Sunday, February 13, 2011
Cotton price up sharply
Shoppers could fork over a few more dollars for a new pair of blue jeans in coming months, if the price of cotton stays high.
"The price of cotton on the world market is the highest it's ever been," said Ian Hardin, a textiles professor at the University of Georgia College of Family and Consumer Sciences. "The previous record was during the Civil War."
As the price of cotton skyrockets, cotton clothing like blue jeans likely will get pricier - and the cost of polyester clothing also could rise.
The cotton crop garnered about 50 cents a pound for the past few years, but this fall, prices shot up to $1 a pound; last week cotton sold for just under $1.80 a pound, Hardin said.
Georgia farmers grow tons of cotton every year, and higher crops prices could translate to bigger price tags on clothes this year - but it's not yet clear how high those prices might go, he said.
Clothing manufacturers and retailers will have to assess how much extra they're willing to charge customers for the increased price of cotton, he said.
Retailers especially were hit hard by the economic recession and have a tough choice between alienating customers with higher prices or absorbing the costs themselves.
"All of the retailers are still trying to get back on their feet," Hardin said.
The world's supply shrunk this year as top cotton-producing countries like China and Pakistan suffered devastating droughts. And India, another top producer, capped its cotton exports. If cotton prices stay high, it's likely that alternative fibers, like polyester, also will increase in price to match the market demand, Hardin said.
"Usually, when cotton prices go up, polyester usage increases," he said.
Polyester prices already are rising internationally, and if cotton goes higher, it's possible that polyester manufacturers will increase the price of their product. Polyester isn't a cheap alternative to cotton now, because it's made from a chemical that's derived from petroleum.
"Polyester is tied to the price of petroleum, and if petroleum prices keep trending upwards, then the polyester could do the same," Hardin said. "They may even jump the price up simply because they see they have nothing to lose."
A trend in higher cotton prices might hurt the American consumer's wallet in the short term, but really could help the country's bottom line, said Doug Bachtel, a demographics and statistics professor in the UGA College of Family and Consumer Sciences.
"Not only do we produce a lot of cotton, we produce a lot of quality cotton," Bachtel said.
The increased price of cotton, especially if the crop stays plentiful in the United States and shrivels elsewhere, could lead to a ripple effect for the country, he said.
China buys much of its cotton from the United States, and if that country has a rotten harvest, it'd have to rely more on American agriculture, Bachtel said.
That could mean less U.S. debt in the hands of China, he said.
"The change might help our balance of payments," Bachtel said. "There's these huge ramifications for some of these agriculture products."
But one year of the United States dominating the cotton market might not do much to prices in the long term.
"Next year, the Indian cotton harvest might be gangbusters," he said.
(Source: http://onlineathens.com/stories/021411/new_785412751.shtml)
India retains cotton export ceiling at 5.5 million bales
India’s cotton export for this season (October 2010-September 2011) will remain at 5.5 million bales (170 kg each).
The committee of secretaries involving the ministries of textiles and commerce decided last week Thursday that the ceiling of raw cotton exports will remain at 5.5 million bales. The ministry of commerce has given until February 25th to fulfill the export obligations to exporters based on the allotments made earlier by the Director General of Foreign Trade, India.
Speaking to this scribe on the sidelines of the 66th Annual Conference of the Textile Association (India) in Bangalore, India on January 28th, Mrs. Panabaaka Lakshmi, Union Minister of State for Textiles, India expressed that her ministry will insist on the ceiling limit of 5.5 million bales. However, the minister indicated that the ministers of agriculture and commerce may want more exports to promote the interests of farmers and exporters.
Spot price of Sankar-6 (28-29 mm staple) in Gujarat recently was Rupees 58,000-58,400 per candy (356 kg). Reports are that producers are holding the stock due to surge in domestic requirement and increase in international price. Price of Sankar-6 rose last week as high as Rupees 60,000 per candy.
The status as of today is India will stick to its export ceiling of 5.5 million bales for this season (2010-11).
(Source: http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=95794)
Continuous heavy rains to affect cotton output
Cotton production is likely to be adversely influenced by the continuous heavy rains taking place in Swaziland. Growth of cotton was adversely affected by intense rains. Besides, application of insecticides on cotton crops has also gone waste as it has been washed away by the rain water thereby making the crops prone to insects.
Cotton harvests may decline owing to the heavy rainfall as it requires average rainfall for its growth. The crop is resistant to drought conditions and its roots are able to suck water from below the ground.
In 2009, cotton growers failed to fulfill the requirement of 5,000 tons of cotton as demanded by Spintex every year. Cotton growers of the country contributed around 60 percent more than the usual production but still failed to fulfill the demand of Spintex. Spintex is a cotton mill which purchases cotton, processes it and then exports it to the global market.
