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ANALYSIS: conducive weather conditions
brighten bumper cotton crop prospects
S A AZIZ SHAH
KARACHI: Conducive weather is brightening the
prospects for a bumper cotton crop of 11.5 million 375-lb
bales in 2004-05 season with very good cotton quality. As the
harvesting is gaining momentum, more and more ginning
factories are resuming operation in new crop cotton.
Last week, when I visited cotton areas of Hyderabad, Sanghar
and Nawabshah districts of Sindh, I found the crop generally
to be in good-to-very-good position. I also saw phutti
(seed-cotton) arrivals and ginning operations in factories
where quality of lint cotton was found to be equivalent to US
Grade 'Middling' with staple length between 1-1/16 and 1-3/32
inches.
Some bright white and clean seed-cotton was seen in many
factories which was said to be Bt Cotton by the factory
workers.
For a couple years, of there have been reports of sowing of
seed of Bt Cotton, reportedly smuggled from India and
Australia.
The ginners sell the lots of so-called Bt. Cotton at premium
price and may be paying premium to growers/suppliers. One
grower confirmed that Bt Cotton has higher productivity and
better fibre characteristics.
As per law, sowing of seed of Bt. Cotton is perhaps
prohibited; so, the Provincial Agriculture Departments some
time raid factories.
India has officially allowed sowing of Bt. Cotton seed which
has increased its productivity and growers' profitability. Bt.
Cotton remains generally almost free from attacks of boll
worms; so, the cost of sprays is drastically reduced.
Dr Jessomal, of Sindh Cotton Ginners, Shahdadpur, said that
this season the quality of cotton is very good, being free
from diseases and yellow starins. Jessomal explained the crop
position and commented on marketing of cotton saying that
presently ginners are oversold.
He holds optimistic ideas about crop size and quality of
cotton. He has a good knowledge of cotton marketing.
Seed-cotton was selling at Rs 950 per 40 kg ex-gin, and lint
cotton at Rs 2,300 per maund of 37.32 kg ex-gin and cotton
seed at Rs 380 per maund in Sanghar district.
Ginners find these rates quite profitable. Spinners/buyers are
lifting all the production. Sanghar district is top most
cotton producing district of Sindh. In 2003-2004, Sanghar
district produced 637,772 bales out of Sindh province total
production of 2,129,553 bales--almost 30 percent.
The Pakistan Cotton Standard Institute, Karachi, under
Ministry of Food, Agriculture and Livestock (Minfal) is
reported to have decided to establish a modern Fibre Testing
Laboratory in Sanghar.
Although Sanghar is the district headquarters but has no rail
link and is one-side close to Indian boarder. Instead,
Shahdadpur is on main railway line, is in the nawab of the
district and is well connected by roads with main cotton
producing stations like Tando Adam, Nawabshah, Sarhari and
Shahpur Chakar.
The demand of the ginners is to locate the fibret-testing
laboratory in Shahdadpur instead of Sanghar.
New crop lint cotton prices remained steady around Rs 2,300-
2,350 per maund ex-gin during the week but was reported weak
on last day of the week. The present level of local lint
prices is quite viable for the local spinners in comparison
with equal quality foreign cottons.
The Trading Corporation of Pakistan is making arrangements for
procurement of lint cotton. The Government's Minimum Support
Price for seed-cotton is Rs 925 per 40 kg but has not fixed
price of lint cotton.
Trade circles say that TCP should enter the cotton market when
lint prices fall below the level of Rs 2,000 per maund.
Ginners are still holding stocks of unsold cotton from last
season's crop which is estimated around 150,000 bales.
Those ginners and exporters, still holding old crop unsold
stocks, are losing hope of any government move to lift these
stocks. Business circles consider the present level of lint
cotton prices quite viable for ginners as well spinners.
Sizeable fall in world cotton prices would certainly affect
local prices.
Pakistan's domestic cotton consumption is estimated around
13.0 million local bales and estimated cotton production of
11.5 million bales and 1.0 million bales re-use of waste
cotton would leave a shortfall of only half a million bales.
Local cotton yarn prices are viable but offtake is not in
bulk.
New York cotton futures market, which had boosted cotton
prices by over 7.0 cents /lb on speculative Fund buying, had
come down half way last week. October Contract settled at
47.90 cents and December at 48.44 cents a pound, losing 2.90
cents and 2.79 cents, respectively.
