Import of yarn: China's decision may enhance cotton prices globally

China's decision to import yarn in bulk may elevate cotton prices internationally, a phenomenon anxiously waited by the Pakistan cotton farmers selling their stocks on an average basis prices ranging between Rs 3000 to Rs 3100 in Sindh and Punjab.
According to the Cotton Review of Pakistan Central Cotton Committee, under the Textile Division of Ministry of Commerce, Sindh has reaped up more than 70 percent of the assessed cotton crop for the year 2013-14. Farmers seem satisfied in terms of Phutti prices, in the meantime, declining trend in international prices has affected seed cotton prices in Pakistan.
China cotton production for 2013-14 is estimated at 6.70 million tons as against 7.3 million tons recorded in 2012-13, showing a decline of 8 percent. While consumption shows a fall of 3 percent as it was estimated at 8.04 million tons in 2013-14 as against 8.29 million tons in previous year. Imports by China are estimated at 3.18 million tons in 2013-14 as against 4.43 million tons in 2012-13.
Cotton reserves of China are expected to increase to 11.4 million tons during 2013-13 and it is likely to hold 60 percent of the world stocks by the end of the season. From a consumption and trade perspective, China is the mover and shaker of the world cotton market. The ICAC has asserted that the direction of the world cotton industry would be determined by the policy decision of China government over the next few years.
Pakistan is likely to produce 11.958 million bales for 2013-14. Production in Punjab stays around 8.70 million bales, followed by 3.150 million bales in Sindh, 0.000433 million bales in Khyber Pakhtunkhwa and 0.108 million bales in Balochistan.
The prices of raw cotton have witnessed declining tendency during October 2013. The prices in first week were averaged at Rs 7755 per 40 Kgs which declined to Rs 7167 per 40 Kgs in the last week due to depressed scenario for cotton trade globally. The export of raw cotton has posted gains to 17,635 metric tons in September 2013 as compared to 14031 metric tons in August 2013 and 11095 metric tons in September 2012. It indicates an increase of 25.7 percent over August 2013 and 34.1 percent over September 2012. Similarly, cumulative exports of textile group commodities have increased to Rs 133,750 million in September 2013 as against Rs 112,786 million in August 2013. Imports of raw cotton slumped to 8733 metric tons in September 2013 as compared to 9076 metric tons in August 2013 and 9662 metric tons in September 2012, showing a decline of 3.8 percent over August 2013 and 9.6 percent over September 2012.