During this season, around 922 tons of lint was sent to Spintex for processing whereas only 593 tons were sent during the last fiscal year. Though there has been significant rise in the cotton that has been harvested during this season but the cotton producers have failed to meet the demand for cotton as required by the company.
(Source: http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=95801)
With cotton prices skyrocketing, Bathinda to get textile park
BATHINDA: Following skyrocketing prices of cotton, this season, and farmers in the region selling their produce at above Rs 6,000 per quintal, Punjab deputy chief minister Sukhbir Singh Badal on Sunday said the state government was giving final touches to their plan of setting up a Textile Park in Bathinda to provide gains of value addition to cotton farmers of Bathinda and Mansa belt.
Sukhbir said the plan for setting up the Textile Park was in its final stage. "I am happy that cotton farmers of Punjab got record procurement price," said Sukhbir. 'I would like to make them partner in the value addition of cotton by setting up cotton fabric industry in the Textile Park,' he said.
Beside this Textile Park, an IT park in Rajpura and Hand Tool Industry Park in Kapurthala are being set up and all these three parks would be marketed as power cut free zones for which Powercom would be signatory to the agreement, assuring 24-hour power with a penal clause. He said with farm output reaching the plateau, diversification in the industrial sector, especially in the soft skill industry, for IT enable services and agro-processing industries, including cotton related industry, was the only answer to provide value addition to farmers.
(Source: http://timesofindia.indiatimes.com/india/With-cotton-prices-skyrocketing-Bathinda-to-get-textile-park/articleshow/7490767.cms)
More bad news for rubber manufacturers, tire makers
The rising cost of rubber is putting pressure on domestic tire producers, which have seen declining profits for most of the last 12 months.
Net profits of Wuxi Boton Belt Co, a rubber product maker, totaled 44.19 million yuan ($6.70 million) in 2010, a drop of 8.51 percent over the previous year, the company said Friday in a filing with the Shenzhen Stock Exchange.
Shrinking net profits are due to a sharp rise in rubber prices last year, the company said in the filing.
Benchmark May 2011 rubber futures contract traded on the Shanghai Futures Exchange hit a record high of 43,500 yuan ($6,598.21) Wednesday, compared to around 20,000 yuan ($3,033.66) in June last year.
Bigger rubber makers in the country have also predicted falling net profits over the past year, attributing it to surging rubber prices.
Shanghai-listed Aeolus Tire Co, a major tire producer based in Henan Province, estimated in January that its 2010 net profit would dive by around 50 percent to 310.05 million yuan ($47.03 million). Guizhou Tyre Co, another Shanghai-listed tire producer, also forecast in January that its net profit over the past year would fall 50 to 70 percent to 111-180 million yuan ($16.84-$27.30 million).
Industry watchers believe rubber prices will remain at the current high levels this year, given tight supply, which will continue to have an impact on domestic tire makers.
Rubber futures prices are likely to moderate in the middle of the year as supply will increase due to the beginning of the tapping season of rubber, while trending upwards again in the second half of the year, said Guo Tiezheng, an analyst at First Futures Brokerage Co based in Tianjin.
Guo Cheng, an analyst with Yong'an Futures Brokerage Co in Beijing, was more bullish on the rubber market.
"Rubber supply growth cannot meet the increase in demand for tires spurred on by strong car sales," he said.
Domestic rubber manufactures have urged the government to help the industry weather the storm, according to an article posted on the rubber association website in January.
(Source: http://english.peopledaily.com.cn/90001/90778/90860/7286564.html)
Tight supply position pushing New York cotton Futures towards 200 cents/lb, domestic prices hit Rs 13,000 mark
KARACHI (February 14, 2011) : Trading in cotton tightened with prices surging though textile exporters maintained buying with an eye on the orders in hand. Indian refusal to honour contract nearly one million bales has put Pak exporters in lurch, The spot rate thus was marked at Rs11,500 through most of the week days and closed at the same level.
WORLD SCENARIO:
Since rising futures prices are restricting India to hold back Pakistan's over one million cotton bales duly contracted, this country is in hot soup price apart, freight rate against imports from S/W Africa or America will prove hard nut. But there seem no way out. The favour from the EU conferred on Pakistan that too is in the WTO kitchen. Australia to a great extent was hope with enough surplus cotton but lately it is reported that bad weather has played foul with the production likely to go down. Many cotton growing countries had been eyeing on sparing large acres for producing more to gain including the US.
The national cotton council and chance survey during annual Beltwide Cotton Conference had released US to effect planting during 2011 from 12.48 million acres to 12.53 million acres. The high prices signalling from by China's Jhangzhao commodity exchange new lifetime peak at 33,790 yuan per tonne. The major cotton players, tightening belt to exploit from rocketing prices ever since 2006 and had beaten 150 years record.
