Cotton prices appear depressed on higher arrivals and increased deliveries

Cotton prices appear depressed on higher arrivals and increased deliveries

Lastly and finally, the tyrant monsoon season has expired and there has been no rains in the country in the last fortnight. The Government of Pakistan and non-governmental organizations are engaged in surveying the loss of agricultural crops, human life, property, livestock, housing and other irrigational and communicational infrastructure facilities which may run into billions of rupees excepting loss of human lives. Last year, the damage was intensive but this year it was extensive and somewhere intensive also. This year, the loss to human life and livestock appears larger than last year. Last year, loss was due to floods and this year more by unprecedented rains and less by floods. This time, the loss to cotton crop only in terms of amount of seed cotton has been estimated equivalent of over 3.0 million bales costing around Rs.120 billions. As per present position, rain-flood water is still standing in fields inundating cotton plants as such there is no question of fresh picking till the clearance of fields. Seed-cotton which had arrived in ginning factories before start of heavy rains is being ginned after drying to possible extent.  However, field situation is improving and stray cotton picking has started in fields cleared of rain water. 

The much awaited cotton arrival and disposal report of the Pakistan Cotton Ginners’ Association (PCGA) has been released on the 3^rd. October, 11. Accordingly, this report covers cotton activities upto 30^th September-11 and figures are mentioned as under:  

Period                       Arrivals in Sindh      Arrivals in Punjab          Total arrivals

Up to 30^th Sept-11         911,653 bales             1,887,120 bales              2,798,773 bales

Up to 30^th Sept,10       1,445,918  “                  1,171,400   “                   2,617,318    “

Variation  (%age)          -36.95                         +61.10                              +6.93

                                         

In my last cotton report (25^th Sept-11), total seed-cotton arrivals up to 30^th September-11, was estimated between 2.8 and 3.0 million bales.  The trend of arrivals in Punjab indicates a bumper cotton crop which may easily cross the psychological level of 10 million bales and may go up to 11 million bales. The trend of arrivals in Sindh shows that rain-floods have substantially damaged cotton crop and on the basis of field reports total Sindh crop may be between 2.0 and 2.5 million bales out of 4.7 – 5.0 million bales initially estimated. Thus, on national basis, we estimate cotton crop between 12.0 – 13.0 million bales. With the passage of time, the crop figures would become more specific and closer to reality.  The impact of latest cotton arrival data is considered to be tilting towards easiness.  This time, number of ginning factories in operation was high at 765 while last season it was 500 – the increase is 53%. This trend shows that ginners were expecting a real bumper cotton crop of 16.0 million bales this season and they opted to start ginning operations somewhat earlier than last season. Up to date seed cotton arrivals in four main districts of Sanghar, Mirpur Khas, Hyderabad and Nawab Shah of Lower Sindh,  severely affected by rains and floods, have been averagely decreased by 50.75 %.  These four districts produced 70 % of total crop and by applying the same percentage this season, these four districts lost some 2.0 million bales and about half a millions bales are estimated to have been lost other districts, making total loss at 2.5 million bales. Another equally disturbing aspect of the present situation is that sowing of wheat crop may be missed in these rain-flood affected districts of Lower Sindh  where standing water is a great threat. Spinning mills cotton purchasing from ginneries this season is about 76 % while it was 74 % last year. Domestic exporters are reported to have procured some 50% of their export sales which are estimated around 120,000 bales.  Of course, the exporters who had sold cotton at 80-85 cents a pound level and were expecting local market to match export parity, are looking for some ways to get out of this crisis. Most of the export sales are reported for China. 

New York cotton future market is moving in narrow margin and is now around 100 Cents a pound. The financial crisis in Euro zone countries is deepening whereas in USA debt crisis is adversely affecting its economy. Japan is facing drastic fall in its exports due to over-valuation of its currency against other major currencies. China is feeling the burnt of depression in European and US markets which are main importers of Chinese textile and other products. Prices of international commodities are under selling pressure, Gold is selling at US $ 1,662 per ounce and crude oil at US $ 76 per barrel, Main stock companies indices such as S&P 500, Dow Indu and Nasdaq are running low. International merchants are engaged in settlement of their last years high rate cotton bargains and the buyers have not as yet returned to normal business working. China has slackened its cotton activities because of slow off-take at European retail stores in view of continuing recession. Cotton activities have slowed down in Bangladesh again because of the same reason of slow sales in European stores. Due to instable financial and economic conditions in Europe and USA, most of the  commodity markets  including cotton are looking for specific direction in medium long term.

