Initial reports regarding damage to the current crop (2006-07) in Pakistan are now being received from the cotton belt. Though the perceived loss to both output and quality is said to be more in Sindh which has more or less been receiving continuous rains over the past several weeks.
But Punjab is also getting regular rains in recent weeks which could damage the cotton in the long run. Due to heavy down pour in Karachi in the afternoon which runs an organised market, Cotton traders and brokers curtailed Thursday's session to rush to their hearths and homes to avoid getting stranded in the water-logged streets. However, earlier in the day the market sentiment indicated that about 300,000 to 400,000 bales (170 kgs) from the current crop (2006-07) may be lost and the quality of many more bales of cotton affected.
Moisture of 14 to 15 percent in the cotton is dissuading the spinners to buy lint at present. The ginning factories which had started a few weeks ago are now only working partially. With the recent spell of rains, the arrivals of the current crop would be delayed by about one month's time.
With mills mostly keeping their cotton purchases in abeyance and also due to continuing dullness being reported from the yarn market, the Karachi Cotton Association (KCA) cut its ex-gin price for Garde 3 cotton twice by Rs 25 per maund (37.32 kgs) each, or a net reduction of Rs 50 per maund within a week or ten days. Thus the ex-gin price for Grade 3 cotton is now at the lower level of Rs 2,450 per maund.
Rains have been falling in most southern and central Sindh in such stations as Mirpurkhas, Tando Allahyar, Tando Adam, Nawabshah, Naushehro Feroze and some areas of the Khairpur district. While southern Sindh has been badly affected by the rains, upper Sindh has been comparatively saved.
In Punjab also the rains fell recently on the plains covering such areas as Khanewal, Chichawatni, Burewalla, Lodhran and Rahimyar Khan. Thus the factories are also said to be running intermittently. In usual times, at this juncture the seedcotton (kapas/phutti) arrivals are equal to about 150,000 or 175,000 bales of lint but till today (Thursday) the brokers said in Karachi that only about 30,000 bales equivalent of seedcotton has been received from both Sindh and Punjab.
On Thursday the seedcotton (kapas/phutti) prices reportedly ranged from Rs 1,050 to Rs 1,150 per 40 kgs in Sindh, while in the Punjab they are said to have ranged from Rs 1,250 to Rs 1,300 per 40 kilogrammes. The price of cottonseed (kakra/binola) in Sindh was said to be around Rs 560 to Rs 570 per maund (37.32 kgs), while in the Punjab it reportedly ranged from Rs 650 to Rs 670 per maund.
Due to drenching rain on Thursday afternoon in Karachi, not much business was reported. However, a sale of 200 bales of cotton from Mirpurkhas in Sindh was said to have materialised at Rs 2,450 per maund (37.32 kgs). due to heavy rains in some parts of the cotton belt, mills appeared to be in no mood to buy cotton eagerly.
Anyhow, there is still the opinion that if the rains do not continue beyond the next three or four days, the current cotton crop (2006-07) may still be salvaged. However, if rains persist over the next few weeks, damage is certain to occur in both quality and quantity. Some assessments already put this year's crop at about 12,500,000 bales (170 kgs) on an ex-gin basis, which would be about the same quantity as the outgoing season (2005-06).
The current price idea of lint from Sindh reportedly ranged from Rs 2,450 to Rs 2,475 per maund (37.32 kgs), while in the Punjab the prices were said to have ranged from Rs 2,575 to Rs 2,600 per maund. thus the mills are presently not showing much interest in buying cotton. Exporters are also said to have entered the local market to sell cotton.
The Trading Corporation of Pakistan (TCP) is said to have disposed all the 28,000 bales from the earlier season (2004-05) which it had offered for sale. The sale prices are said to have ranged from Rs 2,346 to Rs 2,371 per maund (37.32 kgs) according to the quality. Now the TCP probably has less than 5,000 bales of unsold cotton.
In other news, the government has imposed a cotton cess of Rs 5 per bale of 170 kgs as cotton standardisation fee to meet the establishment and operational expenses of the Pakistan Cotton Standard Institute (PCSI). The decision was taken by the Economic Co-ordination Committee which met in Islamabad on last Wednesday.
This step will strengthen the PCSI. Which will assist in further promoting the standardisation of cotton in the country. Also, the ministry of textile industry (Mintex) has announced the clean cotton programme for the year 2006-07 under which 100,000 bales of clean and standardised cotton would be produced (70,000 in Punjab and 30,000 in Sindh). The programme envisages the lint to be of Grade 2 and it should be reasonably clear of non-lint contamination. The growers/suppliers of such seedcotton will be paid Rs 50 per maund by the Trading Corporation of Pakistan (TCP).
It is further stipulated that if the clean cotton bales are not purchased by the spinners in the open market, Then the TCP will buy them according to its laid down procedures at Rs 2,520 per maund (37.32 kgs) for Grade 2 and Rs 2,591 per maund for Grade 1 cotton. This programme will be expanded in the future years.
According to Amjad Saeed, the commission house of Neelum Cotton (Pvt) Ltd was to hold a "seminar on Pakistan cotton ginning standards and level of contamination" in Rahimyar Khan on Thursday night where prominent spinners, ginners and growers have been invited to discuss the issues concerning the standards of ginning and cotton contamination levels.