They are now turning realistic as they expect no major change in world cotton demand but high prices given perception of receding consumption. The rising food prices cannot but restrict apparel buying, besides other needs. China has released 2011 cotton area for sowing up 4.1 percent from a year earlier to 5.17 million hectares, according to Chinese Academy of Agri sciences, cotton futures are seen to have been reaching $2 a pound any day.
On Monday the US cotton futures settled sharply higher on speculative and option-related buying as players piled back into the market, threatening to ignite a fresh rally to record territory. Cotton futures soared last week to their highest in almost 150 years, but then on Thursday endured their biggest one-day fall since early December, Thomson Reuters data showed. Year-to-date, cotton is up almost 16 percent. The key March cotton contract on ICE Futures US rose 6.65 cents or almost 4.0 percent to end at $1.7451 per lb, dealing from $1.6476 to $1.7486, a level representing the top of the 7-cent allowable daily limit. Total volume reached some 33,300 lots, almost 60 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures closed higher on investment fund buying as tight stocks and brisk mill demand trumped an initial selling spree triggered by a rate increase in China, analysts said. Cotton futures stumbled earlier in the session after China increased interest rates for the second time in over a month to cool off its surging economy. But analysts said China will not turn off the spigot in powering economic growth so the potential threat to cotton consumption from an economic slowdown may not materialise at all. The key March cotton contract on ICE Futures US increased 0.78 cent to conclude at $1.7529 per lb, dealing from $1.7294 to $1.7816. Total volume hit some 45,500 lots, more than double the 30-day norm, Thomson Reuters preliminary data showed.
On Wednesday world cotton prices have risen 134 percent since the start of the season, the International Cotton Advisory Committee said, noting increased buying by speculative funds was not to blame for the climb. Other reports appeared which said that the governments should provide more reliable data on world cotton stocks and use, market participants said at a panel discussion. On Tuesday, eschewing suggestions of interventions to help ease the pain of soaring prices. "There is strong demand and shortage of cotton that caused prices to go higher," said Andrei Guichounts, an economist with the ICAC, an association of governments from major cotton producing and consuming countries, which will hold a seminar in China in June on market data.
On Thursday the US cotton futures surged to a fresh 150-year high, as funds and mills continued to chase the rising market on the spectre of dwindling global supplies. The benchmark contract looked poised to hit $2 a lb in the days ahead. March cotton on ICE Futures US rose the 7-cent daily limit to finish at $1.8758 per lb, the highest price since the American Civil War. Trading volume was heavy near 37,600 lots, almost two-thirds higher than the 30-day norm, Thomson Reuters preliminary data showed.
On Friday the US cotton futures jumped to an all-time record at 1.94 dollars per lb on trade and speculative buying as tight supplies are seen pushing the market past the $2 level next week. The benchmark March cotton contract roared up to 1.94 dollars at 9:22 am EST (1422 GMT) before falling on profit-taking to trade at $1.9246, up 4.88 cents on the day.
LOCAL TRADING:
Trading in cotton stayed firm through the session owing to buyers keeping to the sidelines spot rate level was unchanged at Rs11500 as phutti stayed in Punjab and Sindh at Rs4300 and Rs5500. Buyers stayed away in order to save as volatile market was taking price higher. Nearly 12000 bales of cotton changed hands at Rs12,500. The absence of response from India, which has been keeping back over one million bales despite accord. However, talks and bargain are on the way and may yield positive results soon or imports from West Africans countries and the US will be affected.
On Tuesday cotton prices tended higher as a deal struck at Rs13,000 against spot rate staying put at Rs11,500, phutti Sindh and Punjab was unchanged at Rs4300 and Rs5500. In ready off-take 11,000 bales changed hands. Buyers are cautious buying at intervals making sure they save as much as possible. Australia which flooded favourable news is now talking about severe floods estimates nearly seven percent loss.
On Wednesday prices remain range bound in cautious dealings as mills were not ready to oblige the sellers. Spot rate and seed cotton rates were unchanged. The needy cotton consumers lifted nearly 12,000 bales, prices ranging between Rs10,400 and Rs12450. The textile exporters with orders in hand are buying half heatedly. They believe some miracle will happen and rates will turn favourable. The circles were happy textile exports had jumped by 38pc.
On Thursday firm conditions obtained on the cotton market as ginners see short crop from field likely besides India holding back contracted over one million bales. Spot rate stayed put at Rs11,500. In ready 10,000 bales of cotton changed hands at Rs10,500 and Rs12m500. Textile exporters are passing nearly sleepless nights as orders are in hand but are short of raw materials.
On Friday rates were sharply higher due to persisting demand and continued rise in the global market. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11,500. Phutti prices in Sindh and Punjab were at overnight level of Rs 4500-5500. In the ready business about 18,000 bales of cotton changed hands between Rs 10,500-13,000 during improved business. According to the market sources, number of buyers increased as prices hit the new highs in the world and local markets.
