Pakistan is expected to have a large exportable surplus of over a million bales of lint during the current season, ending Aug 31, 2002 but it may not be able to benefit fully from another bumper crop because of the falling world demands and weak international prices.

Both, the Trading Corporation of Pakistan (TCP) and the private sector exporters, have so far made forward sales of about 0.150 bales and are making prompt physical shipments against the firm orders. It appears pretty difficult to hit the high mark of half a million bales during the remaining three months of the season.

The cotton export outlook also appears bleak as the broad perceptions about prices are slowly moving away foreign buyers because of the availability of cheaper quality stuff from the US and elsewhere.

“The attack on the World Trade Centre and the subsequent scenario, including the Afghan war, has taken away the export initiative from Pakistan as no buyer is now willing to open letter of credits because of fears about shipments as the open seas were virtually occupied by the US navy war ships and aircraft carriers”, says a leading exporter commenting on the cotton export outlook.

The export operations started late by about six months,in February and the figure speaks for itself that it was not that bad a performance. The aggressive sales drive is on to sell well in time the entire exportable surplus,he says.

But it is not clear what the TCP will do with its million bales tally as in the recent past it did not invite any international tender to sell a part of its half a million stocks procured so far.

“An idea of a buffer stock to meet possible crop shortages may not be that bad”, suggests a spinner who is short of his annual consumption. “Whether or not the TCP could sit on such a big unsold inventory of about Rs10 billion for a longer period is not clear”, he added.

In the major cotton-producing countries, state-owned agencies do hold sufficient stocks to meet national crop emergencies but the idea to build up a buffer stock here is not mooted in the recent past.

Spinners also support the idea of buffer stock of half a million bales managed by the state-owned corporation to check uneven price fluctuations and to ensure adequate supplies to meet possible crop shortage.

“The emphasis on export of raw cotton should be discouraged”, leading spinners say, adding that “the incidence of value-addition is gaining momentum here each year as both the mills and the ancillary sector have realized its importance for the country”.

Spinners and textile mills during the current season are expected to surpass the 10 million bales consumption target partly because of the addition of about 100 sick units in the production lines and partly to larger monthly intake by the existing units.

“ It is not in the national interest to sell lint to foreign buyers at a discount after having purchased it at much higher price just to support the growers”, spinners opine, adding that “let the market forces determine the price viability and its impact on the foreign exchange earnings”.

Market sources are, however, a bit skeptical about the cotton economy as larger imports of over a million bales of lint cotton from various countries at cheaper prices has altogether changed the price outlook and ginners are worried over the unsold inventories of about a million bales.

“It could well be a good year for the textile industry,but growers and ginners will remain at the receiving end because of higher crop prospects of 10.5m bales”, they added.

An imminent lint price crash has temporarily been averted thanks to the supporting role being played by the Trading Corporation of Pakistan.

As far as spinners, being the first buyers concerned, they enter the market at will keeping the ginners at their toes all the time to lure them in the trap of panic selling.

The next couple of weeks may be crucial for the unsold stocks lying with the ginners but one thing is certain that it may not be that easy to sell them in a volatile world market.