With decreasing ready stocks of cotton from the current crop (2007-08) remaining unsold with the ginners and the forthcoming season (2008-09) still several months away before it can provide sizeable supplies to the domestic textile industry, lint prices in the ready market continue to give a steady appearance.
Moreover, that Pakistani rupee having fallen considerably from Rs 60.85 on the 8th of November 2007 to Rs 66 00 per United States dollar on the 7th of May 2008 on the composite exchange rate market, lint prices should maintain their sound and stable characteristic.
Ginners are now said to be holding only about 400,000 bales of unsold cotton with them from the current crop (2007-08). This relatively small quantity of floating stock in the market is likely to dissipate soon.
The devaluation of the Pakistani rupee by nearly 11 percent over the past six months is making cost of inputs and supplies of raw materials decidedly costlier, but with a majority of Pakistani textile products going into the export markets, such a situation should also provide the industry with considerable advantages with higher rupee earnings.
Even during the current season (2007-08), about a third of the domestic textile industry is estimated to be facing power shortages, but most of the mills which generate their own power should be performing well. Moreover, many mills which have more or less covered their cotton requirements till the end of the current season should also be doing satisfactorily.
Regarding the functioning of the domestic textile industry, the Governor of the State Bank of Pakistan Dr Shamshad Akhtar is recently reported to have conveyed to the Economic Co-ordination Committee (ECC) of the cabinet that the large research and development (R and D) founds totalling Rs 40 millions had been misused by the industry. Moreover, the State Bank of Pakistan and the commercial banks reportedly provide Rs 273 billions under the Export Refinance Scheme (ERS) at concessional rates of interest to the exporting sectors of the textile industry, which is a very large assistance to the industry. In reply to this allegation, leaders of several sectors of the textile industry have criticised the State Bank Governor by not only denying the charges but also claimed that the government response to their problems was slow and that any facility to the textile industry has to be compared with the export promotion measures being given by other governments in the region.
According to Dr Kamal Monnoo, an economic commentator and also a textile industrialist, various problems similar to the Pakistan textile industry are also being faced by the manufacturers in China, India and Bangladesh including high cost of doing business. Kamal Monnoo suggests that the government and the private sector should cooperate with each other as there is high potential for the Pakistan textile industry to become a formidable player in the global textile business.
Last week the Pakistan Cotton Ginners Association (PCGA) issued its final report for seedcotton (kapas/phutti) arrivals for the current season (2007-08) as on the 1st of May 2008. Total arrivals for this year (2007-08) have been recorded at 11,352,925 bales against last year's figure of 12,410,620 domestic size bales, or a shortfall of 8.52 percent. Till the beginning of this month, the mills had picked up 10,702,069 bales, where as the exporters had lifted 116,326 bales.
Other news includes the report that the Economic Co-ordination Committee (ECC) of the cabinet has decided to give a Letter of Intent (LoI) to hire Messrs Monsanto, a company of international repute, to introduce, promote and propagate the growing of Bt cottons in Pakistan which is expected to reduce incidence of pest damage substantially and also increase the yield of cotton per hectare considerably.
The Karachi Cotton Association (KCA) increased the ex-gin price of Grade 3 cotton by Rs 25 per maund (37.3 kgs) and fixed it at Rs 3,375 per maund on Thursday signifying improvement in cotton prices. Till the evening, one deal of new crop cotton (2008-09) was reported being sale of 200 bales from Mirpurkhas in Sindh at Rs 3,700 per maund for delivery in coming August.
A sizeable section of the cotton trade presently believes that about 11.3 to 11.4 million bales of domestic size are projected to produced during the forthcoming season (2008-09) which is more or less the same output achieved this year (2007-08) on an ex-gin basis.