Cotton prices expected to rise in international market

ISLAMABAD: Cotton prices are expected to increase by around 23 percent in open market in 2005-06 as the world cotton production has been estimated at 112 million bales compared with 120 million bales in 2004-05, a senior government official told the Daily Times on Tuesday.

With the projected increase in cotton prices, there will be little chance for the government to intervene in the market through cotton purchase by the state-owned Trading Corporation of Pakistan (TCP), according to the official. He, however, clarified that the TCP would definitely intervene whenever it was feared that the prices were falling below the intervention price of Rs 975 per 40kg this year against Rs925 per 40kg the last year.

He said cotton output in cotton-producing countries was expected to fall. The decrease had been projected by eight percent in China, six percent in the United States, eight percent in India and around 3-4 percent in Uzbekistan.

In Pakistan where the target production is 15 million bales in 2005-06, the output has been estimated at 12.5 million bales against last year's achieved production of 14.6 million bales.

According to the official, the basic factor contributing to the increase in cotton prices is the expected growth in world cotton imports this year. According to initial estimates, cotton imports by textile-manufacturing countries are expected to grow by a record over 100 percent this year.

The initial estimates suggested that total cotton imports would stand at around 13-15 million bales against 6.4 million bales in 2004-05. This would be a major factor contributing to increase in cotton prices that would benefit the cotton growers, the official said. China would be the largest importer of cotton this year, the official added.

He said in Pakistan cotton output had been estimated at 12.5 million bales against last year achieved production of 14.6 million bales. The official said cotton output would be third largest this year as 12.8 million bales production had been achieved in 1991-92.

However, the official clarified that final estimates of cotton production would be coming later this month and the actual price determination would take place afterwards. He said cotton prices (Cotlook A Index) were projected at 64 cents a pound as against 52 cents a pound of last year's average.

According to the official, the area sown this year is 3.27 million hectares against last year's sowing on 3.26 million hectare. The monsoon floods washed away around 300, 000 acres of cotton-sowing area, which was a big loss for the agricultural sector.

Dailytimes.com.pk