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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