Finally, cotton production of 2011-12 season closed at 14,813,779 local weight bales as mentioned by the Pakistan Cotton Ginners' Association (PCGA) in their report dtd . May 3,2012 which is 26.63% higher than that of last year (2010-11) at 11,698,166 local weight bales - really a marvellous performance being historically the highest record.
Punjab province put up an excellent performance by producing a record high crop of 12,132,080 bales even higher than national production of last season by 3.7%. Sindh province lagged behind as extensive cotton crop damage by heavy rains and floods reduced its crop by 29.32% at 2,681,699 bales against 3,793,919 produced last year. Change in crop performance indicates that Punjab Province may repeat its performance next year while Sindh may find weather difficulties in changing the pattern of last two seasons.
Reportedly, officially sowing target has been fixed at 3.16 million hectares for Pakistan; Punjab province 2.51 million hectares ( 79.43%) and Sindh Province at 0.655 million hectares ( 20.47%). By May 5,2012, Sindh had completed 25% and Punjab 15%. Apparently, the sowing is reported to be late by 2 to 3 weeks as by this time, 18% higher sowing was completed last year. There are reports of shortage of irrigation water in central Punjab area and untimely rains in some parts of central and lower Punjab areas which may lower the temperature required for the crop.
There are forecasts for further rains and possible floods in July-August period. The vulgarity of the weather is always there but how far it affects crop development may be seen later. Despite all odds, grower circles expect a bumper cotton crop next season at least not less the present crop level. Presently, sowing is in full swing but lint cotton market fluctuations are likely to affect the sowing intentions. However, cotton plants in some parts of central Punjab are reported to have attained the height up to 1.5 ft.
The growers appeared somewhat worried about the weather as input costs have gone very high and any damage to cotton crop would put them under great financial burden. Let us hope for better but should be ready for worse situation even.
Despite all production restraints such as acute shortage of power supply, gas shut-down, strikes and commotions, increasing cost of production, increasing rates of utility bills and deteriorating law and order situation in the country, the textile sector is performing well and is likely to consume between 14.0 and 14.5 million bales this season on the basis of five months actual consumption.
Business conditions in foreign market especially European Union countries, US and China are reported weak. European Union-is stated in recession. Economies of 17 countries that use Euro are in recession under debt-crisis which has shocked them. Economies of Spain and Greece are relatively in greater trouble demanding strict financial measures to regain confidence of the financial institutions and lending agencies. China, the engine of the world economy also facing slowdown situation in production. Beijing has cut 0.50 percent points in reserve requirements of the banks which would make available equivalent to US $63 billions in the open market for trade. Against 9.2 % growth rate, China now has lowered it to 7.5% for the whole 2012 year.
In China, industrial output rose by 9.3%, the slowest pace in last two years. China's economy is weaker than what is expected with the industrial growth down to one digit since global financial crisis of 2008. Above all, recently announced cotton production and off-take figures which have impacted global cotton market bearishly have made cotton prices crash. In the below table, details are available. Cotton scenario in 2012-13, gives bearish outlook of cotton market as in 2012-13 season, world production is projected higher than mill-use by 6.7 million bales ( 5.74% more production) on the face of larger Beginning stocks at 66.9 million bales inflating Ending Stocks to 73.8 million bales perhaps not seen before. Tope cotton producing countries are China at 30.5.
India at 25, US at 17 and Pakistan at 10.0 million bales while cotton surplus countries namely India, Australia, Central Asia and Brazil are likely to export almost equal amount of cotton between 4.2 and 4.4 million bales each. Australia is the only country which has zero mill-use and zero imports. This report is based on rough estimation which would be adjusted on ground realities. Beginning stock of India has been mentioned 9.0 million bales which appears on very high side and is estimated otherwise not over 6.0 million bales. Pakistan's beginning stocks is reported at 3.2 mln bale which also appears on higher side and is domestically estimated around 2,5 million 480-lb bales, From April-12 to May-12, world Ending stock has been increased by 810,000 bales to 66.9 million bales while world mill-use has been decreased by 1.3 million bales to 106.5 million bales. This has greatly impacted cotton market negatively and prices have crashed to low level down to 77 July -12 contract. All these international factors have put cotton market under great pressure.
Although, statistically local market should be bullish on very low unsold stock around 250,000 bales when new crop may not come before July moth but weak international factors have also affected local cotton market bearishly. The weak international factors have not only depressed cotton prices but main commodities, crude oil and stock values have been affected bearishly. During the last week, NY futures collapsed and July cotton contract fell 732 points to close at 81.82 cents while December-12 contract dropped by 715 point to finsh at 79.37 cents. In Pakistan, cotton prices dropped Rs 400-600 per maund. Yarn prices in local and export markets have decreased considerably in sympathy with cotton and other commodity prices. The market may take respite before recovering some lost values as the shock of bearish factors may be absorbed to some extent. As such, cotton prices are likely to recover some ground next week.
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2012-2013 WORLD COTTON SUPPLY & OFF TAKE (MAY 2012 UPDATE)
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(Mln 480-lbs -bls)
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Beginning Production Imports Supply Mill use Exports Ending Stocks
stocks Stocks -to-use
ratio
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World 66.9 116.7 37.6 183.6 110.0 37.6 73.8 67.1%
US 3.4 17.0 0.0 20.4 3.5 12.0 4.9 31.6%
China 24.6 30.5 14.0 69.1 41.0 0.0 28.1 68.4%
Pakistan 3.2 10.0 2.2 15.4 11.0 0.5 3.9 33.6%
India 9.0 25.0 0.7 34.7 21.0 4.2 9.5 37.5%
Central Asia 3.0 6.7 0.0 9.7 2.3 4.3 3.1 47.7%
Australia 3.5 4.5 0.0 8.0 0.0 4.3 3.8 86.9%
Brazil 8.7 8.0 0.1 16.8 4.3 4.4 8.3 95.5%
Indonesia 0.5 0.0 2.1 2.6 2.1 0.0 0.5 23.7%
Mexico 0.8 1.0 1.2 3.0 1.8 0.4 0.8 37.2%
Turkey 1.8 2.8 3.0 7.5 5.6 0.2 1.8 30.7%
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Source USDA WAOB Report
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