Required Report - Public distribution

**Date:** 1/13/2008

**GAIN Report Number:** PK8001

PK8001

**Pakistan**

**Cotton and Products**

**Cotton Update: 2007/08 Crop Production Reviewed**

**2008**

**Approved by:**

Margaret E Thursland

Agricultural Counselor![](media/image1.wmf)

U.S Embassy Islamabad

**Prepared by:**

Mohammad Shafiq Ur Rehman

Agricultural Specialist

**Report Highlights:**

MY 2007/08 cotton production is revised down from 2.265 MMT to 1.904 MMT
due to severe pest attack and unfavorable weather conditions. Cotton
leaf curl virus and mealy bugs continued to plague Pakistan's cotton
crop. The import forecast is scaled up to meet the textile industry's
requirements for fine yarns. Pakistan remains one of the top importers
of U.S. Pima cotton.

Includes PSD Changes: No

Includes Trade Matrix: No

Quarterly Report

Islamabad \[PK1\]

\[PK\]

**Summary**

Post's forecast of Pakistan\'s MY 2007/08 (August-July) cotton
production has been further lowered from 10.4 million bales to 8.75
million (480 lb) bales, reflecting a 13 percent decline over the
previous marketing year. The Government of Pakistan estimate is 9.1
million (480 lb) bales. Area planted to cotton was lower than targeted,
the crop was severely damaged by the cotton leaf curl virus (CLCV) and
pesticide-resistant mealy bugs, and harsh weather conditions adversely
affected boll size and weight. The sowing of illegal Bt cotton
varieties, which were not designed for Pakistan's climatic, crop disease
and market conditions, also affected the production and quality of this
year's crop. The import forecast has been increased based on the latest
arrivals registered in-country. Demand for U.S. extra long staple and
upland cotton is strong as Pakistan's textile industry struggles to
remain competitive in world markets.

**Table 1: Cotton Production, Supply and Demand**

<table>
<colgroup>
<col style="width: 18%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 11%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><strong>Pakistan</strong></td>
</tr>
<tr class="even">
<td colspan="10"><strong>Cotton (HECTARES) (000) BALES(000- 480
Kg)</strong></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="3"><p>2005</p>
<p>Revised</p></td>
<td colspan="3"><p>2006</p>
<p>Estimate</p></td>
<td colspan="3"><p>2007</p>
<p>Forecast</p></td>
</tr>
<tr class="even">
<td></td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
</tr>
<tr class="odd">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>08/2005</td>
<td>08/2005</td>
<td></td>
<td>08/2006</td>
<td>08/2006</td>
<td></td>
<td>08/2007</td>
<td>08/2007</td>
</tr>
<tr class="even">
<td>Area Planted</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Area Harvested</td>
<td>3101</td>
<td>3103</td>
<td>3101</td>
<td>3250</td>
<td>3250</td>
<td>3250</td>
<td>3250</td>
<td>3000</td>
<td>3000</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>4945</td>
<td>3461</td>
<td>4945</td>
<td>4912</td>
<td>2872</td>
<td>4912</td>
<td>4327</td>
<td>2260</td>
<td>2260</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>10165</td>
<td>10165</td>
<td>10165</td>
<td>9900</td>
<td>9916</td>
<td>9900</td>
<td>8500</td>
<td>10405</td>
<td>8750</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>1615</td>
<td>1615</td>
<td>1615</td>
<td>2298</td>
<td>2343</td>
<td>2298</td>
<td>3250</td>
<td>2485</td>
<td>3515</td>
</tr>
<tr class="odd">
<td>MY Imports from U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Total Supply</td>
<td>16725</td>
<td>15241</td>
<td>16725</td>
<td>17110</td>
<td>15131</td>
<td>17110</td>
<td>16077</td>
<td>15150</td>
<td>14525</td>
</tr>
<tr class="odd">
<td>Exports</td>
<td>288</td>
<td>288</td>
<td>288</td>
<td>258</td>
<td>290</td>
<td>258</td>
<td>150</td>
<td>300</td>
<td>140</td>
</tr>
<tr class="even">
<td>Use</td>
<td>11500</td>
<td>12056</td>
<td>11500</td>
<td>12500</td>
<td>12556</td>
<td>12500</td>
<td>12000</td>
<td>12545</td>
<td>12310</td>
</tr>
<tr class="odd">
<td>Loss</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
<td>25</td>
</tr>
<tr class="even">
<td>Total Dom. Cons.</td>
<td>11525</td>
<td>12081</td>
<td>11525</td>
<td>12525</td>
<td>12581</td>
<td>12525</td>
<td>12025</td>
<td>12570</td>
<td>12335</td>
</tr>
<tr class="odd">
<td>Ending Stocks</td>
<td>4912</td>
<td>2872</td>
<td>4912</td>
<td>4327</td>
<td>2260</td>
<td>4327</td>
<td>3902</td>
<td>2280</td>
<td>2050</td>
</tr>
<tr class="even">
<td>Total Distribution</td>
<td>16725</td>
<td>15241</td>
<td>16725</td>
<td>17110</td>
<td>15131</td>
<td>17110</td>
<td>16077</td>
<td>15150</td>
<td>14525</td>
</tr>
<tr class="odd">
<td>Stock to Use %</td>
<td>41.669</td>
<td>23.266</td>
<td>41.669</td>
<td>33.915</td>
<td>17.5930</td>
<td>33.915974</td>
<td>32.1152</td>
<td>17.7501</td>
<td>16.3411</td>
</tr>
<tr class="even">
<td>Yield</td>
<td>714</td>
<td>713</td>
<td>714</td>
<td>663</td>
<td>664</td>
<td>663</td>
<td>569</td>
<td>755</td>
<td>635</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

