KARACHI (February 22 2010): Latest seed-cotton arrival figures indicate that finally cotton crop (2009-10 season) may hardly touch the level of 12.8 million running bales and may finish some where between 12.7 and 12.8 million bales against 11.34 million running bales in 2008-09 season - an increase of about 12.5 percent over last season.

Good enough, this season, our production has increased otherwise it was decreasing. Now, it has been established that our crop sowing, so the development and so the harvesting are becoming earlier year-on-year because of comparatively better yield, lesser chances of pest-attack and heavy rains.

This season (2009-10), lint cotton prices increased by more than 60 percent from the level of Rs 3,200 to 5,300 per 37.324 Kg in 3rd.week of February month ex-gin.

The increase in cotton / lint prices has been almost quite steep and continuous so almost all stakeholders including growers, ginners, exporters, stock-holders and spinners earned fabulous profits. Those traders who maintained long position earned high profits comparatively. This phenomenal behaviour on increase in cotton prices was also witnessed internationally. Apparently, it was mainly due to larger shortage of world cotton production against world cotton consumption. As such, increase in cotton areas in prominent cotton producing countries like China, US, India and Pakistan appear quite certain.

There are reports that cotton growers in Pakistan may get Bt cottonseed indigenously developed for commercial sowing from 2010-11 season. Field results of Bt cotton on experimental or commercial basis have shown very promising results and the growers are increasingly interested in sowing Bt cotton through the country. General shortage of irrigation water is anticipated in coming years but recent heavy rains and snow fall in North Western areas of Pakistan have increased water level in dams and so the availability more particularly for summer cotton crop.

The recent increase in temperature has encouraged the growers to start cotton sowing in extreme lower Sindh areas immediately for 2010-11 season. Cotton growers of Punjab also equally appear eager to commence sowing as early as possible in some areas of Central Punjab.

Cotton prices have maintained bullish trend in the last week and lint prices further gained ground to reach, not season's, but Pakistan history's record high level of Rs 5,300 per 37.324 Kg ex-gin. (=US Cents 80.0 a lb. F.O.B Karachi). As cotton prices started from Rs 3,200 and touched the level of Rs 5,300 last week, so earlier traders like growers and ginners earned lesser than stock-holders and spinners.

Although this season's cotton production was higher by 1.4 million bales than last season but cotton exporters and spinning mill buyers shared this increase almost equally. Last season, stock of unsold cotton was 1.485 million bales while this season it was 0.612 million bales - about 59 percent less than last season. Now, some 0.7 million bales would be available to buyers till coming June month when new crop is expected. There are fears of closure or cut in spinning capacity due to tight supply of raw cotton. The spinning mills are pressing the foreign sellers to ensure timely cotton imports. The pace of cotton imports from India is accelerating as Indian shipments reach Pakistan in shortest period.

On cotton export from, there appears some anomalies in figures. The cotton exporters are reported to have registered 954,574 bales (Up to 07-02-10) as their export sales with Trade Development Authority of Pakistan and have shipped 721,595 bales (07-02-10) against these sales but are reported to have purchased 794,348 bales from ginning factories. Beside, the cotton exporters also purchased large amount of old crop cotton from Trading Corporation of Pakistan stocks which were also exported. The difference between export sales (954,574 bales) and shipments (721,595 bales) is 232,979 bales. What should one understand is that either there may defaults in shipments or on the fear of possible restriction or ban on cotton exports, some of the cotton exporters have registered advance sales.

There is a confusion some where but in the interest of the trade, these figures should be reconciled but it would remain as it is. Cotton futures on New York board having taken rebound from 68 level have improved by US Cents 10 to touch the level of 78 cents. Cotton prices in the local market are also following international market trends. Pakistan's economy is being effected negatively doubly; one by the increasing prices of commodities in the international market and second by decreasing value of Pakistan's currency against most of the prominent other currencies. Continuing deterioration in the performance of Pakistan economy is cementing the way of pledging our national strategic assets by foreign financial and political powers.

This season, cotton prices started from low of Rs 3,200 per maund and touched season's high of Rs 5,300. May be, cotton prices gain further a few hundred rupees in next couple of months. Thus new season may take start from record high level of prices and may follow the bearish path to reach low at the end of the season on grounds of possibility of larger production, high cost of production, unstable and deteriorating domestic political, business, law and order and security conditions in the country. However, it appears quite difficult to precisely predict cotton prices in the next cotton season in view of possibility of fast changes in commodity, finance, economic and other markets.

Copyright Business Recorder, 2010