Islamabad—Current cotton prices are very low as compared to last year. On New York Cotton Future Market, on the 6th December-11, the December-11 contract closed at US Cents 93.31 whereas on the same date last year it was at 141.92 (Decrease of 34.25 percent). On the 6th December, NY A-Index is US Cents 98.90 whereas on the same date last year it was 161.75 – down by 38.86 percent. The domestic and international factors do not appear supporting cotton prices in next couple of months so there may be chances of further decrease in cotton prices.
The drastic fall in cotton prices and increase in cotton production cost are feared to discourage cotton growers for cotton sowing next season. Cotton growers in China, India and Pakistan have started raising their voices against low cotton prices, which do not even cover their production cost. The result of this situation would be substantial decrease in cotton area in most of cotton producing countries. India cultivated cotton on record high area of 12.11 million hectares in 2011-12 against 11.14 last year, increase being about 9 percent. India is expecting an all-time bumper cotton crop of 35.6 million 170-Kg this season against 32.5 million bales last season- increase being 9.5 percent. India’s domestic cotton consumption is stated around 28.0 million bales and expected export around 7.0-8.0 million bales. This season, there was increase in cotton area in most of the cotton producing countries as the growers were encouraged by the historically high cotton prices last year. There are reports of possible substantial decrease in cotton area next year as the cotton growers are feared losing heavily due to very low cotton prices.
The cotton sellers resist further fall in cotton prices in Pakistan’s domestic market. Especially Sindh growers have lost heavily as their crop was intensively and extensively damaged by heavy rains and devastating floods in July-August months. Quality of seed-cotton and the resultant lint have also been badly damaged; seed-cotton was sold as low as Rs 1,500 per maund of 40 Kg ex-gin while lint cotton was sold as low as Rs 3,500 per maund of 37.324 Kg ex-gin. These rates are well below production cost. Due to this, Sindh has large unsold stocks of cotton to 33 percent of total arrivals whereas Punjab is holding as low as 17.33 percent of total arrivals. This season, stocks of unsold cotton are 2.04 million bales against 1.08 million bales same time last season – about 100 percent increase from last year.