Cotton prices in Pakistan are quoted between Rs.5,00 and 6,400 per maund of 37.324 Kg ex-gin depending on the quality of lint cotton. Seed-cotton arrival is picking up specially in Punjab and prices may lose some ground on selling pressure. Yarn market is reported to be dull on the face slow off=take in local as well as exports.    

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Cotton crop estimates may be lowered on heavy loss by rains and floods

S.A.AZIZ SHAH

Cotton Analyst & Consultant

Cotton crop estimates may be lowered on heavy loss by rains and floods

                 

Although, the chain of Monsoon rains has broken and last week there were no significant rains reported from any cotton areas of Punjab or Sindh provinces but the alarming situation in Sindh is that the standing water in the cotton crop which partly consist of rain water and partly from breached water-logged canals may not be cleared from fields before one to two months. The standing water is proving to be deadly for cotton plants as it is becoming acidic and poisonous by dissolving health injurious chemicals and the hope of recovery is dying. The cotton bolls on plants which were above water level have opened while those under water have turned dead. Fruiting on cotton plants starts from bottom to upwards so all bolls under water have gone dead.  Disturbing field reports indicate fear of almost total loss of cotton crop in most of the water-ravaged areas of Sindh province. As such, the estimate of damage to crop would be going up placing the size of cotton crop in Sindh close to 2.5 million bales plus 10.0 million bales of Punjab to make a national crop of 12.5 million bales.  The Pakistan Cotton Ginners’ Association (PCGA) has not as yet issued any crop arrival report which may guide the cotton community in forming a somewhat realistic idea about size of crop. However, concerned quarters estimate total arrival of seed cotton as on 1^st. October-11 between 2.8 and 3.0 million running bales of which Sindh share may be around 1.2 million bales.  Another factor disturbing the cotton trade in general and exporters / spinners in particular is that of quality of cotton in rain-damaged areas. All cotton  is stored or heaped either in the open yards of ginning factories or cotton fields. Generally, all seed-cotton is heaped on open bricked platforms in factory yards which has been severely damaged by rain water, seed-cotton lying stored in covered Kutcha warehouses has also been damaged but less severely and cotton plants have been damaged.  This season, monsoon rains covered extensively most of the South Asian countries but also intensively only Pakistan. When we talk to cotton people of India about heavy damage to Pakistan cotton crop by torrential rains, they say that the rains have greatly benefited their all summer crops including cotton, rice and sugarcane because their crops are on RAM BHAROSA i.e  almost entirely rain dependent but Pakistan completely irrigate their crops with canal water and rains provide extra water which, if heavy, then damages their crops severely. Even rice crop in Bangladesh is reported to be fine. The aspect of quality has amply been manifested in price of seed-cotton and lint cotton alike. Rain damaged cotton is selling at a discount of Rs.1,000-1400 per maund from clear normal cotton. As such, lint cotton traded last week lowest at Rs.Rs. 4,800 per maund  and fine lot at Rs.6,200 per maund of 37.324 Kg ex-gin (ex-gin price between US Cents 66.66 and 86.11 a pound of lint cotton + FOB expenses 6 to 7 cents).  The lint cotton buyers whether spinners or exporters appeared worried about quality of lint cotton as they see damaged cotton being mixed with better quality. It is better not to mix damaged cotton with sound cotton otherwise mixed lots would be discounted heavily..

India is expecting a bumper crop of 36.10 million 170-Kg bales against their last year’s cotton production of 33.4 million bales. As such, India may have exportable surplus of over 8.0 million bales of which about 90% would go to top three cotton importing countries bordering India viz; China, Bangladesh and Pakistan. According to a press report, a large number of spinning – textile mills located in the south of India have lost their edge on local cotton purchases as total transportation cost from ginning factories in Gujrat, Maharashtra what to speak of Haryana and Punjab area to spinning mills in South India is higher than transportation cost to China. Inland trucking charges in India are high while ship freight for China is very low.  The same reports says that India, instead of moving into value addition i.e. increasing exports of cloth and garments, has unfortunately moved in reverse to export of raw cotton. Sanjay K. Jain, the author of this report complained that Indian Government did nothing to save its textile industry from the ill-effects of US recession of late 2007 and early 2008. On the contrary, Indian Government adopted such policies viz: Increase of Minimum Support Price (MSP) by 40 %, introduction of 5% incentives on export of raw cotton, reduction in duty-drawback rates and reduction in removal of interest subvention by 2% which worked against the interests of their domestic spinning industry.     