On Saturday firmness prevailed as both buyers and sellers were expecting prices to hit new record in the coming days. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11,500. Phutti prices in Sindh and Punjab were unchanged at Rs 4500-5500. In the ready business about 8,000 bales of cotton changed hands between Rs 12,000-13,000, they added.
TIME TO FATHOM PSYCHEDELIC DEPTH:
It was back in 60s when the first very reluctantly Martial Law perpetrator amid a big gale responded to leading newsmen question at Palenga Airport that scenario change for the better was just ahead. His patriotism was beyond doubt. But prophetic outlook for better scenario change has turned out to be worst. Ourselves a top producer of cotton in the world today has cut ourselves to a funny dwarf size.
A million bales accord for delivery at Wagah - and in fact nearly half a million of same delivered already-is being latently turned down. In fact Pak importers have been enlightened to save time and rush for renegotiating lest Pakistani miss the bus. The world is wide open with cotton stocks such as some African countries and America with cotton offers much above Pak need so it was or it is not the matter of availability but ethics.
Not ethics of a nation alone but our own psyche what Pakistanis have made full of potential land said to be gift of God. The lint lost in the floods and amount of same due to refusal by India to deliver under legally signed contract could have more than covered had BT cotton spurious seed was sown.
Unfortunately such gainful cottonseed, which has made India second top lint exporters so far is being planned. Such stupid lapses have brought the country to current passe. Who can predict this country with no leadership of vision has a future one aspires for!
PAKISTAN ASKED TO RENEGOTIATE WITH INDIA:
There is no country in the world, super power or its satellites to pull courage and thrash out what is wrong or what is right? No, two men with muscle can determine about facing weakling where he stands without contradiction. This country seized the opportunity to enter into a deal to buy cotton on offer. Later cotton prices rose and the rise sustained giving ground to the stock holders to renegotiate deal giving effect to the ruling prices.
The Pak importers, a traditional Indian customers stared blankly each other recalling to mind that authorities could move the proper quarters asking them to oblige the Pak importers with quantity of cotton at the contracted amount. The victims who were expecting delivery of cotton at the Wagah border, the spot wherefrom Pakistan honoured delivery of 10,000 tons of onion bring down in that country from around Rs100 to just half of the amount. The Pakistanis onion exporters were expecting hearty thanks, Pakistanis were bluntly told to send new cotton team to India for a fresh deal, instead.
The importers in this country were stressing ears to get confirmed what they were conveyed was true. The naturally hilarious sorts, much to the delight of fellow victims sang 'Onion lelo, cotton dedo'. All those who could make out what music was being played burst into laughter. Others, up their hands and eyes pricing through crystal blues skies prayed for a good neighbour. Cotton will be available from Australia, America - but the distance and delay, not to forget price!
WTO DELAYS VOTE ON EU TRADE BREAKS:
When the time lapse dawned it was loud and clear that much hard earned favour of the EU to this extent - had succumbed to gale of ill intentions. However, a WTO body in Geneva delayed for two months a vote that had been scheduled for that Monday on allowing the EU to waive duties temporarily on some Pak importers to help it recover from last summer's floods, sensible and compassionate diplomat expressed.
The report says that discussion is continuing but the decision to delay the vote does not auger well, other expressed. Pakistan had been knocking EU 29 countries doors to come to rescue and some of the leading union member such as Britain, France, Germany have expressed more than "Yes" for the duty waiver while others were in pressure of these, but unfortunately the favour seeking country and authorities perhaps unmindful how Pakistan had come into being remain as such.
The report speaks clearly that it was not immediately clear which countries oppose the measures, which could apply to 75 goods from cotton sheets to textiles and ethanol, which the EU has estimated would boost Pakistan sales by 100 million euros. Any body who has eye on the economy of the country will agree the yield would go a long way in ameliorating the losses suffered by the floods during Aug/Sep 2010. Now hurt gravely but Pak exporters will have to, it seems, wait until 2014 under the GSP plus regime of preferential market access, or, textile exporters should accuse no one else.
FABRIC, YARN LOOTERS: HOW THIS SOUNDS, SIRs:
May God bless, after a few decades, when somebody will live to narrate this story, how many shocked people will take it for granted? Stunned souls would murmur undertone whether story has been lifted from Arabian Night. In 21st century loot and robbery of this type as reported in a dispatch dateline Faisalabad, our Manchester was unbelievable. Who will believe dacoits inroad into a Faisalabad factory producing fabric and yarn, and order workers to load whatever is there on the trucks waiting for the purpose.