# Production

The size of the MY 2007/08 cotton crop has been scaled back from 2.265
MMT to 1.904 MMT. This is a result of unfavorable weather and severe
crop damage in the main cotton belts of Punjab and Sindh, mainly due to
cotton leaf curl virus (CLCV) and mealy bugs.

Cotton leaf curl virus (CLCV) has become endemic in Pakistan, affecting
over 70 percent of this MY's cotton crop. The virus, which causes
stunted growth and poor fiber yield, was first reported in 1985. While
scientists focus on developing an effective and durable virus resistant
variety, the best control at present is application of pesticides
against the insect vector.

Over the past two years, Pakistan has seen a growing invasion of mealy
bugs. The insect attacked 12 percent of last year's crop and an alarming
30-35 percent of the 2007 crop. The illegal Bt cotton varieties planted
in about 40 percent of Pakistan's cotton region is not the magic bullet
many farmers imagined. It was developed to resist chewing insects,
mainly the cotton bollworm. The mealy bug is a sucking insect,
unaffected by the Bt toxin, which is best controlled through pesticides.

The price of pesticides to combat mealy bugs and the CLCV insect vector
nearly doubled in 2007 and supplies were low, allowing the pest
infestations to multiply rapidly this growing season.

# Cotton Arrivals

As of January 1, 2008, cotton arrivals are 17.75 percent lower compared
with arrivals during the corresponding period last year. Total unsold
stock with the ginners remained at 1.49 million bales against 1.61
million bales for the corresponding period in the previous year. Prices
are anticipated to rise as domestic production is insufficient to meet
the consumption requirement of 12.33 million bales, and the gap will be
bridged through imports.

#  

# Consumption

Consumption will shrink marginally due to reduced local production, an
ongoing power crisis resulting in load-shedding affecting mill
operations, and the prevailing law and order situation in the country.

# Trade

MY 2007/08 and, indeed, next MY cotton imports are projected to remain
strong. Local supply versus consumption requirements have generated a
shortfall of about 3.5 million bales, of which 2 million bales will be
of short and medium staple cotton. From July-October 2007, millers and
traders have imported 0.873 million bales compared to 0.375 million
bales in the corresponding period last year. The domestic textile
industry requires the import of all grades of cotton, including long and
medium staple varieties from the United States. Pakistan remains among
the top importers of U.S. Pima cotton.

During July-September 2007, cotton exports from Pakistan have also
surged, registering 22,004 bales against 13,493 bales in the same period
in 2006. The rising export figure will not affect the domestic market
requirements. Pakistan production is mainly from medium to medium-long
staple cotton varieties which are not suitable for the production of
fine and superfine yarns.

# Stocks

Ending stocks have been reduced based on the revised lower production
estimate.