Cotton imports likely to remain near record high level as output decline

As erratic weather forces farmers in Pakistan, the world’s fourth-biggest producer to trim area under the cotton crop, cotton imports are expected to remain near record-high levels in the year to July 2017, industry officials said. A supply crunch in Pakistan, at a time when back-to-back droughts have taken a toll on output at top producer India, could boost global cotton prices from their current near 11-month highs. The two countries have already taken turns this year to buy from each other to fill shortages at home.

Despite the government and industry’s efforts, farmers in top-producing Punjab have reduced area, cotton area in Pakistan is down around 15 percent, said Saleem Saleh, acting secretary general of All Pakistan Textile Mills Association (APTMA). Unpredictable weather, such as floods late last year as well as poor rainfall in recent months, and the resultant uncertainty about yields is putting many farmers off cotton, stymieing Pakistan’s efforts to boost local output.

While the country has set a production target of 14.1 million bales for the new season, output is likely to fall short and that rainfall over the next few weeks will be crucial in determining yields, industry official said.

Saleem Saleh further added that as local consumption is rising but production is stagnant, import requirement is rising. This year imports jumped due to crop failure. Next year also imports would remain around this year’s level. Actual number depends on production.

Shahzad Ali Khan, chairman of Pakistan Cotton Ginner’s Association said that the farmers are finding other crops more profitable to cotton. The country’s cotton output dropped by a third to 9.7 million bales in 2015/16, forcing it to import a record 4 million bales in the year, up from 1.2 million a year ago, according to APTMA. Pakistan annually consumes around 15 million.

Even for the season starting August 1, weather has not been supportive and the crop in Punjab has already been hurt by poor rains in May and June, said Khan. Cotton sowing in Pakistan starts from April and harvesting begins in July.