This is what RBS textile Director Rana Sohail informed flabbergasted officers. The shortfall in gas, power and other inputs were up afloat in the air, that would make Pak textile products short of edge over the next door rivals, like Bangladesh, India and China. The nature of problem was mainly foreign, the loot and robbery is local which is unheard of in present daytime.
What the rulers and of course, law enforcement agencies to off in reply? Does it not sound strange the agencies claim to have made special arrangements to guard weaving and sizing units. The victims have given out and have expected back from agencies some positive result. But nothing except utter disappointment prevails in Faisalabad, a roaring town with textile mills, known World over. The fact that when Pakistanis wanted to change its old name preferred to chose the name of Saudi ruler Faisal. The fact needs to be translated into honour and dignity when Faisalabad is spoken.
(Source: http://www.brecorder.com/component/news/single/625:news.html?id=1155221)
Cotton Market: prices move both ways determined by supply, demand factor
KARACHI (February 14, 2011) : Milk powder, guwar, cotton cakes Irri 6, moong Punjab, khandsar prices moved both ways during the week when worries were mounting about food problem globally.
On the opening session, Irri 6 Sindh low type shed Rs75 to Rs3150 while the other quality was down Rs100 to Rs3175, wheat old with bardana registered at Rs2640 and wheat new with bardana was quoted at Rs2655, guwar Sindh rose by Rs100 to Rs3650 and Rs3750, gur Punjab rose byRs200 to Rs2600 and Rs3700 and cotton cakes with bag in Sindh low type rose by Rs20 to Rs1260 while the better type was lower and was quoted at Rs1270.
On Tuesday commodities depicted losses such as moong Punjab scaled down by Rs250 to Rs10,000, masoor Canada quoted at Rs6800, masoor dal Canada quoted at Rs8200. Urud Burma lost Rs100 to Rs3200, wheat old with bardana registered at Rs2630 and Rs2655, and wheat new with bardana quoted at Rs2645 and Rs2650, grams Australia shed Rs100 to Rs5150 and Rs5350, grams dal Australia also shed same amount to Rs6100 and Rs6300. Cotton cakes with bag in Sindh low type lost Rs35 to Rs1225 while better type rose by Rs5 to Rs1280. Bangladesh tea was marked down.
On Wednesday Irri 6 Sindh rose by Rs25 to Rs3175 and Rs3200, cottonseed oilcske Sindh with bag rose by Rs25 to Rs1250. Wheat old with bardana was quoted at Rs2640, wheat new with bardana registered at Rs2625. Gur low type shed Rs200 to Rs5000 while better type was unchanged at Rs6200, Khandsari lost Rs500 to Rs7500, yellow peas Canada shed Rs150 to Rs3600 and Rs3750, yellow peas dal Canada lost Rs100 to Rs4100 and Rs4250, yellow peas Ukraine lost sharply by Rs250 to Rs3500 and Rs3650, yellow peas dal Ukraine inferior shed Rs100 to Rs4100 while better type lost Rs150 to Rs4150.
On Jodia Bazar, milk power skimmed (per bag 25kg) olden burger rose by Rs800 to Rs9500, and Amul (India) quoted at Rs9100, Vegetable corolac up by Rs450 to Rs9450 and Haleeb veg quoted at Rs7700, unsweetened King of Kings up Rs100 to Rs4100 and Pineapple (per carton) palac was quoted at Rs1625.
On Thursday barley Sindh and Mardan low type shed Rs50 to Rs2600, while better type was put at Rs2650, gur inferior was unchanged at Rs5000, while better type was down Rs200 to Rs6000. Rapeseed cakes shed Rs10 to Rs890 and Rs900, cotton cakes with bag in Sindh low type lost Rs10 to Rs1240, while the better dropped Rs15 to Rs1265.
On Friday, rates were unchanged as most of the participants were busy in preparations for Juma prayers.
On Saturday Prices moved both ways in process of trading. Prices were firm on the rice sector on the back of strong export orders, therefore, Irri-6 Sindh low type held overnight level at Rs 3175 while the best quality inched up with a gain of Rs 25 to Rs 3225. According to reports, in the first seven months of current fiscal year, rice exports crossed one-billion-dollar mark on the back of rising paddy price on the world market. Makai low type gained Rs 75 to Rs 2700 and better quality was higher by Rs 100 to Rs 2750. Wheat old Burdan was quoted higher at Rs 2645 and wheat new Burdan was registered at Rs 2660. Gur low shed Rs 200 to Rs 4800 and best quality also followed the same pattern, losing Rs 300 to Rs 5700. Prices of gram 50x50, after maintaining a firm trend for several weeks, fell by Rs 100 to Rs 5600-5800, yellow peas Canada low type, however, gained Rs 100 to Rs 3700 and good type also rose by Rs 150 to Rs 3900, yellow peas dal Canada followed the same pattern, low type picked up Rs 100 to Rs 4200 and good type was up by Rs 150 to Rs 4400, yellow peas Ukraine low quality gained Rs 100 to Rs 3600 and best type also higher by Rs 150 to Rs 3800, yellow peas dal Ukraine low type retained its overnight level at Rs 4100 while the best type appreciated by Rs 150 to Rs 4300. Cottonseed oilcake with bag Sindh inferior type held its overnight level at Rs 1240 while the good type gained Rs 15 to Rs 1280, other items managed to hold the last levels.
