On close of the month of January, 2005, total arrivals of seed-cotton were reported at 14.016 million running bales. Textiles purchases were at 10.535 million bales; TCP purchases at 1.567 million bales, exporters' purchases at 0.492 million bales and unsold stocks were at 1.422 million bales.
During the second fortnight of January 2005, some 274,000 bales equivalent to seed-cotton had arrived at the gins which was lower than what was expected. On January 15, total unsold stocks amounted to 1.785 million bales, against 1.422 million bales on close of January.
It appears that season's total arrivals may close around 14.5 million bales against 15.0 million bales, which was expected earlier, and the unsold stocks are decreasing.
This situation may lead to firming up of local cotton prices. Trading Corporation of Pakistan (TCP) has yet to dispose of some 1.5 million bales. Press reports indicate that TCP would oblige both local spinners/buyers and foreign merchants/buyers.
It is likely to issue necessary Tenders soon in this regard. Final decision in this respect is expected to be taken by the Government soon. In view of easiness in international market, Trading Corporation of Pakistan may not get better price in export in comparison with local sale.
The best price bidder in Tender may not accept more than 10,000 bales, and the other bidders closer to the best price may opt not to match their offers with the best price. Thus, in one Tender, for say 50,000 bales or more, actual sale may be small and with this pace of disposal TCP may require months to sell its cotton.
TCP's stocks should be divided equally between local buyers and foreign buyers identifying/earmarking the lots. For local sales, Trading Corporation of Pakistan should fix sale price on weekly basis and for export sale International Tender may be floated. However, some mechanism should be worked out to expedite the sale otherwise through normal system the sale operation may take about a year.
Local cotton market remained dull during last week as the spinner-buyers opted to remain on sidelines while the exporter-buyers did not find the present price level viable. Instead, spinner-exporters resorted to buying from foreign markets and reportedly some 32,600 bales of US origin were booked.
Pakistan is reported to have booked some 100,000 bales from different sources, mainly from US, in January. As the local prices go up, cotton imports become viable. Export sales have slackened as local prices are found higher than bids.
Cotton prices in New York futures market showed easy trend and March contract finished at 43.20 cents, losing 56 C/points, and May settled at 44.53 cents, marginally down by 47 C/points. Reasonably high US weekly sales could not create bullish trend in the market.
US has made total export sales commitments of 9.785 million bales, including 613,000 bales of US Pima, and has made shipments of 4.454 million bales, including 452,600 bales Pima.
Main buyers of US cotton were as under: (All figures are in thousand bales ) Mexico 1,658, Turkey 1,395, China 1,255, Indonesia 976, Korea Rep 627, Thailand 616, Pakistan 467, Canada 420, Taiwan 411, Japan 329, Hong Kong 229 and India 169. Thus, US is left with some 27 percent of unsold stocks against target of 12.8 million bales and has six months in hand.
China is enjoying its New Year festival and would open on February 10. This season India is producing record high crop of 21.3 million local bales as per Cotton Advisory Board of India. India is reported to be applying bio-technology in cotton farming besides other many farming systems.
Under 'Contract Farming', some of the textile industries have adopted a village in Punjab and cultivated 1200 acres land under cotton with the co-operative movement of farmers, scientists, industries and trainers.
The project resulted in increasing the average yield of seed-cotton from current level of 450 kg per acre to 950 kg/acre, against world average of 700 kg/acre. This model project has been replicated in another 10 villages and can be emulated in other cotton regions of India.
By adopting new technologies and new farming systems, India hopes to increase its share in world cotton production from existing 12 percent to 25 percent in the coming years.
Also, India has made very good progress in 'Organic Farming' and about 2.5 million hectares land has been brought under different crops. Last season, India had produced only 17.7 million local bales cotton. India has also improved its cotton quality to a great extent, and Pakistan has to consolidate its position in cotton production and improve quality of cotton.