 China: China achieved all its production and export targets in 2010 being the end of their 11^th five year plan ( 2006-2010) and 2011 is the start of 12^th  5-year plan ( 2011-2015). India and China  have been strictly and regularly planning their 5-year plans and working on it religiously to achieve their goal targets. They have very successfully shaped their economies but Pakistan lost its track after three 5-year plans and is now groping in the dark to find any direction of success. China improved its textile export performance in 2010 to return to pre-crisis level. In 2010, China exported textile and garments worth of US$ 206.5 billions, increase being 75.72 % from 2005. Similarly the profit margins of textile sector improved 1.91 times from 2005 to 5.44% in 2010.  The prominent economic factors which help their economy attain new high targets are mentioned as: competitive advantage of textile industry, sizable growth in domestic demand, industrial upgrading and innovation and textile friendly policies. China has 120 million Ring Spindles, 2.32 million of rotor spinning machines, 1.26 millions of looms and its spinning capacity has reportedly exceeded 50 % of world total spinning capacity. China has 12,000 cotton textile enterprises.  In 2010, China produced 27.17 million tons of yarn and 80 billions of yards of cloth, according to National Bureau of statistics.  China has 12,000 cotton textile enterprises of which about top 100 units share 30 % of the total textile industry and these 100 companies have their own brands which enjoy very good reputation both in domestic and foreign markets.

Bangladesh: Being the second largest cotton importing country after China, Bangladesh imports over 3.8 million 480-lb bales mostly from India, Uzbekistan and US to meet its increasing demand of raw cotton around 4.0 million bales per annum. Total number of mills is over 350 and spindles over 7.6 millions. Domestic cotton production is around 2% of its domestic consumption. Domestic weaving and knitting sector has total requirements of yarn at 940,000 M/tons in 2010-11 including 200,000 tons of imported yarn mostly from India) and fabric consumption is 6.2 billion meters including 2.3 billion meters of imported fabric mostly from China ( 2.4 billion meters or 38.70 % for domestic sector and 3.8 billion meters or 61.30 % for export oriented Ready Made Garment sector).  The annual growth of RMG sector has been very impressive. In 2001-02, total RMG export was at US $ 4.584 billions which increased to US $ 15 billions in 2010-11- the increase is more than 200% in ten years with 10% straight average. Against this, Pakistan’s export of RMG is around US $ 5.5 billions in 2010-11.  We have our own cotton crop equal to more than 80 % of our domestic requirements, we are largely surplus in yarn consumption and also in fabric consumption but RMG exports is only around 36 % of total textile exports whereas RMG exports of Bangladesh is around 80%.             

By thr end of last week, cotton prices decreased heavily on reports of heavy fall in New York futures and commodity prices especially the prices crude oil and gold. Also, off-take of yarn has slowed down beside fall in yarn prices. The alarming financial-cum- economic situation in Europe and US appear to be posing a serious threat to global economy. Beside, US-Pakistan relations have recently deteriorated in the backdrop of attack on Kabul and any action including some sort of attack by Nato forces stationed in Afghanistan on Pakistan’s territory or borders is not ruled out.  Pakistan’s rupee is losing its value against US Dollar and in private trading it has touched the ever highest level of Rs.89 a Dollar. Since Pakistan is import-oriented country whose imports are over 57% more than its exports so devaluation of Pak currency would cost import high and it would very adversely affect our foreign debt position. The impact of the damage to our crops by recent heavy rains and floods, poor economic conditions and deteriorating US-Pak relations may be very serious on our economy as well as on the country.

     

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Rainy season extends its stay in Pakistan for a fortnight

S.A.AZIZ SHAH
url :azizshah.yolasite.com

Rainy season extends its stay in Pakistan for a fortnight

Generally, monsoon season ends with the end of August month every year followed by attack  of  pest and diseases on cotton crop in September month but this time, monsoon season has extended  its operation by 3 to 4 weeks till the end of September month. This time, Sindh has been the prey of heavy monsoon rains  and floods which lashed and inundated vast areas in Sindh normally making entry into Sindh province from Indian states of Rajasthan and Maharashtra bording Simdh. These rains have damaged cotton crops more of adjoining districts of Sanghar, Badin, Mirpur Khas and Tharparker. Cotton crop in  other districts of Sindh like Hyderabad, Tando Allah Yar, Matiari. Nawabsha, Naushero Feroze and Khairpur has also been damaged extensively. As such, total damage to cotton crop in Sindh is estimated equivalent between 1.8 and 2.0 million bales of lint cotton. Official estimates put cotton crop damage worth of Rs.77 billlions. (2.0 million bales x 13.0 Manunds of seed-cotton required for one bale of cotton=26.0 million maunds x Rs.3,000 per maund = Rs.78 billions). Against hope, some cotton areas of lower Sindh comprising of Sanghar, Mir Pur Khas, Tando Allah Yar and Tharparkar have received moderate rains also in the last week. The sky remained partly overcast with clouds and the standing water in fields and roadways did not recede significantly. Practically, towns in many flood affected districts are locked with rain water and Transportation out side towns is standstill.  livestock is under threat of diseases and perhaps death due to poor local conditions. . There are increasing fears among the agriculture community that if the rain water may not be cleared from fields specially in low lying areas which may not only damage cotton crop totally but the growers may miss next wheat cultivation.   However, cotton areas of Central Punjab are reported to have received moderate rains during the last week and cotton crop position is reported better which may produce seed-cotton equivalent to 10 million bales. Thus national cotton production is presently estimated between 12.5 and 13.0 million bales in 2011-12. However, there is still forecast for the rains in cotton areas of Central and Southern Punjab in next week.  

