By the end of January,09, total seed-cotton equivalent of 10.8+ million running bales has reached the ginneries which confirms that total crop this season may be between 11.0 and 11.5 million running bales; almost equal to last year crop of 11.334 million bales. Thus, our this crop may be the 4th consecutive lower crop while India may be harvesting the 4th consecutive record high crop.
In 2004-05, India produced record high crop of 24.32 million 170-Kg bales and continued improving it to new record high of 31.5 million 170-Kg bales in 2008-09; increase 29.50 percent, while in the same period Pakistan's crop decreased from 14.25 million bales to 11.5 million 170-Kg bales; decrease 19.30 percent, in other words, Indian's performance in cotton production was 50 percent better than that of Pakistan in last five years period.
In the same period, India has increased its domestic cotton consumption by 21.62 percent while Pakistan also increased it by 14.28 percent. Resultantly, Pakistan has become the second largest cotton importer after China while India has become the second largest cotton exporter after US. In the last five years 2004/05 to 2008/09 period, India improved its lint yield from 471 to Kgs. 579 per hectare; increase 22.93 percent while Pakistan's lint yield decreased from 760 to Kgs. 650 per hectare; decrease 14.47 percent. China, the top one cotton producer, consumer and importer of the world also improved its cotton production, domestic consumption and lint yield appreciably to new highs.
Again I emphasise the fact that for staying competitive in world textile export market, Pakistan has to improve its cotton productivity and production at least to the level of its self sufficiency and to achieve this objective it has to take revolutionary measures and reform its concerned agriculture institutions / departments and organisations to meet new world challenges.
This season, cotton prices in the world market remained quite depressed partly due to higher production and partly to global financial and economic recession. The prices could have gone even lower if the main cotton producing countries like USA, China, India and Pakistan would have not lent a helping hand to its cotton growers and to cotton market in the forms of subsidy. As such, the respective governments would bear the loss and to some extent save their growers.
West African countries could hardly sell about 10 percent of their exportable surplus, CIS countries which export most of their crop have sold very little, India, having a larger export surplus of over 10.0 million 170-Kg bales, may not export more than 2.5 million bales this season against 9.0 million 170-Kg bales exported last year while US has export target of 13.0 million 480-lb bales of which it has already committed some 8.9 million bales.
Thus, the large unsold stock of cotton may keep cotton price depressed. On the consumption side, world performance is likely to be quite disappointing in view global recession. US may consume as low as 4.4 million 480-lb bales against its record high consumption of 11.349 million 480-lb bales some ten years back. China, the world's largest cotton consumer may reduce its consumption by as much as 10 million 480-lb bales (about 20 percent) from 52.0 million 480-lb bales last year.
India and Pakistan are likely to reduce their cotton consumption by 15 percent each to 19.5 million 170-Kg bales and to 13.175 million 170-Kg bales respectively. About 50 percent of installed spinning capacity of India lies in its Southern State of Tamil Nadu where there is already acute power shortage of 40 percent beside overall economic slump. The present overall cotton situation appears to be bleak and next half of this season may perform even poorer. However, by the end of this season, there may appear some hope of recovery in the situation. Global recession is already doing its work in US and EU countries adversely affecting their economies.
Pakistan's economic performance in general and its textile performance in particular may be hit doubly by global economic depression and dilapidating domestic political, economic and security problems resulting in deepening of economic depression. Pakistan's textile exports are on decrease because of poor demand from US and EU countries which are in the grip of global depression. Pakistan's exports in December,08 dropped by 14.1 percent and imports by 21.92 percent as compared to that of November,08. Although, exports and imports in second half of the calendar year 2008 increased by 10.57 percent and 12.87 percent respectively from same period last year but in the next six months of 2009, foreign trade is likely to be reduced.
As a result of comparatively low return to cotton growers this season, sowing intentions for the next cotton season, are likely to be lower and some cotton area in main cotton producing countries may be switched over to competing and more viable food crops.
Local cotton prices have firmed up their position between Rs 3,300 and 3,500 range and New York Future March,09 contract around the level of 50. Although, economic conditions are deteriorating globally and in the country but apparently lint prices have compromised with the present weak situation, However, any significant even only can make the prices swing either side. The present ailing economy may not find any relief in the current year as economic affairs are yet to see the turning point.