Flood-hit Pakistan turns to India
Its own output of crop has dropped to the lowest in over a decade
Pakistan is meeting its need of cotton from India after floods caused its own output to drop 25% in 2015. PHOTO: AYESHA MIR/EXPRESS
MUMBAI:
Pakistan is buying more cotton than expected from India after floods cut its own crop to the smallest in over a decade, opening an opportunity for the world’s biggest producer to offload its bulging stockpiles.
Farmers in India have struggled to find buyers over the past year after the world’s top cotton consumer China cut import quotas to stimulate demand for its own fibre. The problem has been further exacerbated by near record high Indian output.
Economy braces itself for flood damage
But the recent flurry of purchases by Pakistan has pushed up cotton prices in India to over the state-fixed support price in most regions, reducing pressure on the government to buy from distressed farmers.
India has contracted to export 2 million bales (one bale is equal to 170 kg) in the marketing year that started on October 1, with Pakistan buying half of that, dealers said. Typically, China would account for more than 50% of India’s shipments.
“We were not expecting such kind of demand from Pakistan,” Cotton Association of India President Dhiren Sheth said. “Pakistan could buy another 500,000 to 700,000 bales.”
Cotton consumption to fall to 8.5m bales
According to industry sources, total cotton imports by Pakistan will more than triple this marketing year, with India cornering a major share given lower transportation costs.
“Due to lower freight, India is the first choice for buyers in Pakistan,” said Shahzad Ali Khan, Chairman of the Pakistan Cotton Ginners Association.
India has signed to export cotton to its neighbour for 63-66 US cents per lb, mainly via Wagah land border in Punjab, dealers said. More exports by India could put a lid on US cotton prices that have rallied on worries rains in some producing areas of the US will hit output.
On a thread: Cotton growers irked by falling price
Pakistan’s overall cotton imports are seen climbing to at least four million bales in the current year from 1.2 million bales a year ago, said Saleem Saleh, Acting Secretary General of the All Pakistan Textile Mills Association.
Its cotton output is expected to drop 25% to 11.4 million bales in 2015, the lowest since 2003, he added.
As Pakistan turns to India to fill this shortfall, stocks in the top producer are expected to come down, cutting the need for state purchases.
India spent $2.41 billion to buy 8.7 million bales from farmers in the previous marketing year after China trimmed purchases.
“This year procurement will be much less,” said BK Mishra, Chairman and Managing Director of state-run Cotton Corporation of India, estimating government purchases of just two to three million bales.
Published in The Express Tribune, December 2nd, 2015.
Pakistan is buying more cotton than expected from India after floods cut its own crop to the smallest in over a decade, opening an opportunity for the world’s biggest producer to offload its bulging stockpiles.
Farmers in India have struggled to find buyers over the past year after the world’s top cotton consumer China cut import quotas to stimulate demand for its own fibre. The problem has been further exacerbated by near record high Indian output.
Economy braces itself for flood damage
But the recent flurry of purchases by Pakistan has pushed up cotton prices in India to over the state-fixed support price in most regions, reducing pressure on the government to buy from distressed farmers.
India has contracted to export 2 million bales (one bale is equal to 170 kg) in the marketing year that started on October 1, with Pakistan buying half of that, dealers said. Typically, China would account for more than 50% of India’s shipments.
“We were not expecting such kind of demand from Pakistan,” Cotton Association of India President Dhiren Sheth said. “Pakistan could buy another 500,000 to 700,000 bales.”
Cotton consumption to fall to 8.5m bales
According to industry sources, total cotton imports by Pakistan will more than triple this marketing year, with India cornering a major share given lower transportation costs.
“Due to lower freight, India is the first choice for buyers in Pakistan,” said Shahzad Ali Khan, Chairman of the Pakistan Cotton Ginners Association.
India has signed to export cotton to its neighbour for 63-66 US cents per lb, mainly via Wagah land border in Punjab, dealers said. More exports by India could put a lid on US cotton prices that have rallied on worries rains in some producing areas of the US will hit output.
On a thread: Cotton growers irked by falling price
Pakistan’s overall cotton imports are seen climbing to at least four million bales in the current year from 1.2 million bales a year ago, said Saleem Saleh, Acting Secretary General of the All Pakistan Textile Mills Association.
Its cotton output is expected to drop 25% to 11.4 million bales in 2015, the lowest since 2003, he added.
As Pakistan turns to India to fill this shortfall, stocks in the top producer are expected to come down, cutting the need for state purchases.
India spent $2.41 billion to buy 8.7 million bales from farmers in the previous marketing year after China trimmed purchases.
“This year procurement will be much less,” said BK Mishra, Chairman and Managing Director of state-run Cotton Corporation of India, estimating government purchases of just two to three million bales.
Published in The Express Tribune, December 2nd, 2015.