Cotton market may get boost in near future

The field activities of current cotton crop especially harvesting are coming to an end.

The growers of early cotton sowing areas such as Badin, Tharparker and Thata districts of Lower Sindh and Sahiwal, Chichwatni and Mian Channu districts of central Punjab have started planning their new crop cotton sowing for which their utmost attention is on procurement of good seed and fertiliser before preparation of land.

Availability of sowing seed is a problem in Lower Sindh as in last two consecutive seasons, the heavy rains and floods had severely damaged cotton crop especially the seed.

Availability of good sowing is a problem for the growers.

In 2011-12 season, Punjab produced record high crop with better quality.

As such, Punjab province would meet the seed requirement of Sindh cotton areas especially Lower Sindh.

Seed-cotton arrivals in the second fortnight of this February month are estimated around half a million bales making total arrivals of over 14.5 million bales as on 1st March, 2012 against season's record high arrival of 14.275 million bales in 2004-05.

Final crop size may be around 15.0 million local weight bales of approximately Kgs 153 each equal to 13.5 million bales of 170-Kg each.

One concerned Government official told that they had to cut a sorry figure in international meetings when the question of wide variation in average bale weight in Pakistan is discussed.

In export, low weight bales cost much unnecessarily to the exporters as marine freight is charged on container basis, irrespective of weight of bales.

Beside, the shipper, spinners and ginners all have to bear extra production and handling cost on bale basis and the number of bales is increased by 11.1 percent due to producing short weight bales.

The Central Government should take up this matter with the concerned trade - industry bodies of Spinners and make it mandatory to produce cotton bales with average 170 Kg weight 3 percent.

During the last week, lint cotton prices in the local market remained depressed due to weak N.Y.

cotton advices, slow off-take of yarn and low cotton demand.

On N.Y.

cotton future market, May-12 contract broke the strong psychological barrier of 90 cents to go down 87 levels but on Monday improved to close to 90 level.

The sovereign debt crisis in EU countries especially Greece, Italy, Spain, Portugal and Ireland is getting more severe and the exports of main exporting countries especially

China, India, Pakistan and Bangladesh is impacting negatively.

China consumes some 44 million 480-lb bales; of which 57 percent of textile goods, made from 25 million bales, are used in the country while 43 percent of textile goods made from 19 million bales, are exported.

China uses all its own cotton crop for manufacturing textile goods to be used in the country while from imported cotton it produces textile goods meant for exports.

Cotton growers are paid higher rates and spinning mills buy lint cotton at comparatively higher rates while import lint cotton and yarn at comparatively cheaper rates to make their exports competitive and viable.

US and EU countries are main buyers of Chinese goods especially textile goods.

In 1985, the trade balance between US and China was US $6.0 millions in favour of China which jumped to US $10.431 billions in 1990 then to US $83.833 billions in 2000 then to US $295.456 billions in 2010 which is about 53 percent of total US goods trade deficit.

Similarly, China has large surplus foreign trade balance against EU countries which is worrying them.

China's trade surplus narrowed in November-11, but was higher than expected, indicating the Euro zone crisis is having a real but still limited impact on Chinese exports - the impact appears aggravating with the passage of time.

Chinas trade surplus in November-11, fell to US $14.53 billions against US $17.03 billions in October-11, month.

Chinese exports increased to US $174.5 billions in November-11 month and imports at US $159.9 billions.

One report says that China reported a trade surplus equivalent to US $27.2 billions in January-2012.

China's exports of goods and services constitute 39.7 percent of its GDP.

China's major exports are office machines & data processing equipments, telecommunication equipments, electrical machinery and apparel & clothing.

China imports mainly commodities: iron and steel, oil and mineral fuels, machinery and equipments and organic chemicals.

Its main trading partners are: European Union, USA, Japan, Hong Kong, and South Korea.

India is also facing great difficulty due to meltdown in US and Euro-zone economies.

Its exports are showing downward trend.

However, India's monthly exports is equal to US $24.0 billions which is equal to Pakistan's annual exports.

About 55 percent of Pakistan exports consist of cotton and textile goods.

India's top four commodities which are engineering goods about 22 percent, petroleum products 21 percent, gems & jewellery 16 percent and chemicals and related products 13 percent, constitute over 70 percent share of its total exports.

Raw cotton and textiles constitute about 10 percent of India's total annual exports.

India exports finished products manufactured in India from almost local materials.

India's exports attains high growth rate which is helping them in strengthening their economy and ameliorating the living of their people.

Bangladesh largely depends on its textile and apparel exports which is more than 75 percent of its total annual exports.

The recent slowdown in US and EU economies is hampering the e3xport growth rate as these two are its major export destinations.

However, there appear some positive indications that Bangladesh economy is returning to last position.

The Central banks of the countries and other international financial institutions such as world bank, IMF, Asian Development Bank and etc control and monitor economic performance through controlling finances.

In the last couple of years, economies of many countries over-expanded and heavy defaults were seen.

To arrest this situation, the central banks and global financial institutions increased interest lending rates and now many countries of the world are reducing their interest rates to boost economic activities.

Low rates of interest would discourage the depositors and encourage trade and industrial activities.

Funds would flow out of banks into economy creating job opportunities and boosting growth rates.

This situation may boost commodity and real estate markets in coming months.