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Larger area, Bt cotton-seed sowing herald bumper crop next season

Updated: 2010-5-31 Source: Texglobe-ÐÅÏ¢ÖÐÐÄ
KARACHI (May 31 2010): With the end of this May month, more than 80 percent new crop cotton sowings are reported to have been completed in Pakistan particularly in Sindh and Punjab provinces which produce almost entire cotton crop.

Cotton areas, which faced shortage of irrigation water and of other inputs, may complete their cotton sowing latest by the middle of June month. In general, irrigation water shortage, difficulties in disposal of produce satisfactorily and strict compliance of government orders on crop sowing, would discourage sowing of sugar cane and rice in cotton areas. New Bt cotton seed sown in Punjab is reported to be giving better germination results. Hopefully, the new Bt cottonseeds would prove a success giving higher yields and larger production in Punjab next season.

In 2009-10 cotton season, cotton production in Sindh increased from 3.0 million bales to 4.2 million bales - straight increase of 40 percent all due to Bt cottonseed. In the next 2010-11 cotton season, Punjab province can easily produce about 10.5 million local weight bales on about 10 percent increase in cotton area and widely sowing of first time indigenously developed Bt cottonseed on about 60 percent of its cotton area and Sindh can produce 5.5 million bales which make national cotton production around 16.0 million bales. One upcountry report indicates that Bt cotton sown very early in Karore Pacca and Mailsi cotton areas is at boll-opening stage and its harvesting may start in first week of June month.

The growers are waiting for opening of the gates of factories for acceptance of new crop seed-cotton because soon after picking they want to deliver it to gins fearing loss of weight due to higher moisture contents.

Weather has been quite hot around 45 degrees Centigrade last week but the high temperature has started scaling down. Overall weather conditions have been quite good for the development of cotton plants in the last week and plants progressing well. Very early sown cotton is at boll-development to boll-opening stage of which harvesting may be started by the middle of June month. Fortunately, there has been no adverse reports on cotton development so far.

In 2009-10, cotton season, international cotton merchants entered our cotton market through their local agents and handled about more than 60 percent of cotton exports. One reputed international cotton merchant did the best business, handling local as well as exports of cotton.

The activation of international merchants has almost doubled cotton exports this season. Another reputed international merchants is reportedly planning to establish its office in Pakistan to play a more effective role in local and exports of Pakistan cotton from next cotton season. Pakistan should encourage foreign investment in different industries so that our economy is really benefited. However, foreign investment in trading of agriculture commodities should not be allowed as these companies would manipulate market to their interests and the consumer will pay the cost. International cotton merchants should only be allowed to operate in cotton exports and imports and not in local trading. Our local cotton exporters may not be able to compete with them because international merchants get funds from foreign sources at very low interest rates of 2-3 percent while our local exporters get funds at very high interest rates of 15-16 percent. The international merchants have business out-lets in other countries and can easily find cotton buyers. These international cotton merchants handle larger business on strong financial support and have lower overheads.

Besides, the international merchants who sell foreign cotton growths to cotton spinning mills through their agents would like to deal directly with the buyers saving the selling commission.

Availability of raw cotton in local market has almost exhausted. However, mill to mill and exporter to mill selling were seen. Hopefully, first lot of new drop cotton may be delivered in the second week of June month. Import of cotton is on increase as the domestic stocks have dried up. To control abnormal increase in domestic cotton prices, India had stopped sale and registration of raw cotton from 19th April, 2010. By this time, India had shipped 6.26 million 170-Kg bales against their total sale registration of 8.6 million bales. Thus, 2.0 million bales remained unshipped of which Pakistan's share was of 0.263 million bales =13.15 percent. As a result of ban on export of raw cotton, lint cotton prices in India have decreased by 20 percent and this has benefited the local spinning industry.

Now, the government of India has decided to allow export of cotton under license effective from 27th May, 2010. This decision has perhaps been made to boost cotton area as the sowing period is starting from June month. One report said that China is the largest buyer of Indian cotton accounting some 60 percent of India's total exports. Pakistan is also taking up the matter of pending cotton shipments from India in high level meetings between India and Pakistan. Pakistan has the advantage of shortest shipment period in case of Indian cotton and Pakistan want to exploit this advantage.

One ginner reported that the banks appear quite stringent on sanction of cash credit limits in next cotton season as his bank has slashed down his last cash credit limit to 60 percent in view of tight liquidity position after this budget announcement. The ginner further said that the banks wanted to control prices through monetary policies. If the banks pump lesser funds in cotton business, it would discourage increase in lint prices. If the banks put limit on advances on baled cotton, cotton prices can be checked.

The coming cotton appears to see lot of price fluctuations so the ginners should move very cautiously and the banks have to keep strict control over amount of advances and the valuation of pledged stocks to avoid any default risk. Domestic situation regarding economy, politics, law and order, security, budgetary impact and terrorism appear to be deteriorating which would affect the trade and business conditions of the country. This season, cotton market remained comparatively quite smooth as prices kept on moving on up track and registered total increase of almost 100 percent in the end of the season. The coming season may be bumpy and not wide but fast fluctuations in market may be seen in view unstable domestic conditions.