The heavy rains in Sindh have severely damaged quality of seed-cotton lying stored either in factory premises or fields or on stalks. Seed-cotton prices are reported ranging from Rs.1,700 to Rs.2,500 per 40 Kgs ex-gin. Some of the factories in Sanghar and other such districts which were holding stocks of seed-cotton in their factories have resumed ginning operations and some ginning factories opted to sell seed-cotton to the buyers of upper Sindh or Punjab where the damaged seed-cotton could be ginned with better quality seed-cotton. The best option is to gin damaged cotton separately and not blend it with better quality cotton. Instead of producing small number of low quality cotton bales,   the ginners mix damaged cotton with good cotton and produce large number of bales from mixed cotton which attract heavy discount in price. Grade and high moisture contents are the main quality damage segments. To some extent high moisture contents in lint cotton increase micronaire values which is also undesirable element. However, a reasonably clear picture of crop size and its quality may not be available before middle of October month.  

On the last trading day of the last week, cotton prices dropped on reports of increased arrival and slack buying interests. Lint price was last quoted around Rs.6,000 per maund for Sindh style, of course on lower quality consideration while better grade cotton of Upper Sindh and Punjab was selling around Rs.7,200 per maund of 37.324 Kg ex-gin. Similarly seed-cotton prices ranged between Rs. 1,700 and Rs. 2,500 per bmaund of 40 Kg ex-gin. on quality consideration. Pakistan’s exporters are understood to have sold some 125,000 bales mostly between US Cents 75 and 90 against which  50% cotton has been covered.  Generally, exporters ship Sindh style cotton being comparatively cheaper and cost-effective. This time, the exporters would be in difficult situation as the chances of getting better quality cotton from Sindh area appear quite remote  and prices of Punjab lint cotton would be higher beyond their export parity. One cotton importer of Bangladesh said that quality aspect would be given top priority and the importers might prefer pre-shipment quality inspection in Pakistan to avoid receipt of poor quality shipments.  The mixing of damaged seed-cotton with good quality seed-cotton by the ginners would complicate quality problem for the selectors and inspectors. Local spinning mills also appear quite worried on deterioration of cotton quality in Sindh due to rains and floods. 

New York cotton futures have reacted bearishly and future contracts, October-11 and December-11 drifted down by US Cents 1.54 and 110 to settle at 109.08 and 110.52 respectively.  In US and European union, the rift between US Dollar and Euro is going on for winning the trade of the area. Retail business in textile and apparels in US and EU superstores has reportedly been under pressure which has reduced its buying. Resultantly, the textile production in T. & A supplying countries like China and other South Asian countries has been reduced considerably.  The abnormally high price of lint cotton last year up to US $ 2.50 a pound of lint cotton have shocked textile and apparel producing countries and they have not so far recovered from heavy losses of last year. It may take a couple of months for cotton consuming countries of the East to come to the normal situation.

Situation in yarn and textile market in Pakistan appear to be in doldrums. Industrial and commercial conditions in Pakistan appear poor in view of acute power shortage, deteriorating Law and Order situation, war against terrorism, heavy damage to economy by recent heavy rains and floods,  Pakistan’s Rupee currency losing its value against US Dollar although US Dollar is losing its value against currencies of other prominent countries, increasing  financial burden on country’s resources due to heavy foreign loans and instable political situation and performance of our economy may be poor  this year. In view of the situation, our domestic consumption of cotton is feared quite around 13.0 million bales.

Lint prices in the local market may not be too high as India next door to ua has large cotton  export surplus of some 7 to 8 million bales in 2011-12 season and export prices may be under selling pressure in view of reduced cotton consumption in prominent cotton consuming countries globally. Lint cotton prices may work in the range of Cents 90 to 110 per lb in the season.          

