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ANALYSIS: weather conditions directly influencing cotton
prices
S. A. AZIZ SHAH
KARACHI (September 16 2004): All eyes are set on weather
conditions. Any change in weather conditions would directly
influence cotton crop, either quantitatively or
qualitatively, in almost all cotton producing countries of
Northern Hemisphere.
In Pakistan, cotton crop is progressing well under almost
conducive conditions. Almost half of the critical period has
passed and about a fortnight is left.
Harvesting in early sown areas is in progress, while in
other areas cotton crop is passing through a critical
period.
On my early this week visit to some cotton areas of
Hyderabad and Sanghar districts of Lower Sindh I found crop
conditions from good to very good in about 80 percent, very
good to excellent in 15 percent and poor in 5 percent areas.
Cotton plants up to top had flowers in good numbers.
It is hoped that there would be very low shedding of flowers
due to calm weather forecast. Overall position of the crop
is 'good' to 'very good' and hopefully a bumper crop of 12.0
million 375-lb bales may be harvested this season.
However, I got worried when I spotted some plants in some
fields suffering from some disease which turned the plant
leaves redish and also the bolls, resulting in withering of
the plants. I remember that one or two years ago the same
disease had largely affected cotton plants in these two
districts and it had damaged the cotton crop.
The growers of this area and Sindh Agriculture Extension
Department people should take notice of this development and
immediately take necessary steps to check its spread to
other plants and areas.
The growers, Agri-Departments and all concerned agencies
should be on high alert to effectively meet any eventuality.
Any delay or negligence in this matter may be disastrous for
cotton economy.
On examination, quality of phutti arrivals in Sanghar
district was found quite satisfactory except that it
contained excessive moisture which not only reduces
brightness of cotton colour but also makes ginning rough.
On Monday, September 13, ginners were quoting Rs 965 to Rs
975 per 40 kg ex-gin for phutti. Cottonseed was selling at
Rs 360-370 per maund, while lint cotton was at Rs 2,200 to
Rs 2,250 per maund of 37.324 kg ex-gin.
The ginners said that arrivals were heavy and compounds /
courtyards of many factories were found jam-packed with
seed-cotton.
Saleable cotton was not found in any factory; rather the
ginners were oversold in lint cotton.
Lint cotton prices in local market are following New York
cotton futures which are fluctuating, mostly on weather
reports. However, the tone was easy due to larger arrivals.
On last Monday, lint cotton sales of Shahdadpur (District
Sanghar) station were reported at Rs 2,200 to Rs 2,250 per
maund ex-gin, but on Tuesday prices firmed up by Rs 50 on
high New York advice and again on Wednesday on lower New
York advice, local lint prices showed some weakness and were
quoted around Rs 2,250 per maund ex-gin.
Quality-wise. lint cotton of Mirpur Khas area was generally
discounted by Rs 50 -Rs75 per maund against lint cotton of
Sanghar district.
Arrivals of seed-cotton in Punjab were also on the increase
and a good number of ginneries in northern Punjab have also
resumed operation in new crop.
The spinners, after sweeping lint cotton of first pick in
Lower Sindh, either move to late areas of Upper Sindh or to
fresh stations of northern Punjab. Then accumulation of
unsold stocks starts in Lower Sindh which would develop
selling pressure on ginners forcing them to reduce prices.
New York cotton futures appeared operating mainly on weather
reports. On the reports of storms / cyclones / tornado etc,
or heavy rains, cotton futures fluctuated widely.
On Monday, New York cotton prices jumped by 180 C/pts on
report of possible damage to cotton by storm 'Ivan' hitting
Mexico, but next day New York futures prices decreased by
160 C/pts when the storm caused no damage to cotton crop.
On Tuesday, retiring October contract finished at 51.45
cents and December at 50.45 cents.
The latest USDA report issued on September 10, showed
increase in US cotton production from 20.14 million to 20.90
million bales, while production estimates in China were
reduced from 30.0 million to 29.50 million bales.
Overall world production estimates have been increased to
107.25 million bales.
The speculators have time to play till critical period for
cotton crop comes to an end by end-September. Hopefully, the
crucial period would pass without any noticeable damage to
cotton crop.
Thereafter, cotton prices would stabilize. At what level the
prices would stabilize is anybody's guess but a broad
contention indicates 2-3 cents up and 2-3 cents down from 40
cents.
Last year, world had produced some 94.0 million bales, but
in this season production estimate has increased by 13.25
million bales to 107.25 million bales.
The increase is 14 percent while production has increased
only be 2 percent. Clearly, the impression is that lint
cotton prices would remain depressed due to larger
production.
USDA Cotton Production and Consumption Estimates
(2004-2005). (Figures in million 480-lb bales).
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Country
Production Consumption
Position
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China
29.50
33.50
(-) 4.00
USA
20.90
6.10
(+) 14.80
India
13.00
13.75
(-) 0.75
Pakistan
8.75
9.90
(-) 1.15
Central Asia
7.64
1.95
(+) 5.69
Brazil
6.00
3.90
(+) 2.10
West Africa
4.47
0.20
(+) 4.27
Turkey
4.25
6.10
(-) 1.85
Australia
2.20
0.07
(+) 2.13
World
107.25
100.85
(+) 5.40
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Curtesy: Business Recorder
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