AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, March 11, 2013 (PPI-OT): USDA released its monthly cotton report on Friday Mar O8’13, where forecasted global cotton ending reserves for MY12-13 (Marketing year starting 1st Aug) were decreased by only O.ll8mn bales to 81742mn bales despite an increase in domestic consumption estimates by O.925mn bales.
According to AKD Securities the increase in domestic consumption was offset by an increase in total forecasted global production by O.917mn bales. Trade estimates also rose significantly based on higher demand forecast from China. USDA also released its outlook for cotton next year crop for MY13-14 where global cotton production is expected to fall by 3% with production in US, China and Australia even as an increase in production is expected from Brazil, India and Pakistan.
The increasing demand for cotton due to yarn demand from China, and a shortfall in the local cotton crop are exerting upward pressure on the local cotton prices where prices have increased to PkR7,234/maund (up 12.5%CYTD). The increasing cotton prices will drive cotton yarn prices upward. In this regard, those spinning mills that have booked cotton at favourable rates in 1HFYI3 are likely to perform better due to margin accretion.
Key takeaways from USDA Mar13 cotton report: USDA released its monthly cotton report on Friday Mar 0813, where forecasted global cotton ending reserves for MY12-13 (Marketing year starting 1st Aug) were decreased by only O.ll8mn bales to 81.742mn bales despite an increase in domestic consumption estimates by O.925rnn bales.
The increase in domestic consumption was offset by an increase in total forecasted global production by O917mn bales. Trade estimates also rose significantly based on higher demand forecast from China. Import estimates for Pakistan increased by Q25mn bales while export estimates decreased by O.lmn bales.
USDA outlook for MYI3/14: USDA also released its outlook for cotton next year crop for MY13-14 where global cotton production is expected to fall by 3% with production in US, China and Australia even as an increase in production is expected from Brazil, India and Pakistan.
Global ending cotton inventory is expected to rise to 88.84mn bales, despite the higher cotton consumption as well as Power production. Production in Pakistan is expected to increase by 4% to l0mn bales (12.803mn 170kg bales) as yields are expected to improve next year while cotton acreage s likely to remain unchanged.
Local Cotton and Implications for the textile sector: The increasing demand for cotton due to yarn demand from China, and a shortfall in the local cotton crop ore exerting upward pressure on the local cotton prices where prices have increased to PPC7,234/maund (up td.5%CCTD). The increasing cotton prices will drive cotton yarn prices upward. In this regard, those spinning mills that have booked cotton at favourable rates in 1 HFYI 3 are likely to perform better due to margin accretion.