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Prospects for bumper cotton crop appear bleak on devastating rains, floods

 S A AZIZ SHAH 
url: azizshah.yolasite.com

Prospects for bumper cotton crop appear bleak on devastating rains, floods

KARACHI: Perhaps, last week was the peak of monsoon rains across the cotton belts of Pakistan especially Lower Sindh where cotton fields were flooded with rain water.

Breaches in rivers and river branches have been reported from different cotton areas of Sindh which have inundated agriculture crops including that of cotton. On the 7th and 8th of this month, Lower Sindh districts of Sanghar, Hyderabad, Nawabshah and Mirpurkhas received unprecedented heavy rains almost continuously for some 25-hours and severely damaged crops.

Sanghar being the largest cotton producing district (about 1.5-1.8 million bales) in Pakistan, was severely hit by these rains. In only 24 hours, some of the places received rains up to 360 millimeters. Even on last Saturday, some of the cotton areas of Lower Sindh received moderate to heavy rains. The Met. Office is reported to have forecast for another system following these rains. Rains from Punjab cotton areas have also been reported last week. The recent unprecedented rains and river breaches in Sindh specially in Lower Sindh are also producing devastating floods which is likely to damage cotton crop severely.

The process of monsoon rains and floods is going on and may be extended to another fortnight or so. As such the reliable estimates for cotton damage may not be possible till middle of next month. One report mentioned that the standing crops on 1.5 million acres have been totally damaged of which cotton may be on 1.0 million acres, producing some 2.0 million cotton bales. The heavy rains and floods have badly affected all cotton areas of Sindh except Sukkur and Ghotki districts and cotton production estimates in rain affected areas was more than 4.0 million bales. If we consider cotton damage to 50 percent in these area then it also comes to 2.0 million bales. As such, provisional damage to cotton crop in Sindh may be taken as of 2.0 million local weight bales and 1.0 million bales loss in Punjab totaling 3.0 million bales in Pakistan out of 15.5 million bales production estimates before rains, putting fresh production estimates around 12.5 million bales.

Lint prices in the local market appreciated from pre-Eid vacation level (27th -29th August) from Rs 5,600 (Sindh style) to Rs 7,300 per maund of 37.324 Kg ex-gin on Saturday, the 10th September, 2011. The rise in lint prices is due to tight supply of cotton as recent rains have forced ginning factories in Sindh to suspend their operations. There may be further increase in cotton prices even up to Rs 8,000 level as some of the spinning mills running hand-to-mouth do not want to close down their operations. The quality of cotton has been damaged by rains. Pakistani exporters are understood to have sold some more than 120,000 bales of new crop to different countries like China, Indonesia, Bangladesh, Thailand and Vietnam of this about 50 percent has been registered by the end of August month with the concerned Government authorities.

The recent hike in cotton prices has confused those exporters who have not covered their export sales from local market. If the rains persist for a longer time, the local cotton prices may register further increase in view of tight cotton supply. Yarn prices have also firmed up in view of its tight supply and the spinners are forced to buy cotton at higher rates but perhaps not more than this level of prices as cotton imports may become quite viable at this price level.

Indian Commerce Ministry on last Friday indicated their intention of allowing export of 2011-12 crop raw cotton on Open General License (OGL) with no quantitative restrictions from coming October month. India is the second largest exporter of raw cotton in the world after US. In 2011-12 season, it is expected to produce 27.0 million 480-lb bales (=34.5 million 375-lb bales) consuming domestically 20.5 million 480-lb bales (26.25 million 375-lb bales) and exporting 5.0 million 480-lb bales (6.5 million 375-lb bales). US is expected to produce 16.6 million 480-lb bales, mills-use at 3.8 million bales exports at 12.3 million bales. China is expected to produce 33.0 million 480-lb bales, consume locally 46.0 million bales and import 15.0 million bales.

Mill-use estimates in 2011-12 season in Pakistan may be taken as 13.0 million bales in view of adverse conditions prevailing in business and industries sectors. One latest encouraging and positive report came from European Union where India is reported to have agreed to drop its objections at the World Trade Organisation (WTO) against the European Union's decision to allow duty-free access to 75 Pakistani textile and leather products.

However, a formal announcement may be forthcoming by the end of this month. European Union-27 have decided to allow custom duty exemption to Pakistan on its import of value-added textile and leather products into the EU for the next three years. Presently, the export earnings from these 75 products of textile and leather is around Euro 900 millions which may be increased by Euro 140 millions to Euro 1,040 millions annually after application of custom-duty exemptions. It is worth mentioning that this facility or concession has been exclusively designed for Pakistan and is not available to our competing countries like Turkey, India and Bangladesh.

