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Beginning Jan-2020, raw cotton import bill will be one to watch. At least that is the consensus impression received with interactions from industry voices, which insist that that the cotton crop performance during the ongoing harvest season is worst in recent memory.

If consensus industry estimates are anything to go by, cotton production in the Aug-Dec picking seasons may at best peak close to 8 million bales, levels last seen in FY94. And this is still not the worst-case scenario, which predicts actual season arrivals even below 7.5 million bales. That would set the performance benchmark back by another nine years, easily worst in over three decades.

Nevertheless, numbers reported by Pakistan Cotton Ginner’s Association do not appear hardly as dismal, which place Aug-Nov four month seed cotton arrivals comfortably at 7.5 million bales. However, there is some confusion if that figure excludes weight of seed and wastage, which would put four-month fibre supply at just 5 million bales.

Even so, industry critics counter that even these numbers are overstated, as reporting of cotton bale weight was quietly changed from 226 kg per bale to 170 kg several years ago to window dress the declining production and fibre quality.

Amidst this confusion, the most interesting position taken appears to be one of Pakistan Central Cotton Committee, whose daily cotton report as of the time of this writing is adamant that total expected production for the season will be 10.8 million bales. That may be one-third short of the unrealistic target of 15 million bales but is only slightly shy of the five-year production average at 10.6 million bales.

An upward trend in cotton prices may serve as indicator of where the situation may be headed, but since cotton prices are pegged to the international market, movement in domestic prices still appear to be largely in line with international commodity market. On surface, four-month raw cotton import as reported by PBS has also declined by 33 percent between July-Oct, negating industry’s position that the crop may be facing a massive failure.

But that may be over optimistic. Historically, cotton import usually picks up in off-season beginning January, when the two percent duty on raw cotton import is periodically removed. Moreover, news reports suggest that rabi season sowing has already begun, indicating that raw cotton harvest period may be nearing its end.

Note that historically, December month harvest’s highest ever contribution to domestic supply has been no more than one-third of seasonal total. If the conservative estimate from ginner association is anything to go by, that would add just another 2.5 million bales to supply, with cotton production coming in at half of the target set by Federal Committee on Agriculture.

That means domestic demand will require import of between 7.5 – 8.5 million bales going by historical trends. Last year, import of 2.5 million bales cost the exchequer $0.7billion in incremental imports. If cotton import volume really does manage to grow by three times in FY20, incremental loss of foreign exchange would be in the vicinity of $1.5billions. Fingers crossed!