20000325

Further gains in cotton market

DR ZAFAR HASSAN

LAHORE: Since the last weekend, lint prices have moved up by another Rs 25 to Rs 50 per maund (37.32 kgs) in the ready market. Total gains achieved in cotton prices add up to Rs 200 per maund since the inception of this month. A turnover of nearly 12,000 bales was reported from Karachi on Friday. Usually a slack day.

There is said to be good demand for cotton in the market from both the mills and the exporters. Though the domestic lint prices are now out of parity for the exporters, they are still enquiring for more cotton, perhaps to cover their earlier foreign sales.

Though the local yarn prices were barely steady, the foreign prices for Pakistan yarn have lept up remarkably. The domestic weavers do not find the current yarn prices as feasible. The textile ancillary industry in Pakistan continues to protest against the high yarn prices and is still pleading with the government to apply some export restrictions on yarn including imposition of some export duty. However, the spinners feel that such a move is unnecessary and unjustified.

The Karachi Cotton Association (KCA) increased its spot rates in all its notified varieties on Friday by Rs 28.75 per maund (37.32 kgs) uniformly. Thus the spot rate for Niab-78 was filled at Rs 2,225 per maund including 15 percent sales tax, that for K-68 was determined at Rs 2,397.50 per maund, while the spot rate for MNH-93 was established at Rs 2,436.25 per maund. Polyester staple fibre (PSF) prices have gained in Pakistan recently and are poised to increase further, in line with other petroleum products due to the strength of the crude oil market.

Though not all the figures and statistics will be formally recorded, but market sources in Karachi claim that nearly 10 million lint-equivalent bales (170 kgs) of seedocotton (Kapas/Phutti) have already arrived into the ginning factories in Pakistan this season (1999-2000), out of which the mills have actually lifted about 8.5 million bales (170 kgs).

The Trading Corporation of Pakistan (TCP) has lifted 525,000 bales, while the exporters have lifted an estimated 350,000 bales. Thus nearly 9.3 to 9.4 million bales of cotton have been lifted by the Sundry buyers, while the ginners may have retained 600,000 to 700,000 bales of undisposed cotton with them.

In the ready market, the seller was reportedly willing to dispose of his cotton in Mirpurkhas in Sindh at Rs 1,900 per maund (37.32 kgs) without 15 percent sales tax, while 1,500 bales of cotton from Mando Dero in upper Sindh (K-68) were sold at Rs 2,040 per maund and 600 bales from Pano Aqil sold at Rs 2,200 per maund on credit basis.

Without the sales tax, 1,200 bales of cotton from Rahimyar Khan reportedly sold at Rs 2,085 per maund (37.32 kgs), 2000 bales from Bahawalpur sold on last Thursday night at Rs 2,095 per maund, 5000 bales from Ahmadpur East and Bahawalpur are said to have been sold at Rs 2,150 per maund, while 2,200 bales of cotton from Channigoth and Ahmadpur East are said to have been sold on one month's letter of credit basis at Rs 2,175 per maund. The tone of the market remained steady to firm in the evening.

Though the TCP has sold 177,000 bales (170 kgs) through its various tenders, the actual shipment has been only 1,900 bales. New sales of only 5,000 bales each for Afzal and Alaka types were finalised this week at US cents 47.10 and 46.25 per pound FOB respectively, which prices are lower by about 3 (three) cents per pound as compared to the previous tender.

There were reports in the market that the international merchants have yet to sell much of the cotton which they bought earlier from Pakistan. The TCP is negotiating to sell more cotton (20,000 bales of Afzal and 15,000 bales of Alaka), to a couple of international merchants at the prices obtained in the latest tender. The reply was awaited on Friday.

The descending prices on the New York cotton futures market continued to pressurise the cotton values. Release of more lint from CIS origin and deliveries expected from such southern hemisphere crops as Australia, South Africa and Brazil also weighed on the market. Good rains in West Texas and other parts of the US cotton belt eased the cotton values.

On last Thursday, the futures prices in New York fell across the board. The May 2,000 delivery suffered to settle at US cents 59.04 per pound (down by 82 points), the July 2000 delivery closed for the day at US cents 60.53 per pound (down by 75 points), while the October 2,000 delivery slipped to US cents 60.40 per pound (down by 50 points).

The falling prices in New York may be indicative of the process of discounting what the trade believes to be a large prospective planting estimate due for release next week from the United States Department of Agriculture (USDA).