AIRLINK 78.55 Decreased By ▼ -0.06 (-0.08%)
BOP 4.77 Increased By ▲ 0.12 (2.58%)
CNERGY 4.16 Increased By ▲ 0.13 (3.23%)
DFML 39.29 Increased By ▲ 2.81 (7.7%)
DGKC 95.65 Increased By ▲ 7.40 (8.39%)
FCCL 24.16 Increased By ▲ 1.87 (8.39%)
FFBL 32.77 Increased By ▲ 2.62 (8.69%)
FFL 9.37 Increased By ▲ 0.19 (2.07%)
GGL 10.15 Increased By ▲ 0.23 (2.32%)
HASCOL 6.54 Increased By ▲ 0.43 (7.04%)
HBL 109.50 Increased By ▲ 4.50 (4.29%)
HUBC 145.01 Increased By ▲ 7.51 (5.46%)
HUMNL 10.73 Increased By ▲ 0.08 (0.75%)
KEL 4.73 Increased By ▲ 0.09 (1.94%)
KOSM 4.26 Increased By ▲ 0.26 (6.5%)
MLCF 39.40 Increased By ▲ 2.27 (6.11%)
OGDC 129.25 Increased By ▲ 10.06 (8.44%)
PAEL 25.87 Increased By ▲ 1.89 (7.88%)
PIBTL 6.34 Increased By ▲ 0.27 (4.45%)
PPL 122.70 Increased By ▲ 8.65 (7.58%)
PRL 24.35 Increased By ▲ 1.18 (5.09%)
PTC 12.99 Increased By ▲ 0.79 (6.48%)
SEARL 61.18 Increased By ▲ 2.13 (3.61%)
SNGP 65.20 Increased By ▲ 3.22 (5.2%)
SSGC 9.89 Increased By ▲ 0.13 (1.33%)
TELE 7.86 Increased By ▲ 0.19 (2.48%)
TPLP 9.85 Increased By ▲ 0.37 (3.9%)
TRG 64.50 Increased By ▲ 0.78 (1.22%)
UNITY 26.99 Increased By ▲ 0.14 (0.52%)
WTL 1.32 Increased By ▲ 0.02 (1.54%)
BR100 7,977 Increased By 398.8 (5.26%)
BR30 25,602 Increased By 1383.8 (5.71%)
KSE100 76,208 Increased By 3410.7 (4.69%)
KSE30 24,438 Increased By 1225 (5.28%)

Yesterday, Pakistan Cotton Ginners Association (PCGA) released its fortnightly report card, pressing the brakes on premature celebrations hailing victory over cotton output. Yes, arrivals to-date are higher by 70 percent over last year, yet they remain second- lowest in three decades. Don’t let low-base effect fool you!

The latest fortnightly report lends credence to BR Research’s hypothesis that cotton arrivals in the ongoing season are witnessing early peaking, possibly an outcome of sowing window moving from March to February in many cotton sowing areas of northern Sindh.

Historically, up to 80 percent of total arrivals during each season are received at ginning factories by mid-November. At this rate, cumulative arrivals for the year shall clock in at 8.6 million bales (170kg). As GoP applies 10 – 15 percent adjustment to PCGA estimates to account for disappearances and under reporting, revised GoP forecast of 9.4 million bales output may remain unchanged. However, that would take full year increase up by only one-third, and second lowest in quarter century.

So what happened to earlier jubilations? Effectively, Sindh received up to 2.35 million bales by end-September, against 5-year average of 1.85 million bales. Similar trend was observed in Punjab, which received 1.5 million bales by end-September against 5-year average of 1.25 million bales. Remember, on nationwide basis, historically only 33 percent arrivals are witnessed by end-September, which on annualized basis meant that if the momentum had maintained, total seasonal output would have clocked in around 11.3 million bales.

However, it is now becoming increasingly clear that lower area cultivated meant that much of the cotton sown had already been picked by September close. On national basis, cotton arrivals as reported by PCGA are neatly following in the footsteps of FY20 arrivals, which as per PCGA climbed up to 8.57 million bales on cumulative basis. Higher local cotton prices, up by nearly 15 percent in the past 2 weeks, also validate the theory that the growth momentum has now broken.

Since cotton is a 6-month crop, most growers may now be in a haste to clear the crop in the next two weeks, to free the field up for wheat sowing. That will once again take the supply gap for the year to at least 5 million bales, which shall revive pressure on import bill projections.

But it remains unanswered as to what precipitated early arrivals this season. Although BR Research was the first to raise this hypothesis, it was mostly based on week-on-week numbers. Although early sowing did take place in some areas, the differential is too large to be explained by early sowing alone – unless of course the practice has been adopted on national level and not just in northern Sindh.

Second, the average bale weight also remains an unknown, as PCGA and allied associations do not disclose bale weight. Private sector has previously been alleged to use a non-standardized bale weight of 155kg rather than 170kg to increase the number of bales. Allegedly, the practice helps in raising the amount of financing that may be availed against cotton pledge.

If correct, this could mean that the total quantity produced in the country is actually much lower (when measured in metric tons).

However, it would still not help resolve the discrepancy between GoP and private sector estimates, as figures released by GoP are usually much higher, when in fact “fiddling with bale weight” theory suggests the opposite should be true.

While the sharp recovery in cotton output over last year is indeed a welcome sign, it raises more questions over the credibility of cotton crop estimates – by both public and private sector organizations – than it resolves.

Although it may not be possible for GoP to fix chronic issues pertaining to seed quality and R&D in one season, with some effort, surely it can manage to get the counting right!


Comments are closed.