(Source: http://www.brecorder.com/component/news/single/625:news.html?id=1155225)
International cotton market target at two dollars a pound
KARACHI (February 14, 2011) : Now, cotton production in 2010-11 season is estimated around 12.0 million local weight bales as by 31st January, 2011, seed-cotton arrivals had reached equivalent of 11.1 million local weight bales.
When this analyst visited cotton areas of Sanghar district, many fields were found having cotton on plants. Up-country reports also indicate that cotton can be found in fields in Punjab. In fact, due to heavy rains and floods in last July and August months, the development of crop was delayed. In some areas, flower-shedding and in some areas re-sowing extended the cotton season. On the 1st September, 10, seed-cotton arrivals were short by 19.91% in Punjab and by 22.65% in Sindh while on national basis the shortage was 22.95% which later was reduced to 19.52% on 15th November 10 and then to 11.26% on 1st February, 2011. If we harvest a cotton crop of 11.8 million bales, the shortfall may be further reduced to 7.1% from last season when we produced 12.7 million bales.
There are indications that in some cotton areas of Sindh and Punjab which were affected by floods, sowing of cotton was done after rain/flood water receded or dried up and this crop is maturing now maturing in late-February and March / April months.
The amount of such cotton production may be around 200,000 bales. Plants are reported to have developed bolls which may open as the temperature increases in coming days. Cotton farmers in early sowing areas of central Punjab and lower Sindh are reported to have started new crop cotton sowing which may be harvested in middle of coming May month. In view of record high cotton prices, cotton farmers are making haste in cotton sowing to take advantage of the high cotton prices in next cotton crop.
Understandably, cotton area may be increased by 10-12% to 3.4 million hectares. In view of the extension of the running cotton season and early start of next cotton season, seed-cotton arrivals may maintain continuity till next crop. There are strong indications that cotton area in almost all prominent cotton producing countries such as China, India, US, Pakistan and Uzbekistan would be increased considerably. This season, cotton harvested area in US was 10.973 million acres and next cotton season sowing intentions are estimated around 12.514 million acres - the increase is more than 14%. Thus US may harvest a crop of over 20.0 million 480-lb bales next year. If all things go normal, Pakistan may harvest a record bumper crop of 15.0-15.5 million local weight bales in 2011-2012 season, which may meet our season's cotton requirements.
To increase our cotton production at least matching our cotton requirements, Pakistan has to adopt G M technology, which would help us in boosting our cotton production and productivity as did India, our neighbouring country.
Cotton prices have continued their upward journey to new highs in local as well as international markets. In New York cotton future market, prices have touched the historical high of 1.94 US Cents per pound on last Friday (11th February 2011) in March 11, contract and the next target may be to touch the level of US $2.0 per pound. Before this, the historically high traded cotton price was US Cents 1.90 per pound some 150 years ago in American civil war in 1864. Only for the sake of information and interest of readers, the following data is presented.
In 1937-38 season, US produced a record high crop of about 19.0 million bales which was exceeded by China after 46 years in 1983-84 season by producing 21.3 million bales and US broke its own record after 55 years in 1994-95 by producing 19.662 million bales. US produced so far record high crop of 23.89 million bales in 2005-06 season. In this running cotton season, US is producing 18.32 million 480-ln bales while last season in 2009-10, it produced a lower crop of 12.19 million bales. In 2009-10, US exported 98.76% of its production. Generally, cotton export and cotton consumption are inversely related with each other. If cotton consumption goes up export goes down and inversely if cotton consumption goes down cotton exports go up.
In the local market, lint cotton prices have touched the ever high mark of Rs13,000 per maund of 37.324 Kgs ex-gin which works out equal to US Cents 185.0/lb ex-gin. As the lint price is going high shy-rocketing, the volume of cotton business is becoming lesser. Money market has become quite tight in view of liquidity crunch and business is squeezing. In view of present poor working conditions and high raw cotton prices, our total cotton requirements may be between 13.0 - 13.5 million bales. As such, we may be obliged to import.
There are reports that in view of better performance in exports, Pakistan's export target of US $20.0 billions may be increased to US $22.0 billions. If we look into this matter, we find that due to exceptionally high prices of textile and other products, our export earnings may be higher.
