First fortnight of the peak arrival month of November is over but field reports and ginneries reported comparatively small arrivals of seed-cotton although prices are very high.
According to Pakistan Cotton Ginners Association (PCGA) periodical report issued on last Sunday (18th Nov), Pakistan's total arrival of seed cotton up to 15th November, 2007, is reported equivalent to 5,894,920 bales, some more than 900 thousand bales short from last year's same time.
If this shortage is maintained till end of the season then total crop would be around 11.5 million bales but shortage is likely to increase in coming months and may finally finish at around 1.5 million bales placing total crop around 10.9 million bales. Unsold stock has been reported at 1,521,820 bales; 50 percent ginned and pressed bales and balance 50 percent unginned.
The percentage of unsold stock comes to 26 percent, same as on last fortnight. This shows that ginners holding up sales of lint cotton in hope of getting even better price but this trend is likely to be maintained in coming fortnights which would increase the amount of unsold cotton.
At some stage huge unsold stocks may exert selling pressure on cotton market easing down prices. Against the expected production of 11.0 million bales, Pakistan's season's domestic cotton consumption is estimated around 15.5 and 16.0 million bales. Thus there may shortfall of 4.5 to 5.0 million local weight bales. This situation may add to bullish sentiments in the local market in near future.
Exporters are reported to have committed some 110 thousand bales in export and are understood to have covered some 50,000 bales and shipped some 30,000 bales. Most of the exporters had maintained short position in expectation of decrease in prices but it happed otherwise. The exporters are caught up; some preferred to settle the bargains mutually.
However, huge amount of difference running in million of dollars will have to be paid to settle the bargains. Condition of spinning, weaving, knitting and towelling mills is not good and 40 percent of knitting units are reported to have closed down. Yarn and textile goods prices are not in line with high lint cotton prices. Reports of damage to cotton crop in India are also surfacing sending bullish signals to world markets.
During the last week, cotton prices firmed up further by Rs 100 per maund to reach the level of Rs 3,300 per maund of 37.324 kg ex-gin, seed-cotton to Rs 1,760 per 40 Kg ex-gin and cottonseed to Rs 800 per maund. High prices of edible oil are supporting cottonseed prices and cottonseed prices are supporting seed-cotton prices. On last Friday, volume of cotton business was fairly large but it was low on last Saturday. Most of the market factors viz: uncertain political conditions, poor law and order situation, lower New York advices, tight liquidity position and unsupportive yarn and textile goods prices. All these bearish factors are offset by only one strong factor of 15 to 20 percent damage to cotton crop.
The ruling high lint cotton prices of Rs 3,200 - 3,300 per maund are incompatible with ruling prices of yarn and textile goods. General estimates of lint cotton production are now placed between 11.5 and 12.0 million local weight bales against government's official estimate of 12.8 million bales reduced from initial estimate of 14.14 million bales. Major factors of damage to cotton crop are attack of Mealy bug, cotton leaf curl virus and heavy rains. Mealy bug was also found in the fields of Gujarat and other States of India which was properly handled and controlled. As a matter of fact, Mealy bug more significantly and prominently damaged Bt cotton fields than normal customary seeds. We all know that so far Pakistan has not been able to produce and distribute its own Bt cottonseed to its growers whereas Bt cottonseed has reportedly been sown on some more than half a million hectares of land to produce initially estimated around 2.5 million local weight bales.
Now, question arises as from where the seed came to growers. The answer is clear viz: smuggled from India and such seed is being multiplied locally. It is a hard fact that for getting optimum benefits of Bt cotton seed sowing, every season original/fresh seed should be used otherwise using first, second and third generation seeds would deteriorate fibre properties, decrease ginning out-turn and invite pest attacks/diseases. Beside this, oil contents of such Bt seed I get deteriorated and may be harmful for human consumption. As such, cotton production in Pakistan has been decreasing in three years consecutively. Simple reason for this is that we are not using original seed but using deteriorating Bt cottonseed.
India is using original seeds and getting higher and higher cotton productivity and production year to year. In the last five years, India has almost doubled its cotton production to 31.0 million 170-kg bales in 2007-2008 mostly by increasing its lint cotton yield from 302 kg per hectare in 2002-2003 season to 520 kg per hectare in 2007-2008. India's share in world cotton area under Bt cotton seed is about 27 percent and is producing Bt cotton almost 50 percent of its total cotton production. Beside, India has also started producing organic cotton which fetches handsome prices some 75 to 85 percent more than that of normal cotton.
India's share in world production of organic cotton is about 33 percent and is the second largest producer after Turkey whereas Pakistan's share is only half percent. Pakistan has to adopt genetically modified technology and produce its own Bt cottonseed for country-wide cultivation so as to increase its productivity and production at least to meet its domestic increasing demand.
Pakistan imports pesticides worth of millions of US dollars annually and according to some reports about 75 percent of it is used on cotton crop. By going to BT cottonseed sowing, we can reduce our imports of pesticides by more than 60 percent but the companies / agencies or persons; local or foreign, involved in this business and earning fabulous profits would not like it.
Another important sector is of private companies involved in seed production, multiplication and distribution also earning multiple profits would not like to lose their business.
Needless to mention that prominent cotton producing countries like China, USA, India, Brazil, Argentina, South Africa and Australia have already adopted G.M technology and are getting multiple benefits. The Government of Pakistan, Karachi Cotton Association, Karachi, Pakistan Cotton Ginners' Association. Farmers' bodies, TV channels and other allied organisations are urged upon to hold seminars / discussion / talks to highlight the importance of adopting GM technology and making a definite programme to embark upon it immediately so as to benefit our economy and the country as well.