Whether the current crop is short, or the mill demand has risen manifold, is a question being debated in cotton circles for the last couple of weeks, sans consensus as opinions are widely divided. When the debate was on, a leading group of ginners managed to sell the idea of a short crop, despite the fact that phutti arrivals into the ginneries for the last one months have shown an increase of 11 per cent as compared to last season’s comparable total, signalling that the production is expected to be in line with the official projections despite lower acreage.

“The crop figure may not touch the high mark of 10 million bales as bulk of the phutti has already arrived in the ginneries”, leading ginners claim, “the next two months’ figure will show the virtual drying up of the pipelines”.

But spinners are not inclined to buy this idea and say, “the lower crop ideas are being projected to push prices further higher to Rs2,300 or above per maund without 15 per cent sales tax”.

There could be two opinions about the cotton situation until the last bale lands in a ginnery, indications are that the future sailing may not be that smooth for textile at least during the current season, as far as competitive lint prices are concerned.

“The world consumption of lint will outstrip the production by a big margin of over three million bales at 96.3 million as against 93.2 million bales during the current year. It could well mean higher world prices”, cotton analysts said.

All leading producers of cotton including China, Turkey and India are going to harvest short crops, while their consumption will rise to 5,950 tonnes, 1,400 tonnes and 3,009 tonnes, respectively, as compared to previous year’s 5,552, 1,325 and 2,917 tonnes. Owing to the closure of over a 100 mills, the US production may match the local consumption, they added.

Independent cotton analysts say both are right in their claims. The crop is certainly short if calculated on the basis of annual mill consumption.

For the last several years,the mill demand had never touched the high mark of 10 million bales, but much has changed during the last two years.

“The spinning sector is in the process of massive expansion and modernization programme amounting to Rs55 billion, more than 100 sick mills have resumed production and the industry has explored more export outlets, including major concessions from the European Commission”, they said. “Only a year ago their annual consumption figure touched an all-time high mark of 13 million bales”.

The industry imported about 2.5 million bales from various sources at much lower rates to supplement the local production. And official figures tell there is no change in the mill demand and the crop figure of even 10.5 million bales, may be too short to satisfy the local demand.

The increase in total exports to $5 billion during the first six months of the current fiscal shows the share of textiles above 60 per cent, which means higher mill intake of the lint cotton.

Both are, therefore, right in their respective claims as the crop is certainly short as compared to the textile industry’s demand. However, the ginners have more than one exit outlets, while the spinners have not because of higher world prices ruling above 50 cents per lb.

The spinners are now at the receiving end as a big question is haunting them. From where to arrange the additional supplies as world prices are Rs200 to 300 per maund higher than the local ones. But supplies may fall short of their demand.

Pakistan may not be poised to harvest another good cotton crop for the third consecutive season, which could give the needed boost to textile exports. It will certainly enable the government to achieve its highest-ever export target of $10.4 billion for the current year.

Although the final crop figure will be known sometime in April, the pace of arrivals of seedcotton into the ginneries and the stable prices reflect that the production projections are in line with the official thinking.

“An increase of about over nine per cent at 9.1 million bales for the first fortnight of the current month gave a pleasant surprise to both the spinners and the exporters”, brokers said, “but the mills and the spinners who were virtually shaken by the earlier reports of a short crop were a bit happy and for good reasons too as their hands are full with firm import orders”.

“If the last season’s mill consumption figures is taken as the base, the industry will need about 1.3 million bales to see the current season through”, spinners claim adding, “because of a massive moderinzation and replacement, more sick mills have resumed operations increasing the intake”.

How much phutti is left in the godowns of leading growers is pretty hard to assess but some analysts claim the final picking is complete and the end-January arrival figures of phutti will give fair idea of the total crop.

Some cotton analysts also fear that the farmers may already have dumped their phutti into the ginneries in a bid to get the higher prices and leftover unsold stocks could be well below the market expectations.

The opinions about the future price outlook, therefore, differ. Some say prices could fall from the current level as spinners will keep to the sidelines awaiting the ginner reaction about the crop size.

But some others say the supply and demand factors will not allow major change in the current price outlook as ginners will hold on to their position after having purchased phutti at much higher rates.

Despite having larger unsold stock of over 2 million bales in their godowns, ginners are not worried and hope mills and spinners could not stay out of the market for more than a week owing to the compulsion of the developing situation.

There was, therefore, post-figures relative quiet on the physical trading as both the buyers and the sellers just marked time and did not bid in a big way, although prices maintained firm trend on the perception of larger mill intake during the year.