KARACHI (March 22 2004): The flow of seed-cotton from fields to marketplaces and ginning factories is going on and is likely to continue till the end of next month.

The Pakistan Cotton Ginners' Association has released cotton arrivals figures up to March 15, according to which total arrivals of seed-cotton in ginneries are equivalent of 9.67 million local bales.

Actual arrivals are estimated around 10.5 million bales and it may close at 10.8 million bales whereas the reported arrivals may reach 10.0 million bales.

The unsold stocks were reported at 1.4 million bales on March 15, while this figure may stand around 1.2 million bales after adjusting fresh arrivals of some 300,000 bales by the end of April.

The early sown cotton in areas of Lower Sindh would be harvested in June. In view of extension of cotton arrivals this season till April and early start of the next cotton season from June, about half a dozen ginning factories are likely to remain operational throughout the year, as already a couple of factories in Samandari / Faisalabad area do it.

In the recent spell of hot weather, the temperature touched 43/44 degrees Centigrade on March 20 in Lower Sindh where cotton sowing is also going on. High temperature, beyond 40, causes demoisturization in fields beside withering the newly born tender leaves, resulting in re-sowing of cotton.

As cotton growers got better price of their produce this season, they appear more enthusiastic to increase the area under cotton in 2004-05 season.

If weather remains favourable during the season, Pakistan may harvest a bumper cotton crop of 12.0 million local bales next season.

In fact, a bumper cotton crop of over 12.0 million bales is direly needed as our domestic consumption of cotton is estimated around plus 13.0 million bales next season.

The quality aspect needs immediate attention as quality of our cotton is well below international standards.

The other day, the general body of Pakistan Cotton Ginners' Association discussed the matter of re-opening of Cotton Hedge Market under the Karachi Cotton Association and came to the conclusion that at present 'Forward Trading' in cotton is not in the interest of the ginners. So the PCGA should oppose the idea of restoration of Hedge Market.

Local cotton market remained depressed due to poor buying interest. When cricket matches were played last week between Pakistan and India, cotton traders were totally involved in the matches and cotton business could not be concluded. The Karachi Cotton Association fixed Spot Rate at Rs 2,975 / 37.324 kg ex-gin on Saturday.

Spinners are making cotton purchases without heating up prices. Spinners are of the view that quality of 80 percent of the unsold stocks is below average and low micronaire, while only 20 percent cotton stocks are of average quality. Better grade cotton was selling around Rs 2,950; average grade around Rs 2,800 - Rs 2,900; while low grade cotton was selling between Rs 2,500 and Rs 2,750 per mound. Trade circles think that on recovery of yarn prices, cotton prices may firm up.

In the context of the agreement reached and signed by the Saarc nations, known as South Asia Free Trade Agreement (Safta) in Islamabad in January, 2004, merits and demerits of trade between India and Pakistan are under discussion.

However, overwhelming idea is that bilateral trade would benefit Pakistan more than India.

HERE ARE SOME OF THE COMPARATIVE ECONOMIC INDICATORS OF PAKISTAN AND INDIA:
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Pakistan India
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Installed Ring Spindles (million)    9.73 36.01
Open-end Rotors Nos                 145,528 442,000
Shuttless Looms Nos                 23,000 7,955
Shuttle Looms (million)               0.225 1.650
Cotton production (2004)(m bales )
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10.00 (170-kg) 16.75 (170-kg)
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Cotton Yield kg/hectare 617 312
Cotton Consumption in 2004 (m bales)     12.5 17.0
Production of cotton yarn (000 Tons)        1,818 2,267
Production of cotton fabrics (000 tons)     1.125 1,804
Production of mmf (000 Tons)                  562 1,913
Interest Rate ( percent)                           6.69 12.14
(Power Tariff for Industry (Rs/kwh)           3.80 3.50
Exchange rate/dollar                             57.70 46.15
Foreign Exchange Reserves (bn $)        12.00 115.00
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New York cotton futures recovered more than 300 C/Pts both in May and July contracts. May contract closed at 67.92 cents and July at 69.12 cents per pound.

During the week ending March 11, US export sales were at 458,000 running bales, with China at 171,000 bales, Turkey 67,400, Mexico 41,900, Thailand 31,000 and Vietnam 28,600 running bales.

US total export sales of the season were reported at 11.867 million bales including 444,000 bales of US Pima, and shipments at 6.765 million bales. including 385,000 bales of US Pima cotton.

Thus, US has to make 1.933 million bales exports to meet the export target of 13.8 million bales this season.

Main share holders of US cotton this season are (million bales): China 4.409, Mexico 1.667, Turkey 1.160, Indonesia 0.756, Korean Republic 0.450, Canada 0.419, Pakistan 0.384, Thailand 0.342, Japan 0.322, Brazil 0.286, Thailand 0.262, India 0.177 and Bangladesh 0.140.

US domestic consumption of cotton in 2003-04 season is estimated around 6.3 million bales of 480-lb each.

This season, India is producing about 17.0 million 170-kg bales and consuming same amount of cotton. Its imports and exports are estimated at 900,000 local bales each.

Some reports indicate that price of viscose staple fibre (VSF) in international market is higher by 40 cents per kg.

Same report says that China is set on seizing every opportunity to import alternative fibres from world markets as the soaring cotton prices pushed it to mop up as much quantity of the fibers as possible.

Chinese spinning mills are feeling the pinch of their earlier cotton imports at very high prices and now want to cover their balance cotton requirements at comparatively lower rates to average out their purchase price for making spinning operation profitable.

Courtesy Business Recorder