KARACHI: Pakistan’s cotton production for 2008- 09 crop season witnessed a shortfall of 2.8 million bales, chairman Pakistan Cotton Ginners Association (PCGA) said Monday.

Chairman PCGA, Rana Abdul Sattar while talking to Daily Times said it remained below the government’s target of 14.1 million bales on account of non-supply of better quality seeds, short supply of quality inputs and insufficient water supply.

He said the Pakistan Central Cotton Committee keeping in view the situation had revised the target to the level of 12.5 million bales, but the production could not touch the revised target.

According to Pakistan Cotton Ginners Association (PCGA) Monday, the country achieved 11.7 million bales of cotton during 2007-08 production year, which was lower than 2.4 million bales than the the initial target. In 2007-08 the country had failed to meet the cotton production target set by the government.

Member on Cotton Committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ghulam Rabbani said the last arrival on Monday shows the final figures.

Rabbani said final arrival for 2008-09 stood at 113,49029 bales at the ginneries, out of which textile sector purchased 103,19134 bales, private sector exporters bought 294,865 bales, Trading Corporation of Pakistan bought 185,033 bales while stocks remained at 546,547 bales.

The higher cotton prices would put further pressure on the gross margins of textile manufacturers, and at the same time, the 23 percent rupee depreciation (year to date) is expected to translate a significant revenue increase impact for export oriented ventures, which would ultimately help them to more than mitigate the pressure on margins, he added.

“The textile and spinning sector will have to bear additional burden around of $1.20 billion on the import of lint to keep their wheels running,” said Rabbani.

The US Department of Agriculture’s World Agricultural Supply and Demand Estimates for September 2008 also indicate lower world cotton production on the back of reduced contribution from India, Australia, Pakistan, African Franc Zone and Turkey.

During August 2008, average domestic cotton prices reached an all-time high level of Rs 4,235 per maund, he added.

He said though, with the initial arrival of new crop in the market during April 2009, domestic prices receded to the level of Rs 3,650 per maund. He said lint price was still 25 percent higher than last year’s average price level of Rs 3,300 per maund during the same month.

The cotton prices are likely to remain at soaring levels with lower production and comparatively higher consumption.

The clash of short-term negative supply fundamentals and the outlook for lower production and a sharp drop in stocks for the 2008-2009 season should help keep cotton prices volatile for the short-run.

The International Cotton Advisory Committee indicates that world cotton ending stocks for the 2008-2009 season falls by 5 percent to 10.96 million tonnes. This is down from 12.7 million tonnes two years ago.

He said lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 20 percent crop in the Punjab and interior Sindh has been affected.

Other factors attributing behind lower production are less area under cultivation due to shift towards sunflower and sugarcane etc, severe weather conditions and crop diseases like Cotton Leaf Curl Virus (CLCV) and mealy bug.

On the consumption side, ICAC projects 1 percent yearly decline in world cotton consumption during 2008-09 due to slowdown in global economic growth and relatively higher cotton-polyester price ratio.