Flood damage to Pakistan's key cotton crop has cut deep into the forecast for the 2010/11 season, industry officials said on Tuesday, adding the country is likely to import at least 4 million bales. The monsoon flooding, which started over a month ago, damaged about 524,000 hectares (1.3 million acres), out of the total 3.20 million hectares, under cultivation in the major cotton-growing areas of central Punjab and southern Sindh province.
Government and industry officials now estimate output of about 11.6 million bales of 170 kg (374.8 lb) each against the government target of 14 million bales. "We will have to probably import a minimum of 4 million bales to meet our demand this season after floods damaged up to 2.25 million bales," Yasin Siddik, a senior official at the private All Pakistan Textile Mills Association, told Reuters.
Despite being the fourth largest cotton producer, Pakistan often must import bales to feed its textile industry, which accounts for more than 50 percent of the country's exports. Pakistan imported about 2 million bales so far this year through June after producing 12.76 million bales. Global cotton prices gained sharply in August since expected lower output and higher imports by countries like Pakistan and China.
A US Department of Agriculture attache report last week revised estimates for Pakistan's 2010/11 cotton production down by 17 percent to 8.75 million bales (480 lb). The decreased production is likely to increase cotton imports by an estimated 67 percent to 3.5 million bales, it said. Attache reports are not official USDA data. Yasin said Pakistan had already made contracts for about 1 million bales for October-January delivery and would buy more in November.
"But now we have a breathing space as output from our own crop has also started coming in." Traders say about 1 million cotton bales from the new crop has already arrived in the market as of September 1 - about 300,000 bales less from the previous year.
But with no bar on exports, growers and exporters also sell their output in the international market to fetch better prices. About 800,000 bales were sold from the 2009/10 crop. Industry officials say Pakistani traders will mainly be buying from neighbouring India to make up for the shortfall because of lower transport costs.
Naseem Usman, chairman of the Karachi-based Cotton Brokers Forum, said Pakistan so far had ordered about 1.2 million bales, nearly half of it coming from India, the world's second biggest cotton exporter. "Most of the contracts are for October-onward delivery and some have even booked orders for up to February."
But while the cotton output in India is seen at a record 32.5 million bales, the south Asian country will only allow cotton exports of up to 5.5 million bales of 170 kg each, India's Trade Secretary Rahul Khullar said at the weekend. Usman, who estimated Pakistan's import this season at about 3.5 million bales, said traders also bought from West Africa and would be buying from the United States, Brazil and the Central Asian states as well.