950815

Analysis

Cotton market

slightly easier

DR ZAFAR HASSAN

KARACHI: Lint values were moderately easier on Tuesday in the local market compared to Sunday (Monday having been Independence Day holiday). Lower Sindh styles from the new crop (1995-96) which were selling between Rs 1850 to Rs 1925 per maund on Sunday were sold from Rs 1850 to Rs 1875 per maund on Tuesday afternoon registering a fall from Rs 25 to Rs 50 per maund.

Tando Allahyar lint sold at Rs 1850 per maund because its style was said to be dullish. Shahdadpur new crop also sold at Rs 1850 per maund. However, Tando Adam fared better and obtained Rs 1875 per maund in the ready market. Thus, lint values were relatively easier on Tuesday. However, seed-cotton (Phutti) prices ranged from Rs 760 to Rs 770 per 40 kgs, which sold at about Rs 750 per 40 kgs a couple of days ago. Even cotton-seed (Binola/Kakra) price were higher at Rs 245 to Rs 250 per maund, which were earlier ruling from Rs 230 to Rs 235 per maund.

Textile mills are still not doing well, but some reports indicate that the textile industry performance may improve in the near future. Portents of some type of emerging revival are being anticipated since the last few days in the textile market.

The general condition of the cotton crop in both Sindh and the Punjab provinces is said to be good. Due to some drizzle in some areas of the Punjab, now the crop arrival there may be late by a week or so, and thus several ginning factories in Maddarasa, Bahawalnagar, Chishtian, Sahiwal and Pakpattan may now commence ginning in early September, and not in the end of August as previously anticipated. In the Sindh province, some seed-cotton arrival may be delayed there due to cloudy weather.

In the meantime, the textile mills are reported to be requesting the Cotton Report Corporation (CEC) to further reduce the prices of imported CIS cotton which the CEC is selling to the local mills.

According to reports from New York, price-fixing by the mills there accompanied by speculative buying pushed the cotton futures prices limit-up for all the first five trading months on Monday. The weather and the perceived deterioration in crop conditions have also aided a rise in the New York cotton futures market. Thus, October, 1995 delivery month closed at US cents 76.70 per pound (limit-up by 200 points) on Monday, December 1995 delivery closed at US cents 74.35 per pound (limit-up by 200 points), March 1996 delivery closed at US cents 75.30 per pound (limit-up by 200 points), May 1996 delivery closed at US cents 76.28 per pound (limit-up by 200 points), while the July 1996 delivery increased to close at US cents 76.75 per pound (limit-up by 200 points).

Earlier, some international merchants have envisaged some fall in New York cotton future values, but now the market there has firmed up on decline of the crop condition there. As earlier, international merchants still perceive a fairly steady price level for the Extra Long Staple (ELS) cottons during the 1995-96 season.In conclusion, one may say that due to reported rains in Texas causing deteriorating in quality, reports of lint buying by China and South Korea recently, pest problems in Georgia, Alabama and the Delta region in the USA, some possible improvement in cotton yarn prices, and the USA having already said to have committed sizeable quantities of cotton in export sales, the lint prices may have to be watched carefully for any possible upturn. Presently, however, other "outside" growths are doing reasonably well as regards their production prospects.