New crop US cotton is reported to be facing a lot of pressure
from other countries, like CIS, South / West Africa and Brazil
and in the week ending August 27, US export sales stood at
115,600 Running Bales. Prominent buyers were Turkey 28,200
bales, Indonesia 21,500 bales, Mexico 14,300, China 14,000 and
Hong Kong 13,600 Running bales.
US export sales (2004-05 crop) is now reaching the level of
5.0 million bales including more than 50 percent of the
carry-forward of unshipped 2003-04 season cotton.
US appears committed to defending US agriculture interests in
every forum and has no intention of taking any unilateral
step. Talking on US/Brazil dispute decision in favour of
Brazil. National Cotton Council chairman, Woody Anderson, is
reported to have said that the WTO decision against US is a
disappointing development and further said that it did not
change the provision of current laws. US is producing a bumper
crop of 20.14 million 480-lb bales, China 30.0 million bales,
India 14.0 million bales, Pakistan 9.0 million bales and CIS
countries 7.4 million bales - these top five countries are
producing about 3/4 of world total production of 106.0 million
bales. Global cotton consumption is said to be around 100
million bales.
Last season, the market started from 50 cents and went above
80 cents and came down below 50 cents level. The trend of
market is reported weak in this season and some traders expect
it may go down to 35 or even 30. Till the end of the last
season, cotton trade was maintaining long position in physical
cotton business and short position in hedge.
Cotton merchants lost heavily on unsold stocks. Last year
heavy damage to cotton crop in China and China hectic cotton
buying played important role. Now, the world is hungry for
news from China which affect cotton but the time is going
tight for possibility of such news.
According to Indian Cotton Advisory Board, prospects for a
bumper cotton production in 2004-05 have brightened up and the
negative effect of dry weather in southern Indian states,
especially Gujarat, has died down. In 2004-05, India
cultivated cotton on 76.14 million hectares and is expecting
total out-put of 17.946 million 375-lb ( 14.02 million 480-lb)
bales, achieving record high yield of 400 kg/hectare, up from
traditional 322 kg per hectare.
Apparently, this breakthrough is due to adoption of new
technologies in seed and agronomy. India is sowing hybrid seed
on 35 percent of its total area and is producing about 1.3
million bales of Bt. Cotton. China is mainly manufacturing
coarse to medium fine yarn. The position is as under:
2001-2002
2002-2003
2003-2004
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Total Yarn
2212 m kg
2177 m kg
2121 m kg
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1 - 10 counts 23.69
21.08
20.60
11 -20 counts 19.85
20.44
19.09
21-30 counts
20.61
21.86
23.29
31-40 counts
24.77 (88.92 %) 24.48 (87.96 %)
24.42 (87.40 %)
41-60 counts
6.65
7.39
7.54
61-80 counts
2.76
2.80
3.02
Above 80s
1.67
1.95
2.04
Total percentage 100
100
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According to one report, cotton fibre characteristics /
quality parameters required by modern high speed spinning
machinery for operating at maximum efficiency, in relation to
US Grades, are as under:
1. Grade : Strict Middling White
2. Staple length : 27.4 mm
3. Micronaire : Min 3.8 Max 4.4
4. Strength : 28 g/tex
5. Length uniformity : 83 percent
6. Fibre Maturity : 80 percent
7. Elongation : 6 percent.
High grade, longer staple length, suitable micronaire range
and higher fibre strength contribute to production of finer
and stronger yarn.
Chinese economy, particularly textile industry, is confronted
with tight liquidity position, frequent power breakdowns,
higher cost of raw material and slum in local buying. These
factors have led Chinese economy to go slow.
Economies of European Union countries are not performing well.
Germany is facing chronic unemployment problems. Reportedly
its economy is largely depending on exports to USA and China
but its home-grown economy is not recovering.
Italy is also more or less facing same situation. Only France
is enjoying consumption boom and other economies are depending
on foreign markets.
Fundamentals of world cotton market appear weak in view of
record high crop estimates of 106 million 480-lb bales,
slowdown of prominent economies, high oil prices and critical
Middle-East situation.
Cotton merchants / traders and growers favour a bullish market
and look towards China for any upset in production estimates..
Courtesy: Business Recorder
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Pakissan.com;
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