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Pakistan : High cotton prices to slash consumption (January 13, 11)

Pakistan : High cotton prices to slash consumption

Lint consumption is expected to grow by just 1.25 percent as against the normal growth of 5.0 to 6.0 percent during 2011-12 as high cotton prices will likely have an impact on major spinning sectors of the world, cotton analysts said Tuesday.

The lint consumption was expected to grow by five to six percent against the current prediction 1.25 percent, said Karachi Cotton Association Director Ghulam Rabbani.

They said it would also result in some shifts in fibre blends at the spinning level.

The International Cotton Advisory Committee (ICAC) in its forecast for 2011-12 said when high prices would come down then the production would hit record highs and consumers may switch to cheaper artificial fibres.

World imports of cotton will increase around 12 percent of the total output during the next crop year, Rabbani said.

The import in Pakistan and China would witness an increase of around 5-10 percent of their respective total consumption due to value-added exports and increase in yarn production, he added.

Pakistan’s cotton crop target in 2011-12 will witness an increase by around 5.0 percent to 13.90 million bales as compared to last crop season of 12.5 million bales, Rabbani said.

The inter-governmental group predicted a rebound in world production to 27.3 million tonnes, surpassing by more than 600,000 tonnes the record set four years ago.

The share of cotton in global fibre use, estimated at 36.5 percent in 2009-10, will likely continue to decline in 2011.

The major contributors to the costs of production vary by production system, level of technology and the rising cost of labor and inputs.

Many country-specific options for lowering production costs were presented by experts from Brazil, Pakistan, Turkey, USA and Zambia at the 69th Plenary Meeting of the ICAC.

Biotech cotton can help to lower the cost of production in some cases, but it is not appropriate in all production systems.

The rise in cotton prices means the buyers may have to pay suppliers at least 15 percent more for clothing. How much of that cost will trickle down to the retail shelves is uncertain, he added.

Pakistan offers the cheapest available growth quoted in the Liverpool Cotlook ‘A’ index, he added.

Devastating floods in Australian Province of Queensland could potentially lead to major production losses for cotton, Australia and New Zealand Banking Group said.

The full impact of the floods on cotton production in the state is difficult to quantify at this stage, ANZ said in a report. AgForce had earlier estimated cotton crop losses at more than 100,000 metric tonnes (500,000 bales) following the floods. That would represent a 10 percent plus reduction in the size of the crop to be harvested around April. Queensland accounts for 25 percent to 35 percent of the national cotton output.

The price in Pakistan remained around Rs 9,400 per maund to Rs 10,000 per maund while New York futures market March 2011 stood at 144 cents per pound and May 2011 closed at 140 cents per pound. The cotlook A index was declared settled at 170 cents per pound.

The rising cost of cotton production is a major concern to all producers around the world. A survey by the ICAC Secretariat shows that the average cost of producing one kilogramme of lint was $1.22 in 2009-10, 18 cents higher.

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