Pakistan's spinning mills are reported to have bought some half a million cotton bales of 480-lb each from US during this season but have also booked some 143,000 bales of next crop. This is a new phenomena in cotton import business.
This season, world cotton production is reported at 115.45 million 480-lb bales and consumption at 116.58 million bales. Thus the production is short from consumption by 1.13 million bales while last year cotton production was short from consumption by a large margin of (118.52-101.54) =16.98 million bales. However, beginning cotton stock last year was at 60.52 million bales but this season it is 43.85 million bales. Thus, the matter of statistics is not so poor that it can trigger cotton prices up to more than 100%. Actually, there has been abnormal increase in major commodity prices in the world and as such cotton is no exception to this abnormal increase in prices. Money market expanded widely but housing industry has sacrificed high cost.
India played its pivotal role in distortion of cotton market this season. Presently, cotton prices in Indian local market touched the ever highest level of Indian Rs60,000 / candy ex-gin (= US Cents 168.20 cts /lb) Now, just look at the difference in cotton prices between Pakistan and India. In Pakistan it is equal to US Cents 185.0/lb while in India it is at 168.20/lb. ex-gin. Indian spinners as well as the exporters are getting lint cotton cheaper than Pakistan by US Cents 20.42 / lb. Reportedly, Indian ginners are closing their operation as high seed-cotton prices are not matching with lint cotton prices.
India made frequent changes in cotton export policies. India is reported to have committed breach of contract and did not hour its cotton export commitments. Pakistan had bought some one million bales but has received only 10% shipments. Indian cotton exporters negotiated cotton prices many times with the importers when prices register increase. In China, cotton activities are resuming after vacations of Lunar New Year and the recent increase in international cotton prices is attributed to return of Chinese buyers in cotton market. The reports of drought in the North China Plain are causing some concern about the possible size of next cotton crop.
Until new cotton crop starts reaching markets / ginneries, lint cotton prices may maintain this high level of cotton prices. In May month, we may expect harvesting of new cotton crop which may decrease cotton prices.
(Source: http://www.brecorder.com/component/news/single/625:news.html?id=1155223)
Cotton to rally on Indian export ban, Chinese demand
Suppy scenario in India, world’s second largest producer as well as consumer of cotton after China and world’s second largest exporter after US, seems to be a little tight due to firm overseas fundamentals and lower than expected arrivals in the domestic market. In domestic market buying from exporters and millers are strong despite higher production estimated for the current season.
While international cotton future rose to 150-year high thanks to strong china imports, US almost exhausted with last year crop, domestic restrictions for fresh exports may all lead to more gain for global Cotton prices. Cotton offers almost 100% return in the last 1-year thanks to lower global production and increasing china imports.
However, this skyrocket prices not likely to sustain at such higher levels and millers buying likely to be slow in coming days due to not increasing yarn prices. On other side still domestic prices is lower by around 15-20 cents compared to international prices and if exports is allowed then we may see more bounce back in domestic cotton prices.
India is likely to produce a record 329 lakh bale of cotton in 2010-11 against last year's 295 lakh bale, according to a senior government official said last week. However, some traders estimates it lower side at 320-325 lakh bale for current season.
Domestic cotton arrivals at spot markets till January 30 in the 2010-11 season rose 6% on year to 19.5 mlllion bale, the state-run Cotton Corporation of India said. India, the world's second largest exporter, had permitted 5.5 mlllion bale for exports from October 1 but met with a poor response because rains hit harvest. An initial deadline was extended until February 25 for 1.7-1.9 mlllion bale which went unshipped. Overseas demand for Indian cotton has increased after bad weather hit crops in China and Pakistan, both leading consumers.
In domestic market farmers have seen holding on to crop in expectations of more price rally in coming days. Earlier it was expected that good crop arrivals from Maharashtra but since last 1.5 months arrivals almost nil which supports domestic prices.
In the global market, Australia’s world’s 5th largest producer and 4th largest exporter seen 8% lower crop this season due to flood-like situations. In the global market supply only expected from US and India. However, after un-favourable weather, Pakistan not able to export much while Chinas demand seen strong in the global market. However, at US, almost 80-90% of crop is consumed and not much left for export while India’s policy for earlier there were hope that’s India may allow more cotton exports in its February 10 meeting but it was remain un-concluded & after seeing price rise, we might not get decision in short term also. Because of export curb from India & steady Chinese import rally is expected in international cotton prices. In year 2010 China imported 86% higher cotton then year 2009 and this higher Import also likely to continue for year 2011
According to the latest USDA report, global cotton consumption seen higher at 12.08 crore bales against production estimated lower at 11.67 crore bale. Chinas import estimated around 1.30-1.50 crore bale which may fuel prices throughout the year. This might be a 5th consecutive year when world cotton demand outpaces its supply. Otherside global cotton ending stock also has seen falling in 2010-11 at 45.44 mlllion bale which is down from 46.98 in 2009-10 and 60.44 in 2008-09 year.