In FY 2010-11, Pakistan's total exports of textile goods stood at US$ 14.0 billions out of total national exports of US$ 25.0 billions. In 2010-11, the prices of commodities were very high which helped Pakistan achieving the export target of 25 billions. One garment exporter indicated that in FY 2011-12, our textile exports may be restricted to US$ 11.0 billions as price factor would work adversely and so the export quantum factor in view of deteriorating business and industries conditions.

In 2011-12, the Government of Pakistan has fixed export target of US$ 26.0 billions. The Prime Minister of Pakistan is understood to have approved the recommendations of Trade Policy 2011-12 last Saturday, the 10th September, 2011.

On New York cotton market prices have registered an increase of US Cents 7.85 a pound during the last week in ICE December, 11 contract. This increase is understood to be the result of reported cotton damage in Pakistan due to rains and floods and in US due to inclement weather conditions. NY December 11, contract closed at 113.63 on 9th September against 105.78 on 2nd September, 11. During the last week, good local US mill demand of cotton was on higher side. If this demand trend continues further or not, will have to be seen.

India is also reportedly receiving heavy rains in the northern and central zones delaying picking operation in the north by about three weeks. Heavy rains in the western zones are also forecast in next two weeks. In China, cotton prices have improved in sympathy with world cotton prices and the growers find it more profitable to sell their proceed to private mills than to Chinese Reserve which offer lower price.

More rains are forecast also for some cotton areas of China. The crop situation is to be watched minutely in next 3-4 weeks. Chinese textile exports are facing resistance in US and European Union markets due to some financial difficulties and high price factor. The adverse affect of abnormally high prices of cotton in 2010-11 season, would be seen this season when volume of exports may shrink to some extent.

We have to monitor the behavior of monsoons and weather minutely and cautiously till middle of next month to come to a reliable cotton crop estimate which would also help cotton market in determining the price trend in coming months.

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5-Year Cotton statistics of prominent cotton countries

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World Cotton Exports

==============================================================================

(Millions of         2007/08   2008/09   2009/10   2010/11   2011/12   2011/12

480 lb. bales)                                                  July    August

==============================================================================

United States           13.6      13.3      12.0      14.4      12.0      12.3

India                    7.5       2.4       6.6       5.0       5.0       5.0

Australia                1.2       1.2       2.1       2.6       4.4       4.3

Brazil                   2.2       2.7       2.0       2.0       4.4       3.7

Uzbekistan               4.2       3.0       3.8       2.7       3.2       3.0

African Franc Zone*      1.7       1.5       1.4       1.3       1.6       1.3

EU-27                    1.6       1.0       1.1       1.0       1.3       1.4

Greece                   1.3       0.8       0.9       0.8       1.1       1.1

Turkmenistan             0.8       0.6       1.1       1.0       1.0       1.0

Burkina                  0.8       0.8       0.8       0.7       0.8       0.7

Mali                     0.5       0.3       0.4       0.5       0.5       0.6

Tajikistan               0.5       0.4       0.5       0.4       0.4       0.4

Zimbabwe                 0.4       0.3       0.4       0.4       0.4       0.4

Benin                    0.5       0.4       0.4       0.3       0.4       0.3

Egypt                    0.6       0.1       0.4       0.4       0.4       0.4

Rest of World            4.5       3.6       4.2       4.1       4.2       4.4

World Total             39.0      30.1      35.6      35.3      38.3      37.6

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Source: USDA

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Note: *African Franc Zone includes Benin, Burkina Faso, Cameroon,

                                                Chad, Cote d'Ivoire, and Mali.

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World Cotton Production

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(Millions of         2007/08   2008/09   2009/10   2010/11   2011/12   2011/12

480 lb. bales)                                                  July    August

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China                   37.0      36.7      32.0      30.5      33.0      33.0

India                   24.0      22.6      23.0      25.4      27.0      27.0

United States           19.2      12.8      12.2      18.1      16.0      16.6

Pakistan                 8.6       8.7       9.6       8.8      10.3      10.3

Brazil                   7.4       5.5       5.5       8.5       9.3       8.7

Australia                0.6       1.5       1.8       4.2       4.5       4.5

Uzbekistan               5.4       4.6       3.9       4.1       4.5       4.3

Turkey                   3.1       1.9       1.8       2.1       2.9       2.9

African Franc Zone       2.3       2.2       2.1       2.2       1.8       1.5

EU-27                    1.7       1.2       1.1       1.1       1.7       1.7

Turkmenistan             1.3       1.4       1.3       1.6       1.6       1.6

Greece                   1.6       1.2       0.9       0.9       1.4       1.4

Argentina                0.7       0.6       1.0       1.3       1.4       1.4

Mexico                   0.6       0.6       0.4       0.7       1.1       1.1

Burkina                  0.7       0.9       0.7       0.7       0.9       0.7

Rest of World            7.8       6.8       5.9       6.1       7.2       7.6

World Total            119.7     107.1     101.4     114.6     123.2     122.7

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World Cotton Consumption

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(Millions of         2007/08   2008/09   2009/10   2010/11   2011/12   2011/12

