Last week, intensity of heat in cotton areas was reduced which impacted positively on development of cotton plants. Process of cotton planting has almost been completed barring a small percentage in late sowing areas. In some cotton areas, re-sowing of cotton has been reported due to withering of tender leaves because of high temperature.
It appears a strange phenomena that in early sown areas of Sindh province cotton harvesting starts at the time when planting in late sowing areas of Punjab province has not been completed. Reportedly, cotton plants in early sown areas in central Punjab may attain maturity even earlier than lower Sindh. Monsoon rains are expected to enter into Sindh in week's time. Monsoon rains are showing violence in Northern Indian States, In Bangladesh and China.
However, literally. cotton picking has started in lower Sindh but ginning factories may start receiving new crop seed-cotton from next month. Last week, no bargain in new crop was reported. The sellers are watching the crop development position very minutely. Last sale of new crop lint cotton was reported around Rs 2,500 maund of 37.3245 Kg ex-gin.
The increase in cotton prices in the international market would have positive effect on local lint prices, stocks of unsold cotton with the ginners is estimated around 100,000 bales and sellers appear reluctant in selling cotton under pressure.
Better grade cotton of running season is quoted no less than Rs 2,700 per maund ex-gin and stray bargains are materialising in left over cotton. Yarn prices have also started improving, encouraging the spinners to buy cotton. The government has not entertained as yet the requests of the textile sector for relief in bank borrowing charges, temporary remission of some utilities and social sectors levies and relief in other local taxes.
In the coming fortnights, the behaviour of new crop development and arrivals would primarily dictate cotton prices. Carry-over stocks mainly with the spinners by the end of this season are estimated around 4.1 million 480 lb bales (Equivalent to 5.25 million 170-Kg bales) sufficient for about four months mill requirements.
It means that the local spinners may not show aggressiveness in cotton buying in early cotton season. This situation may depress cotton prices o some extent during the early part of the season. However, recent trend of increase in cotton prices in the international market may help the price in maintaining steady position. It is a matter of only four to six weeks when clear market picture would emerge.
The recent surge in US cotton prices and in New York cotton futures indicate looking for the cotton prices to attain the new benchmark of US Cents 60. New York cotton futures are steadily increasing and retiring contract July, 07 last week closed at 54.92 while new crop October, 07 contract finished at 57.90 /lb. By 7th June, 07, US managed season's total export sales of 13,515,700 running bales including 749,800 bales US Pima cotton and has shipped 9,283,600 running bales including 648,400 bales of US Pima cotton.
PROMINENT BUYERS OF US COTTON ARE: (In thousand bales) China 3,975, Turkey 2,241, Mexico 1,679, Indonesia 1,046, Pakistan 646, Taiwan 525, Thailand 481, Korea Rep. 387, Hong Kong 289 and Japan 284. These 10 top buyers of US cotton have more than 85 % of total US cotton export sales. New cotton crop sowing in US has been completed and condition of crop is reported satisfactory. However, in China and India, sowing is still going on and may be completed by mid-July.
COMMENTS:
1.India will be the second largest cotton producer replacing USA after China. It is already second largest in cotton consumption.
2. US cotton production will be down by 2.8 million bales from 2006-2007 season.
3. US mill-use at 4.4 million bales will be the lowest in more than 100 years.
4. Chinese cotton production will almost be the same as in 2006-2007 but its mill- use will increase by 4 million bales to 54 million bales.
5. China's beginning stocks will be maintained.
6. China's imports will be very close to US total production.
7. Pakistan may be the third largest importer of cotton after China and Turkey.
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2007-08 World Cotton Position (Mln bales of 480-lbs)
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Country Beg. Stocks Prod. Imports Mill-use Exports End Stocks
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World 56.4 115.9 42.1 127.4 41.6 51.2
USA 9.8 18.8 0.0 4.4 17.5 6.7
China 14.6 31.0 17.0 54.0 0.1 14.5
Pakistan 4.1 10.4 2.3 12.4 0.2 4.2
India 7.4 22.5 0.4 20.0 3.5 6.8
Central Asia 2.2 8.1 0.0 1.4 6.8 2.1
Australia 0.9 1.0 0.0 0.1 1.3 0.6
Brazil 5.5 6.0 0.3 4.1 2.7 4.9
Indonesia 0.4 0.0 2.3 2.2 0.0 0.4
Mexico 1.1 0.7 1.5 2.1 0.3 1.0
Turkey 2.0 3.8 3.4 7.3 0.1 1.8
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