Last week, when this analyst toured some of the cotton areas of Hyderabad, Matiari and Sanghar districts in Sindh province, he was shocked to see severe attack of Mealy Bug / black on cotton plants; severely affected areas being Sanghar district.
Cotton fields, along National Highways after Matiari till Hala and to Shahdadpur towns, were found severely affected by Mealy Bug. Some of the cotton fields were totally destroyed while others were severely affected. The attack of Mealy Bug is covering more and more area and its severity is also increasing, the growers said.
Most of the cotton plants had good to very good fruiting but leaves of the plants had become black. Last year, this cotton area was largely damaged by Mealy Bug. Last year, Mealy Bug started in late August -early September but this time its attack is late. Reportedly, about 65-70 percent of the cotton crop in Sanghar district has been harvested. Lately sown crop in this area has been damaged.
However, this season's cotton production may be equal to that of last season, said a ginner. This Mealy Bug may extend to cotton areas of Nawabshah and Naushero Feroze districts. Cotton production estimates this season appear converging around 11.5 million local weight bales; close to last season's production figures. In 1991-92, India produced a cotton crop of 11.9 million 170-Kg bales and Pakistan produced 12.8 million 170-Kg bales crop but in 2008-09, India is producing a crop 31.5 million bales and Pakistan a crop of 11.5 million bales.
Just compare our progress with India. If Mealy Bug affects crop in upper Sindh area where cotton acreage is already low, production estimates may be reduced. Lint cotton prices remained depressed due to partly local and partly international reasons. In local market, lint cotton is selling between Rs3,700 and 3,850 per maund of 37.324 Kg ex-gin depending on quality. On the basis of Rs3,800 per 37.324 Kg, the FOB price works out to US Cents 65.0/lb which appears quite workable.
The weakness of Rupee against US dollar is largely contributing to viability of export parity. Prices of commodities like wheat, grains, Soybean, edible oils, crude oil and sugar in the international market are going down fast and so the cotton prices. Apparently, local cotton market remained closed for only 3 days due to Eid holidays but virtually cotton activities remained suspended for 7-10 days. However, ginneries continued their operation except two-three days and stock of lint cotton has accumulated of which selling pressure has eased down lint prices.
Lint prices which were around Rs4,000 per maund of Kgs 37.324 ex-gin, further eased down in the absence of buying interest during holidays to Rs3,700 level in Mirpurkhas area and to Rs3,800-3,850 level in other stations of Sindh and also in Punjab. The lint quality of Sanghar district which was on the top in recent past and the exporters and spinning mills paid premia to such cotton, would deteriorate due to severe attack of Mealy Bug. The depression in US economy and financial sector is a big shock to other world economies as US economy is the engine of world economies. US administration is taking all necessary steps including plans of pumping US $700 billions into US economy to bail it out. Some experts believe the depression or rather crisis is so big that these counter steps may not be able to arrest the deterioration of the economy and financial sector.
One version about the cause of the crisis is the huge US spending of US dollars 1.3 trillions on war on terror in Iraq and Afghanistan. Other version is withdrawal of investments in crude oil and commodities of which prices have crashed adversely affecting other businesses and stocks not only in US but in other countries. Some are of the opinion that this crisis in economy and financial sector is so sever and big that it may last some years changing the pattern of economies. US companies sustaining huge losses may be under pressure of declaring bankruptcy. Industries and commercial organisation are shedding jobs and in September,08 month some 159,000 jobs have been lost in US pushing the unemployment percentage to 6.1.
On New York cotton market, values have tumbled down below the level of 60 when December,08 contract closed at US Cents 57.41 and March,09 contract at 61.94. October,08 contract is under tender. A large shipper has basically stopped all notices issued against October,08 contract. Cotton prices may further decline till economic and financial conditions in US improve.
Last week, cotton market remained closed for three days but virtually cotton activities remained suspended for 7 to 10 days. During these days, ginning factories continued their operation except for two-three days in Eid period. As there were no buyers in last 10 days, the stocks of unginned cotton has accumulated which has put selling pressure on ginners and lint prices have been reduced to Rs3,700 - 3.850 per maund of 37.324 Kg ex-gin. When the market will re-open on Monday (6th Oct,08) the spinning mills and the exporters would enter into the market for buying and the prices may find support for increase. The Pakistan Cotton Ginners would also release periodical cotton arrival and disposal figures, which would also give some an idea abut size of cotton crop. However, cotton prices are not expected to keep a bullish trend in the wake of poor economic conditions, deteriorating law and order situation, tense situation on borders of the country, unstable political conditions and deteriorating political relations with India, US and Afghanistan.
Source: Business Recorder