COTTON

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Dec 24 - 30, 2012

Cotton is a natural fiber that finds use in many products. These range from clothing to home furnishings to medical products. As a result, cotton is always in demand though its use is subject to the strengths and weaknesses of the overall Pakistani economy. It accounts for 8.2 per cent of the value added in agriculture and about 2 per cent to GDP. Pakistan is the fifth largest producer of cotton in the world, the third largest exporter of raw cotton, the fourth largest consumer of cotton, and the largest exporter of cotton yarn. 1.3 million farmers (out of a total of 5 million) cultivate cotton over 3 million hectares, covering 15 per cent of the cultivable area in the country. Cotton and cotton products contribute about 10 per cent to GDP and 55 per cent to the foreign exchange earnings of the country. Pakistan's cotton crop at 15 million bales this season, but adverse climatic conditions and a decrease in cultivated area brought down the forecast to 13.5 to 14 million bales.

EXPORTS OF COTTON FABRICS

COMMODITY JULY - JUNE, (2011 - 12) JULY - JUNE, (2010 - 11)
QUANTITY
('000' SQ. M.),
VALUE
(RS. MILLION)
QUANTITY
('000' SQ. M.),
VALUE
(RS. MILLION)
Cotton fabrics grey 831,716 86,482.26 1,016,392 92,597.07
Cotton prints 257,311 27,816.56 288,882 28,209.29
Cotton sheeting 114,865 11,521.96 139,524 13,437.57
Canvas cloth water proof 403,803 42,392.35 438,990 43,276.05
Denim 368,832 40,616.04 362,685 37,683.13
Other cotton fabrics 90,030 9,330.59 91,331 9,053.95

On the other hand, the total production in the country is expected to be lower than the previous estimates, whereas China buying cotton yarn from Pakistan is said to continue in a significant way this year that could lead to upward trend in cotton and raw cotton (phutti) prices.

The price of cotton has jumped Rs 200 to Rs 6,200 per maund in the local market and phutt has become dearer by Rs 300 to Rs 3,000 per maund.

COTTON FABRICS

Pakistan's cotton fabrics share decreased to 10.34 per cent during FY 2011-12 from 10.57 per cent as compared to FY 2010-11. During FY 2011-12 2,066,558 thousand sq. meters of cotton fabrics valued at Rs. 218,159.75 million were exported as against 2,337,804 thousands sq. meters valued at Rs. 224,257.06 million during the SPLY showing a decrease of 11.60 per cent in terms of quantity and by 2.72 per cent in terms of value. During FY 2011-12 the average unit price of cotton fabrics increased to Rs. 105.57 per sq. meter from Rs. 95.93 per sq. meter during the SPLY showing an increase of 10.05 per cent. Main buyers of cotton fabrics during FY 2011 - 12 were Bangladesh (Rs. 32,374.39 million), Cambodia (Rs. 25,935.35 million), Turkey (Rs. 12,441.51 million), Italy (Rs. 12,417.05 million), U.S.A (Rs. 10,686.91 million), Germany (Rs. 8,379.53 million), Sri Lanka (Rs. 7,912.24 million), Egypt (Rs. 6,653.61 million), Spain (Rs. 6,630.35 million), Korea Rep.of (Rs. 6,519.97 million), South Africa (Rs. 5,493.16 million), Russian Federation (Rs. 5,387.04 million), U.K (Rs. 5,140.34 million), Belgium (Rs. 4,488.18 million), Mexico (Rs. 4,022.08 million) and Netherlands (Rs.3,944.54 million).

Their total take-off accounted for 72.62 per cent of total exports of cotton cloth as compared to their combined share of 74.31 per cent during the SPLY.

COTTON YARN

Cotton yarn share was decreased to 7.68 per cent in FY 2011-12 from 8.87 per cent in the country as compared to the SPLY. During FY 2011-12 exports of cotton yarn amounted to Rs. 162,003.74 million as against Rs. 188,200.13 million in the SPLY showing a rise of 7.41 per cent. In terms of quantity 575,842 thousand Kg. of cotton yarn was exported during FY 2011-12 against 536,128 thousand Kg. during the SPLY showing an increase of 7.41 per cent. The average unit price of cotton yarn for the period FY 2011-12 was Rs. 281.33 per Kg. as against Rs. 351.04 per Kg. in the SPLY showing decrease of 19.86 per cent. China (Rs. 97,451.79 million), Hong Kong (Rs. 16,635.27 million), Bangladesh (Rs. 8,359.65 million), Korea Rep.of (Rs. 5,702.01 million), Japan (Rs. 5,236.28 million), Portugal (Rs. 3,456.97 million), Turkey (Rs. 2,586.49 million), U.S.A (Rs. 2,349.66 million) and Italy (Rs. 2,016.88 million) were major buyers of cotton yarn during the period. Their combined share accounted for 88.76 per cent of total exports of cotton yarn as compared to their combined share of 83.77 per cent during the SPLY.

EXPORTS OF COTTON YARN

COMMODITY JULY - JUNE, (2011 - 12) JULY - JUNE, (2010 - 11)
QUANTITY
('000' SQ. M.),
VALUE
(RS. MILLION)
QUANTITY
('000' SQ. M.),
VALUE
(RS. MILLION)
1. COTTON YARN SINGLE
Combed/uncombed 498,312 137,425.37 414,456 143,527.88
2. COTTON YARN MULTIPLE
Combed/uncombed 77,304 24,503.68 120,681 44,272.76
Cotton yarn N.S. 226 74.68 991 399.50

SEED COTTON

Currently, seed cotton arrivals in Punjab's ginning factories stood at 4,303,099 bales up to October 31, showing a reduction of 701,431 bales or 14 per cent than the SPLY. Similarly, in Sindh's ginning factories cotton seed stood at 2,547,957 bales, which is 848,747 bales or 50 per cent more than the SPLY. Further, Sanghar is the leading cotton producing district with 1,136,873 bales that constitutes 17 per cent of the total arrivals of Pakistan and 44 per cent of arrivals in Sindh. Furthermore, 783 cotton ginning factories in Punjab and 258 in Sindh are operative.