Globally all eye on India’s cotton export policy and if any positive decision we may see in coming days then again will resulted in one more round of Rally in cotton prices. Only factors against cotton rally is any fall in yarn prices, lower millers buying and fall in international prices. Still new seasons almost 35-40% yet to arrive in market & if there is no clarity from export side then some sharp profit booking expected by end of this month in domestic prices.
(Source: http://financialexpress.com/news/cotton-to-rally-on-indian-export-ban-chinese-demand/749648/0)
Australian growers missing out on some of the cotton price boom
Cotton continues its record run, with a new high price set last Friday.
The global shortage, which is pushing up prices, is forecast to continue for the next six months.
Matthew Leeson, from Independent Commodity Management, says international market is doing extremely well, although with most of the domestic cotton already sold on the futures market, much of the high prices can't be enjoyed by Australian farmers.
The cotton price is going gangbusters, though Australian farmers are missing out on the full benefit because of futures contracts (Julia Holman)
"There's certainly no handbrake on this market at the moment," he said.
"We saw another round of fresh highs set as recently as Friday night with prices trading up through the 1864 Civil War high, and reaching a high of almost 195 cents.
"So it's been an amazing ride, basically doubled or a little more doubled since last August."
(Source: http://www.abc.net.au/rural/news/content/201102/s3137867.htm)
Low-priced cotton, yarn export hurts local industry
KARACHI: Pakistan Hosiery Manufacturers and Exporters Association (PHMEA) has accused local traders of exporting cotton and cotton yarn at lower than international prices, which it says hurts local industry.
“We exported cotton yarn at $1.58 per pound and cotton at $1.14 per pound, while the price of cotton jumped to $1.92 per pound in the international market,” said Saleem Parekh, central chairman of PHMA in a letter to the President Asif Ali Zardari on Saturday.
The letter was written after President Zardari had assured All Pakistan Textile Mills Association (APTMA) that no restrictions would be imposed on cotton and cotton yarn export this year.
The National Assembly’s Standing Committee on Textile has asked authorities to allow export of cotton and cotton yarn in case they were surplus.
Parekh said that India was creating non-tariff barriers in export of cotton and cotton yarn to protect its value-added textile sector, although India’s textile exports were only 12 percent of its total exports.
Pakistan’s textile export is 57 percent of its total export, but authorities are not willing to regulate export of cotton and cotton yarn, he said.
If local traders do not export cotton yarn and instead provide it to the value-added textile sector, much higher foreign exchange could be earned, he said. “Garment manufacturers could have earned up to six dollars per pound of cotton after value addition against $1.58 per pound the cotton yarn export has yielded.” Value-added textile export constitutes 82 percent of total textile export.
(Source: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=30926&Cat=3&dt=2/13/2011)
Global shortage sends cotton to record level
The price of cotton on Friday surpassed its record high on Friday, surging above $1.90 a pound amid a global shortage of the fibre.
Cotton prices have spiked 150 per cent since the start of 2010 as demand for textiles rebounded from the global financial crisis and India, the world's second-largest exporter, restricted shipments to help its domestic textiles industry.
On Friday, the benchmark ICE March cotton contract rose 2.9 per cent to an intraday peak of $1.9263 a pound. That was the highest in the 141-year history of the New York exchange and its predecessors, and also above the price reached during the climax of the cotton embargo of the American civil war in the 1860s.
The latest price rise comes as stocks available for delivery are extraordinarily low as farmers in the US, the largest exporter, have sold almost all of last year's crop and carryover inventories. US cotton exports have jumped as Chinese cotton mills continue to buy on the international market, in spite of high prices.
"Demand is not being rationed sufficiently," said analysts at Rabobank. "Mills in China are still willing to buy at current record levels, and investors see an opportunity due to the tight inventories."
Moreover, traders are concerned that India will extend export restrictions amid sharply rising domestic prices and concerns about inflationary pressures.
Global demand for cotton will outstrip production by 1.3m bales in the marketing year to July, according to the US Department for Agriculture's forecast this week. Certified stocks at ICE warehouses currently stand at less than 200,000 bales.
The rise in prices is putting pressure on manufacturers and retailers to pass on costs to consumers or accept lower margins. The ICE Futures US exchange last week said it was planning to force traders with large positions in cotton to prove they were economically necessary.
Higher prices could spur US farmers to plant more cotton this spring, but surging markets for corn, soyabeans and wheat could limit gains in land area, analysts say.
"The world needs a record cotton crop in 2011 just to maintain the current tight fundamentals," Rabobank said. "An inadequate harvest would likely result in continued record highs."
