About a dozen of factories, more in Punjab and less in Sindh, have already commenced ginning operation in new crop (2011-12) for which almost entire supply of seed-cotton comes from the districts of lower Sindh. Stray pickings have also started in central Punjab's early sown cotton areas.
Momentum of picking operations would be geared up where cotton plants reach maturity. Of course, reports of larger increase in cotton areas specially in non-traditional cotton areas are on record, which by average may be between 10 and 12 percent to 33.5 but private circles put it around 3.5 million hectares. On the basis of last ten years field lint yield of Kgs 712 per hectare, 2011-12 crop turns out to 15.6 million bales of kgs 160 each (average weight of bales). Optimistic circles of trade estimate new crop over 16.0 million bales. Of course, prospects for a bumper crop are there but, simultaneously there are fears of heavy rains/floods and possible pest-attack and diseases.
However, clear picture of crop size may emerge after crucial September month. The domestic cotton consumption in current season is now expected lower at 13.5 million bales in view of drastic decrease in spinning operational period. Total cotton import in the running season may be less than 2.0 million 170-Kg bales. In the next cotton season (2011-12), cotton supply position would become easy in view of higher expected cotton production but recent increase up to 1.5 percent in interest rates for exports by the State Bank of Pakistan and gas load-shedding of three days a week in Punjab and two days in Sindh and other adverse factors would discourage production in all sectors of textile. Presently, 20-25 percent of the national spinning capacity is taken as closed.
Thus, the prospects of cotton exports in new crop appear bright and exports may be as higher as 15 million bales. To avail of this cotton export opportunity, the local exporters are sharpening their tools and are doing necessary homework. Beside local exporters, some international merchants are also planning to take their share in Pakistan's cotton exports. One prominent international merchant is understood to have established its camp-office in Pakistan. In this region, Pakistan produces cotton crop earliest than other cotton producing countries like India, China and Uzbekistan, so the foreign buyers who maintain low cotton inventories, rush to Pakistan for new crop cotton purchases.
Lint cotton prices in the local market appear looking for certain direction but end of September month, cotton market may remain fluctuating between narrow range of Rs 7,000-8,500 per maund. Pakistan harvest a bumper crop of even 15.0 million bales or more, cotton prices may remain depressed when daily seed-cotton arrivals touch the level of 100,000 bales equivalent. Seed-cotton price may come down between Rs 3,200 and 3,500 per 40 Kgs ex-gin, while lint cotton between Rs 6,500 and 7,800 per maund ex-gin. Prospects of better in US, China, India and Uzbekistan and demand from cotton consuming countries would determine the course of market. It appears certain that in 2011-12 season, world cotton production of 124.0 million 480-lb bales would be more than 116 millions, the world consumption forecast. Cotton production of prominent countries would be as: China 33.0 million bales, India 27.0 Pakistan 10.8 and Australia 4.0 millions bales.
Presently, cotton prices on world market is looking for direction and new crop December 11, contract is running below 120 level on slack demand from spinners. Last week, there have been cancellations of US cotton contract, one of the contract was of more than 125,000 bales. Cotton buyers in many other countries have settled their cotton bargains due to drastic fall in cotton prices. These phenomena have increased unsold stocks.
In this season, about 575,000 bales have been shipped to China, Bangladesh, Vietnam and Thailand countries. During this Fiscal year (July-June,11), Pakistan's total exports are estimated to reach the level of $25.0 billions of which exports of textile and clothing is equal to $13.5 billions. Pakistan's total imports of this season may touch the level $40.85 billions. The all-time record exports of $13,5 billions of textiles and clothing in this season is 34 percent more than last years exports. Pakistan's exports did bring more value but volume of exports, as compared to that of last season was reportedly lower by 17 percent. Next season, Pakistan may hopefully perform well in exports particularly that of cotton and textiles if the domestic working conditions improve.