20000207

Sharp rise in prices on cotton market

SHAFI AHMAD SYED

KARACHI: Cotton prices became immune to local or foreign factors that normally cast their shadow on the prices, during the week ended on February 5, 2000, on which date market remained inoperative due to observance of Kashmir Solidarity Day.

The week registered record sales of 20,000 bales during one single session and a single highest deal of 10,000 bales on Friday, February 4, 2000.

Cotton prices registered sharply rise Ñ Niab was up by Rs 137.75, K-68 by Rs 161 and MNH 93 by Rs 172.50 with sales tax (ST).

WORLD SCENARIO

Futures in the ultimate analysis were lower on the New York Cotton Exchange (NYCE) during the week contrary: to sharp rise during a couple of weeks.

The opening session was mixed due to moisture in the key cotton producing areas of West Texas which pressured prices.

The market edged up to higher ground at the start buoyed by robust weekly cotton export sales data from the USDA which said upland sales were higher by 58 percent above average at 176.100 running bales plantings are expected on 14.5/15 million acres.

However, March opened up 0.41 to finish at 57.86 cents a pound while May was up 0.34 to 59.28 cents. Closing scene was March ended off 0.01 at 56.08 after trading between 56.40 and 55.21 cents a pound.

Meanwhile, the International Cotton Advisory Committee (ICAC) in January raised its forecast for world cotton prices during 2000/2001 marketing year to 55 cents from earlier 54 cents. In 1994 world prices had hit $1.10 a pound but sank to 44 cents at the end of (1999).

REASSURING FOR TCP

The fact that the TCP has moved the corner is reassuring for it. When it was inducted primarily to procure cotton for exports in order to stabilise prices to hints were dropped, it would not be able to sell.

The TCP has instead been able to sell 23,000 bales of cotton initially to US, UK and Italy. The quality Alaqa and Afzal has been sold at 41 and 41.50 respectively. Earlier it reported it had sold 1,000 bales of cotton to Liverpool companies.

The TCP has tendered for another 40,000 bales at a time when prices have been showing up. It has already bought 525,000 bales, while it has procured nearly one million bales.

The textile millers were after TCP to include them in auctions. The TCP said it rejected a couple of bids, though keen market people alleged that actually local agents bought.

STARVED OF YARN

Producers and exporters of value-added items alleged that they are starved of cotton yarn. They cited a good quantity of orders they managed to secure at international Heim Textile in Germany which they apprehended but would not be able to executes.

Reason: Shortage of cotton yarn. They also alleged that cotton, bought at lower prices by the spinners, had not benefitted them. Yarn prices remained high. The leading aggrieved remain members of bedwear association, Council of Textile Association and powerloomers. They have demanded facility of refinance allowed on counts of yarn be withdrawn. Some interest also called for imposition of duty on yarn exports.

ARRIVALS UP

LatestÑ upto February 1, 2000, arrival figure was shown higher by 35.23 percent. But local prices were not hit altogether. Although production has been given by 9,244,000 bales, but the most optimist thin production can go up to 10 million bales. Such people think until end of March another eight lakh bales may make inroads into market. However, ginners feel cotton leaves enough surplus after meeting 8.5 million textile mills demand. The spinners put their demand over nine million bales.

Meanwhile, private sector exporters besides the TCP, have already shipped 96,802 bales and registered contract for exports up to 436,246 bales.

WARNING TO GROWERS

In their own interest growers of cotton have been asked to get rid of hibernating pupae of the American bollworm in the remnants of the recently picked up crop. The Punjab Agriculture Department has given February 15, as the last date to root out the sticks. They said after the deadline, pupae will gain strength. Therefore, farmers, not carrying out advice, would be panelised. The growers have been advised in their own interest to take care the field and the pupae before February 15, 2000. If they acted in time, growers would be spared of penalty by the Agriculture Department and, of course, the damage to crop. Take head growers!

SLOW BUYING

At times cotton lifting appeared really huge. But ginners do not feel satisfied, as they lamented about small buying. Perhaps they were referring to around 1.5 million to 1.6 million cotton stock piled in ginneries.

Last week, a no-deal day with small lifting was rather exception. One single day saw cotton changing hands around 20,000 bales and on Friday one deal was struck for 10,000 bales.

In circumstances as they exist today it is difficult point fingers at anybody. The buyers may be pretty conscious about the inventory that has enough to last long and the prices taking to uphill course. Besides these they have to judge their export parity. Spinners claim they bought when prices were higher than the international rates. However, ginners (or growers) have already suffered because of back of many outlets. Their outcry needs careful examination.

In the meantime small growers have come out with a lament. They said that prices have increased but gains have gone to those, who could hold back cotton till this day. Small stock holders cannot but avail the first opportunity to pay back loans and meet other obligations. God help them.

TAIL PIECE: In good old days, who had to go a long journey or found their own place not safe, deposited valuables, documents with men known for integrity. The other day, the growers fed up with slippage in the phutti prices and dumped their phutti with ginners, particularly, those, who could not hold if with them. The idea was that the phutti would be sold, when prices go up. When the phutti was dumped, prices were ruling at Rs 350, Rs 400 per 40 kgs. When prices rose, the growers approached the ginners for settlement of the dumped phutti, but they allegedly found ginners were not ready to budge.

The issue was then taken to district authorities with some reservations. The issue came up before commissioner Hyderabad Division and finally settled. The growers would now get Rs 600 per 40 kg, additional Rs 250 and below ruling rate Ñ Rs 650, Rs 700 or like amount.

Some lacuna about ginning rate, deduction on "Bora" weight etc., was left to be decided by the two sides. Anyway general atmosphere was that of satisfaction on both sides! Thank God!!.