Despite poor domestic business conditions, cottonmarket stays steady

Karachi  (january 17, 2011) : cotton crop is drawing closer to an end as about 90 percent of the expected amount of crop (10.24 million local weight bales) have already reached ginneries by the end of december month and by 15th january, 2011, total arrivals of seed-cotton equivalent of around 10.8 million local weight bales are expected.
now, most of the crop estimates appear converging around 11.5 million local weight bales in 2010-11. last year, pakistan produced 12.7 million bales of cotton. with the start of january month, some of the cotton growers in early cotton sowing areas of punjab and sindh provinces have started preparation for even earlier cotton sowing of 2011-12 season to take advantage of very high rates of seed cotton between rs 4,200-4,400 per 40 kgs ex-gin which are more than double those of last year.
about over 50 percent ginning factories in lower sindh - early cotton sowing area, are still in operation and ginning operation in this area may continue to early february month. one ginner from lower sindh said that ginning operation of that season might overlap the nextcotton season. the reports from early cotton sowing areas of sindh and punjab indicate that harvesting of 2011-12 crop may start early as end of may month. in view of very highcotton rates in 2010-11 season, cotton growers almost in all cotton growing countries including pakistan would opt to increase cotton area substantially to harvest a record highcotton crop. in view of high cotton prices, acute power / gas shortage, slackness in yarn sales, poor law and order situation, increasing cost of production, yarn production may be lower putting domestic cotton consumption between 13.5 and 14.0 million bales.
after taking into account estimated 700,000 bales of cotton as season's total exports, pakistan's seasonal import may be between 3.0 and 3.5 million bales to meet its domestic cotton requirements. in five-month period ending december 2010, 110,585 metric tons equivalent to 650,500 bales of 170-kg each of cotton have been imported into pakistan and on this basis, the annualized imports may be around 1,561,200 bales which is only 50 percent of the estimated total imports. the reason for this slow rate of import may be the delay in imports of cotton from india from where pakistan's spinning mills are reported to have booked some 1.5 million 170-kg bales in 2010-11 against which a couple of hundred thousand bales may have been received from india.
during the last week, cotton prices maintained a steady trend and lint prices were quoted between rs 9,500 and 10,500 per maund ex-gin. due to possible scarcity of good quality of lint cotton, quality premium has increased to rs 500 per maund. india has recently decided to allow its cotton exporters shipment of balance 1.9 million 170-kg bales on pro-rata basis. before this, indian exporters had filed export registration of cotton bales equal to seven times of its season's total exports.
most of the international cotton merchants and cotton organisations understand that indian mishandled case of its cotton exports, which unreasonably boosted cotton prices and distorted cotton market. pakistan has been making serious efforts at all levels whether trade organizations or diplomatic or government levels to make agree india to ship one million bales of cotton which indian exporters had sold to pakistan's spinning / textile mills mostly at prices below 100 level. mirza ikhtiar baig, textile adviser to prime minister of pakistan has a plan of visiting india for attempting to secure pending cottonshipments of about one million bales for pakistan. the other day baig met the indian high commissioner in pakistan who is reported to have said that the matter of pending cottonshipments does relate to indian government but it is between pakistani buyers and indian sellers and should be amicably resolved by the two parties. bangladesh government has been able to secure not only its pending cotton shipments from india but india promised to give some extra shipment to help spinning mills of bangladesh.
some local developments in cotton and textile sector are reported recently which caste negative effect on cotton and textile business. turkish government is understood to have increased duty by 28 percent on imports of fabric from pakistan ostensibly under pressure from domestic textile industry. this turkish move would adversely affect the annual exports of some half a billion dollar worth. pakistan exports grey and denim fabric to be used as raw material bt the turkish garment industry and larger orders are under process with the textile industry of pakistan.
understandably, the government of pakistan is bringing sale of agriculture farm produce in the net of 3.5 percent with-holding tax of which growers, merchants and ginners have opposed it as it would hurt cotton business. the health of our economy is deteriorating on high government spending, lower revenue collection and increasing burden on economy. other adverse matters such as high cost of cotton, high production cost, high interest rates, high cost of utilities and acute crisis of power supply and many others, jointly affectcotton and textile business adversely.

(Source: http://www.brecorder.com/news/cotton-analysis/1144479:despite-poor-domestic-business-conditions-cotton-market-stays-steady.html?hl=cotton)