Lint cotton sellers eyeing Rs 6,000 price level

12 Apr, 2010

Increase in irrigation water availability and decrease in temperature to desired limits are indicating towards increased sowing and better development of cotton crop. April month is the prime time for cotton sowing in lower Sindh and early sowing areas of Central Punjab.
However, cotton sowing period would go up to June month. In the last rainy season, Pakistan received about 40 percent less water and this shortage can be met by diverting water share of Punjab to Sindh and vice-versa as per water requirements of both the provinces because of difference in sowing periods. Cotton crop requires lesser water than competing crops like rice and sugarcane and if the available water is used intelligently, this water shortage can be overcome.
Monsoons also greatly compensate the shortage of irrigation water. The use of latest farm irrigation technologies go for minimum use and maximum conservation of irrigation water. Another important technology is of seed breeding which would help in evolving promising seeds varieties which give better yields, are pest-resistant and rich in fibre properties.
The Punjab Seed Council is reported to have approved some eight / nine Bt cotton / hybrid varieties and their seed would be released for commercial cultivation in Punjab through respective private breeders. Sindh has already been using illegally imported foreign seed for the last some years and have successfully increased its cotton yield and production considerably. Farmers want indigenously developed Bt seeds for real production. Normally every season, Bt cottonseed of first generation is used to get best results and thus the fear of mixing of seeds is avoided. Last Saturday, the Federal Ministry of Agriculture is reported to have signed a MoU (Memorandum Of Understanding) with an American firm namely Monsanto for producing Bt cotton seed varieties in Pakistan. Perhaps in the last government of President Musharraf similar deal was signed with Monsanto. Reportedly, MoU was also signed with a Chinese seed-breeding firm in this government. All such efforts may be going in the right direction but the nation wants the results, which are not coming as yet.
On the 12th instant, the Federal Committee on Agriculture (FAC) is holding its meeting to fix production targets of Rabi crops such as cotton, rice and sugarcane. The trade circles consider the production target of 14.5 - 15.0 million local weight bales as reasonable and achievable on the field reports of increase in cotton area by about 12 percent in 2010-11 season. India introduced genetically modified technology in the start of the new millennium and by now it has increased its production by about 250 percent while Pakistan's production has increased by less than 20 percent in last 8-9 years.
Pakistan who exported some 3.7 million 480-lb bales in 1988-89 but imported some 3.0 million 480-lb bales 2007-08. Against this India imported 2.388 million 480-lb bales in 2001-02, exported some 5.0 million 480-lb bales in 2007-8. Pakistan has more dependence on agriculture and agr-products in exports than India yet Pakistan appear to be at least 10 years behind India in agriculture performance. Similarly India has availed of the opportunity of becoming top-2, textile giant in the world after China but Pakistan is losing its third position to other relatively small countries of the region.
According to ICAC latest projections of cotton crop in 2010-11 season, world cotton area may increase by 8 percent to 32.8 million hectares and production to increase by 12 percent to 24.7 million tons =113.414 million 480-lb bales, assuming 4 percent increase in yield to 759 Kgs/hectare. The world cotton consumption may increase by 2 percent to 24.6 million tons = 112.955 million 480-lb bales. Thus in 2010-11 season, world cotton production and consumption would be almost equal.
Field reports indicate healthy developments of sapling and plants. One report said that height of plant in central Punjab's early sowing area has crossed one foot level. Harvesting of early sown crop may commence by the end of May or early June month and during same period in early sowing areas of Lower Sindh.
In the last month, local cotton market remained steady to firm as lint prices against touched the peak of the season at Rs 5,800 per maund. However, one or two deals were made at Rs 5,900 per maund on one month credit. The ginners holding unsold stocks which are reported around 250,000 bales are in commanding position but the mill-buyers are resisting further increase in lint prices. The ginner sellers would be happy if they strike bargain at Rs 6,000 per maund of 37.324 Kg ex-gin which is not difficult to achieve.
Spinning mills are also weighing the viability of cotton imports and donot want to miss any chance. It appears certain that shortage of cotton may lead to closure of some of the spinning mills or force them to reduce working hours to avoid closure of their mills.
Below mentioned is Table 1, giving latest position of cotton production and off take of running crop. As compare to March, 10 figures, world mill-use has increased by 370,000 bales, world production down by 520,000 bales, Pakistan's imports down by 500,000 bales, US production down by 250,000 bales, India's mill consumption increased by 200,000 bales and Turkey's mill-use increased by 100,000 bales, ICA report tells.
Tab.1: 2009-10 WORLD COTTON SUPPLY & OFFTAKE (April 2010 update)



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( Million 480-lb bales)
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End
Begn. Stock Production Imports Supply Mill-us Exports stocks
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World 62.8 101.7 34.2 164.5 116.1 34.2 50.9
USA 6.3 12.2 0.0 18.5 3.5 12.0 3.0
China 22.4 31.5 9.5 63.4 47.5 0.1 18.3
Pakistan 4.7 9.8 2.0 16.5 11.5 0.7 4.3
India 9.9 23.5 0.6 34.0 19.4 6.1 8.5
Central Asia 3.5 6.2 0.0 9.7 1.7 5.9 2.2
Australia 0.9 1.6 0.0 2.5 0.0 1.8 0.8
Brazil 5.0 5.8 0.1 10.8 4.4 1.9 4.7
Indonessia 0.4 0.0 2.1 2.5 2.1 0.0 0.4
Mexico 0.8 0.4 1.5 2.7 1.9 0.1 0.7
Turkey 1.6 1.7 3.7 7.0 5.4 0.2 1.4
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Source: USDA-WAOB April WASDW report.

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