purchased some over100,000 bales from local market, of course for export purpose. The working capacity of local exporters appears to be limited to 300,000 - 400,000 bales so as and when Pakistan harvest bumper cotton crop, the international merchants would get into the market. These international merchants have many advantages over local exporters such as they divert their funds from foreign banks at low interest rates and they utilise hedging facility to reduce business risks. These international merchants are also involved in selling foreign growths to Bangladesh who also prefer them.
Although, the ginners lost money earlier this season but presently they are earning profits on purchase of seed-cotton at Rs 1,700 per 40 Kgs ex-gin, selling cottonseed at Rs 750 - 800 per 40 Kg and lint cotton at Rs 3,500 - 3,600 per maund of 37.3245 Kg ex-gin. In this month, there would be rush of arrivals crossing the daily arrival level of seed-cotton equivalent of 100,000 bales. There is a perception that larger arrivals are likely to depress cotton market and lint prices may lose Rs 100 to 150 per maund. However, in December month, the purchasing of cotton by the spinners would ease down due to exhaustion of credit limits and diverting their cotton purchasing strategy from local market to foreign market. In December month and later, scarcity of good quality cotton would tighten up prices of quality cotton while low grade cotton would be discounted. There are chances of export of some low grade cotton in early months of 2010 calendar year.
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