PAKISTAN: New Cotton Crop May Face Difficult Challenges

In 1986-87, Pakistan produced 6.75 million 480-lb bales and India produced a little higher at 7.10 million 480-lb bales but after 20 years, India is producing three times more than Pakistan's production. Just compare the performance of ours and India's agriculture sectors. China produced 19.0 million 480-lb bales in 1988 and after 20 years its production is 35 million bales. On the basis of larger shortage of irrigation water and low quality of sown-seed, some people estimate new crop cotton production even less than 10 million bales.The obvious result of the larger spread of sowing period would be that there may be no rush of deliveries but arrivals may be slower against demand. Resultantly, seed-cotton prices may be higher. Ginning factories would face the shortage of power and their daily operational time may be limited to 12 - 14 hours daily instead of 18-24 hours.Against this, demand from spinning mills would be higher in comparison with lint cotton supply as the spinning mills may be operating on 24 hours basis as most of the mills have their own power supply arrangements. In view of almost zero carry-over stocks, spinning mills would be eager to cover their nearby requirements from the new crop and the early couple of months of new season would be demand oriented and the ginners would be in comfortable position.Price indications for seed-cotton are Rs 1900 per 40-kg ex-gin and cottonseed prices at Rs 900 per maund of 37.324 kg ex-gin. Some bargains in new crop lint have been concluded between Rs 3,600 and 4,000 per maund of 37.3245 kg ex-gin for August delivery.In 2007-08 season, Pakistan's total imports of raw cotton equivalent to 170 kg bale is expected around 4.5 million bales of which half of it would be from India and next season cotton imports may be around the same level unless by miracle we harvest a bumper crop. Expectedly, abnormally high prices of petrol and petroleum products in next season would keep the cost of production high.The high prices of foodgrains and other essential items in local and foreign markets would keep lint cotton prices at high level. Of course, high cost of cloth, other textile products and overall living would tend to decrease local consumption. The export would also be competitive and demand may be on lower side due to high cost of textile goods.Next season, export of lint cotton may not be easy in view of lower domestic production. National and regional political, economic and law and order situations would have greater impact on cotton / textile markets. Abnormally high prices crude oil, gold and food-grains may adversely effect cotton and textile markets. Uncertain political, law and order and economic conditions in the country and high oil and grain prices in the world may distort cotton and textile markets.Source: Business Recorder