Pakistan'S Textile Exports May Decline Again

In fiscal year 2009, the growth of textile exports in Pakistan may decline again because of the decline in cotton production in Punjab and Sindh provinces.

Agricultural experts predict that in the current cotton season (2007-08 cotton season), local cotton may reach 12 million 500 thousand packs, which is still below the official target of 14 million packs due to insect damage in cotton fields.

In the past few years, the textile industry, including the spinning, weaving and composite sectors, has caused a heavy blow to their business costs due to the sharp rise in cotton prices, power interruption and shortages and rising interest rates, and for many other reasons.

At the same time, the suspension of R & D funds and support mechanisms made Pakistan's textile industry vulnerable to attack, leading to a sharp decline in textile exports.

In the 2006-07 cotton season, Pakistan's cotton production increased to 13 million bales, of which Punjab produced 10 million 500 thousand bales, and Sindh produced 2 million 400 thousand bales.

The expected global cotton production decline and India's ban on cotton exports have led Pakistan's local cotton mills to focus their attention on the export market. However, they must consider that the cotton prices in the local market are under pressure in addition to the global cotton production decline.

According to the statistics of Pakistan Federal Statistics Bureau, in July 2008, Pakistan's textile exports dropped 24% from July 2007 to 930 million 300 thousand US dollars, down to 905 million 900 thousand US dollars.

With the rapid rise in cotton prices and the rise in energy costs, the textile sector in Pakistan experienced a sharp decline in fiscal year 2008, because the core productivity of the main sectors declined, and it fell by 77% in the 9 months of fiscal 2008.

The sharp rise in cotton prices at present may put pressure on the profit margins of the textile sector, resulting in a decline in yields.

However, the sharp depreciation of the Pakistan rupee and the US dollar will push the expansion of textile companies to the top line.

Pakistan's current cotton price is hovering at 4100 rupees / Mende.

This is not only caused by the expected global cotton production shortage, but also due to the lower cotton crop in Pakistan this year.

Pakistan is the third largest cotton producing country in the world.

According to different estimates, in the 2009 fiscal year, global cotton consumption is expected to reach 112 million packages (6% lower than last year). The expected decline is mainly driven by low cotton crop estimates in the United States and China, which has led to an increase in cotton prices in the international market.

So far in fiscal year 2009, the Cotlook A index has reached 78 cents / pound, up 14% from the same period last year.