480 lb. bales)                                                  July    August

==============================================================================

China                   51.0      44.0      50.0      46.0      46.5      46.0

India                   18.6      17.8      19.5      20.0      21.0      20.5

Pakistan                12.0      11.3      10.8      10.3      10.5      10.3

Turkey                   6.2       5.1       5.8       5.8       6.0       5.9

Brazil                   4.6       4.2       4.4       4.4       4.6       4.6

Bangladesh               3.5       3.8       3.8       3.6       4.0       3.7

United States            4.6       3.6       3.5       3.8       3.8       3.8

Indonesia                2.2       2.0       2.1       1.8       1.9       1.9

Mexico                   2.0       1.9       1.9       1.7       1.9       1.8

Vietnam                  1.2       1.3       1.6       1.7       1.8       1.8

Thailand                 2.0       1.6       1.8       1.7       1.7       1.7

Uzbekistan               1.0       1.0       1.1       1.3       1.3       1.3

South Korea              1.0       1.0       1.0       1.1       1.1       1.1

Taiwan                   1.0       0.8       1.0       0.9       0.9       0.9

Argentina                0.8       0.8       0.8       0.8       0.9       0.9

Rest of World           11.6      10.1       9.5       9.2       9.1       9.2

World Total            123.3     110.1     118.4     113.9     116.7     115.2

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Source: USDA

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World Cotton Imports

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(Millions of         2007/08   2008/09   2009/10   2010/11   2011/12   2011/12

480 lb. bales)                                                  July    August

==============================================================================

China                   11.5       7.0      10.9      12.0      15.3      15.0

Bangladesh               3.5       3.8       3.8       3.5       4.0       3.7

Turkey                   3.3       2.9       4.4       3.4       3.4       3.4

Indonesia                2.3       2.0       2.2       1.8       2.0       2.0

Vietnam                  1.2       1.3       1.7       1.7       1.8       1.8

Thailand                 1.9       1.6       1.8       1.8       1.7       1.7

Mexico                   1.5       1.3       1.4       1.2       1.2       1.1

Pakistan                 3.9       1.9       1.6       1.5       1.2       1.1

South Korea              1.0       1.0       1.0       1.1       1.1       1.1

Taiwan                   1.0       0.8       1.0       0.8       0.9       0.9

Russia                   1.1       0.9       0.8       0.5       0.6       0.6

Egypt                    0.4       0.4       0.6       0.6       0.5       0.5

India                    0.6       0.8       0.5       0.5       0.5       0.5

Japan                    0.6       0.4       0.3       0.4       0.4       0.4

Colombia                 0.2       0.3       0.2       0.3       0.3       0.3

Rest of World            5.0       3.8       4.0       4.4       3.5       3.5

World Total             38.9      30.2      36.2      35.2      38.3      37.6

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Source: USDA

==============================================================================

Torrential rains cause heavy damage to cotton crop in Pakistan

Cotton Report By Aziz Shah published in  Business Recorder deted 5-9-2011

S.A.AZIZ SHAH

Cotton Analyst & Consultant

­­­­­­­­­­­­­­­­­­­­­­­­­

Torrential rains cause heavy damage to cotton crop

         

The last week (ended on 3^rd.Sept-11) spell of heavy rains with gusty winds lashed almost all cotton areas in Sindh and Punjab provinces throughout the week. Field reports indicate that the severity of rains in Sindh was more than that of Punjab. As compared to last year, monsoon season has been delayed by about two –three weeks and it is running perhaps on its last leg. Last year, heavy rains both in Sindh and Punjab were followed by moderate to heavy floods which damaged cotton crop heavily. The cotton crop, ( 2010-11) initially estimated around 14.0 million bales was finally harvested at 11.6 million local weight bales – loss of cotton crop being equivalent in bales to 16.47%  and as compare to previous season (2009-10) loss of 7.84%. By middle of August month, cotton crop estimates were officially reported around 15.0 million bales and by private sector around 16.0+ million bales, in view of very favourable weather conditions. Prior to these recent heavy rains, damage to cotton crop was caused by first spell of rains in Sindh in August month and fairly the damaged was assessed equivalent to half a million bales. This time, the damage is in both the provinces of Sindh and Punjab. Till the time, the running monsoon season comes to an end anytime in September month, one cannot precisely estimate the size of damage to cotton crop. In Sindh, the provincial Government has declared all the five districts namely Badin, Mirpur Khas, Tando Muhammad Khan Tando Allahyar and Nawab Shah as calamity-hit areas which jointly produce up to 2.0 million bales. Sanghar district of Sindh is the top most cotton producing district in Pakistan, alone producing annually between 1.6-2.0 million bales.

