The world, including Pakistan, is facing serious cotton crisis as its overall production is declining against the increasing demand, and the shortage is expected during current fiscal year to be over six million bales during the current fiscal year, traders told Business Recorder.
"As per International Cotton Advisory Committee (ICAC) estimates, the cotton production world-wide will decline by 0.423 million during the 2008 fiscal year," they added.
However, reduction in the world-wide cotton crop resulted in price hike in the local as well as international market. During the current fiscal year, overall cotton production of Pakistan, China, the US, India, Commonwealth of Independent States (CIS), Brazil, African zone, Turkey, Greece, Australia and other countries have been estimated at 115.833 million bales (480 pound) as compared to 116.256 million bales during the 2007 fiscal year.
The ICAC estimated that during the 2008 fiscal year, the gap between cotton production and its consumption would also be widened by 2.77 million bales to six million bales from 4.406 million bales in 2007.
"The cotton production of top four cotton producers, including Pakistan, China, the US and India, would decline by 2.181 million bales, as the ICAC estimated 81.249 million bales cotton production of these top four countries during 2008 as compared to 83.430 million bales during 2007," said the traders.
Chinese and the US crops are estimated to be lower than the last fiscal year, while cotton production of Pakistan and India is expected to rise by three percent to 31.618 million bales in 2008 fiscal year. The US cotton acreage could be nearing an 18-year low as farmers preferred more remunerative crops like corn and wheat.
"The US Department of Agriculture has decided to reduce its cotton production aimed at minimising the subsidy being paid on cotton production", said leading trader Ghulam Rabbani. He said that cotton cultivation area for 2008 was reduced to 10.760 million acres - the lowest since 1989 and down from projections of 11.6 million acres for the current year.
"Although Pakistan is the fourth largest producer of cotton in the world and currently its production will increase, yet it has failed to fulfil its local demand, thus depending on import of raw cotton from different countries, including the US, India and Brazil," he said.
China, the first largest producer and India, the third largest producer of the commodity - are also facing some shortage of cotton, as they had exported the surplus stocks, he added. "Reduction in the world-wide cotton crop is the main reason behind this price hike in the international market as well as local market," Rabbani added.
He said that the world-wide cotton shortage could bring a crisis in the shape of price hike in the world market, as the cotton prices was gradually increasing in the international market, while the price in the local market had touched a new peak level of Rs 3,500 per maund.
"Despite the fact some decline has been witnessed in the local market, but it is feared that the future cotton prices in the country will surge," he added. He said that the cotton prices in the world market were on the rise for the last two months, which had now gone up by 12 cent to 66 cent per pound during the last one week.