Last week, it rained in many cotton stations in Punjab and Sindh when cotton sowing was in full swing. These rains were generally accompanied by gusty winds, which disturbed cotton sowing. Some areas of lower and central Sindh were in the grip of high temperature--sometimes up to 47 degrees Celsius--which tends to whither the tender leaves.
There were reports of re-sowing in some areas due to rains. Weather appeared quite inconsistent and was not cotton-friendly.
This season, irrigation water supply position is quite favourable and growers appear more enthusiastic in sowing cotton. However, by the end of first fortnight of June, sowing in Pakistan would almost be completed.
Anyhow, the government and the concerned agencies and growers should make it a point that extraordinary precautionary and spot fighting measures are taken to avoid effect of adverse weather conditions and fight the pest/boll worm attack effectively.
By the close of May, some 70-80 percent sowing may be completed. Because of satisfactory irrigation water supply position, sowing is likely to be completed in shorter period than 2004-05 season.
Some bargains of new crop lint cotton have also been reported in lower Sindh at around Rs 2,300 to Rs 2.350 per maund ex-gin for August delivery. Unsold lint cotton stocks with the ginners have been reduced to below 50,000 bales, while Trading Corporation of Pakistan (TCP) is aggressively selling its cotton stocks more to local spinners than foreign merchants. Although the TCP had promised with All Pakistan Textile Mills Association (Aptma) to sell its cotton at the best bid, be it from local spinners or from foreign buyers, but in the last Tender it sold 5,000 bales to a foreign company at 45.11 cents/lb FOB Karachi, and in the local sale at a higher price of Rs 2,300 per maund, ex-warehouse. The real difference between the two prices came to Rs 200 per maund.
Aptma has complained about this undue favour to foreign merchants to the Prime Minister who also heard Aptma and TCP versions.
TCP is floating Cotton Sale Tender every week and opening the bids every on Saturday. Last Saturday, among the four bids for total 20,000 bales, the best bid was at 44.10 cents/lb FOB Karachi and TCP has given counter at 45.50 cents. The best bid in local sale was Rs 2,330 per maund for 1000 bales from Bahawalpur warehouse which was accepted by the TCP, while it gave improved counter-offers between Rs 2,280 and Rs 2,300 for cotton from various warehouses. The equivalent of Rs 2,330 ex-warehouse is 47.00 cents, while on FOB Karachi basis it should be 49.00 cents whereas TCP is offering at 45.50 cents ie loss of 3.50 cents to local spinners.
Against TCP's total sale of some 200,000 to 240,000 bales, physical lifting percentage is very low. The TCP should ensure safety and security of cotton stocks by taking necessary measures against damage/loss due to rains or possible fire.
The TCP has not cleared the allegations of some ginners that it had given undue favour to a few ginners by evaluating their 13,000 bales in Grade II in Akramabad (Rahimyar Khan) warehouse where 40,000 bales, worth Rs 400 million, were burnt. Out of 1.3 million bales in Karachi only 1300 bales are reported to have been evaluated in Grade II. The TCP should issue to the press the names of the parties whose cotton was evaluated as Grade II to make the matter transparent.
Cotton prices in New York Futures Market did not show any performance. Very little fluctuation was seen. July contact closed at 50.43 cents and October finished at 51.98 cents per pound, marginally improving by C/Pts 38 and 23 respectively.
Slackness in yarn prices also influenced cotton market. Cotton planting in China, US, India, Pakistan and CIS countries is in progress but weather conditions in some of the countries are not as conducive as were reported last year. In China, new crop sowing area is estimated to be lower by 10-12 percent this season. World cotton production in 2005-06 season is estimated around 103 million bales and mill-use at 109 million bales.
It has been admitted that due to very favourable weather conditions, the world harvested a record high crop production of some 119 million bales and repetition of crop performance in 2005-06 season appears quite difficult.
US and European Union countries appear quite disturbed on tremendously increasing imports of textile and apparel specially from China as their trade bodies are exerting pressure on their governments to take necessary measures for the protection of local industries as WTO rules reportedly are not against such safety measures. The US is pressing China to adjust its currency to its real values. The economic row between US / EU and China has led the world markets offload their long positions. The clouds of economic uncertainty may continue further till some definite and encouraging steps are taken for the promotion of world trade.
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