  However, latest field reports term the cotton damage as sufficiently heavy which may be nationally equivalent to 15% of the estimated crop of 15.0 million bales till writing of this report. Thus, latest crop estimate may be considered around 12.75 million bales on cotton area of about 3.5 million hectares. The wide spread rains have extensively caused flower shedding where crop was at flowering stage. Rains water is still standing in fields especially in low lying areas where if water stagnated for a day or so, the cotton plants with fruits may die of suffocation. The early sown cotton areas where cotton crop has already reached maturity stage and is ready for harvesting, the damage may not be in quantity but the quality would be adversely affected. After, the end of monsoon season, fears are there for pest and diseases attacks on cotton crop which may also cause damage to quantity and quality both. However, reliable crop estimates may not be available before October month. One press report by Shezad Ali Khan, acting Chairman of PCGA mentioned total national crop damage equivalent of 650,000 bales which appears far from reality. The PCGA has assessed cotton damage of 5-7% only while prior to last week heavy rains had damaged cotton crop to around half a million bales. In another press report by Yasar Babbar, the damage to cotton crop in Sindh has been mentioned as 70 % which works out between 3.0 and 3.5% million bales. Just see the two extreme reports; one assessing the loss around 650,000 bales in Pakistan and another report around 3.25 million bales only in Sindh.  Apparently, the two reports exaggerated and may be representing the interests of spinners and growers respectively.  What was the hurry, at least for PCGA, in declaring the size of cotton damage when the conditions under which damage was caused to cotton crop are  still present. The reporters / writers should make damage assessment very cautiously and pragmatically taking stock of all relevant ground realities and relevant factors. For a realistic crop damage assessment, one has to wait for a period of 4-5 weeks.  Of course cotton damage may be more in lower Sindh which may go between 1.5 and 1.8 million bales.  

Cotton crop in USA has already been affected by adverse weather conditions specially sever drought in Southern states which have lowered the crop estimates by about 4.0 million bales to 16.6 million bales.  Floods in  China\s cotton areas have been reported which would also damage cotton crop. Monsoons in India are continuing in South and western states – the main cotton areas but Rajasthan area has not received sufficient rains which the growers consider it good for better cotton crop. Pakistan crop estimates will have to be revised from 10.3 million bales 480-lb bales to below 10.0 level which may finally be determined in October month. Pakistan’s mill-use may require minor adjustment in October, 2011.    

Mill-use in Pakistan is now estimated around 13.5 million local weight bales. In view of present cotton damage position, Pakistan may not have export surplus as was estimated prior to  cotton damage by rains. It appears that Pakistan will have to go  for cotton imports which may be between one to one and a half million bales in 2011-12 season. I remember the situation of US crop in 1936-37, when after heavy rains the weather became so promising and conducive that US crop size improved by some 3.5 millions to 19.4 million bales instead of  estimated damage of more than 2.0 million bales. Nature  can show any thing beyond our comprehension.  So let us wait for the time for getting realistic production figures. 

 Here is a table of cotton figures which may give a fair idea to the readers about cotton situation in new season.

           

  Tab: 1.

                         World cotton supply and off-take – 2011-12 ( 480-lb Mln Bls)

Country           Beg. Stock     Production   imports   Supply   Mill-use   exports   End. stock

World                 45.0                122.7           37.6           167.7        115.2       37.6        52.7

US                         2.9                  16.6             0.0             19.4            3.8       12.3          3.3

China                  11.6                  33.0           15.0             59.6          46.0         0.1        13.6

Pakistan               2.6                  10.3             1.1             14.0           10.3        0.5          3.2

India                     7.3                 27.0             0.5             34.8           20.5         5.0          9.3

Central Asia        2.0                   7.0             0.0               9.0             1.9         4.9          2.2

Australia             2.5                   4.5              0.0              9.0             0.0         4.3           2.8

Brazil                   7.3                   8.7             0.1              16.1           4.6          3.7          8.0

Indonesia            0.4                    0.0              2.0              2.4             1.9          0.0          0.5

Mexico                0.5                    1.1              1.1              2.7             1.8          0.3          0.6

Turkey               1.6                     2.9              3.4              7.9            5.9           0.2          1.9

Source; CCI Global fax  August-2011.               

   

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