950808

Cotton prices bounce

back to higher level

DR ZAFAR HASSAN

KARACHI: After falling from Rs. 2200 per maund to Rs. 1650 per maund since the last ten days or so, prices of new crop (1995-96) cotton bounced back to Rs. 1900 per maund on Tuesday. The firming up of lint prices is apparent since the last couple of days, as the lint prices have improved upto Rs. 250 per maund in this time. There are several days of holiday ahead on various counts, and the local cotton market would close on Thursday and is then expected to resume fully on next Tuesday (August 15, 1995) while August 13 will also be a working day. Recent performance of lint prices on the local market depicts a high degree of volatility, though less selling pressure appears to be on the ginners as current demand exceeds the supply of new crop lint.

It is interesting to note that cotton yarn prices generally remain under pressure, though sporadic buying continues now and then; even then lint prices have again increased, though there are also the reports of a good cotton crop in Pakistan next year (1995-96), which is presently estimated to exceed 10 million bales (of 170 Kgs. each). Negligible loss has been assessed upto now by the Karachi Cotton Association (KCA) Chairman Abdul Sattar Balagamwala to the new crop due to rains and floods, either in Punjab or Sindh.

Lint from new crop (1995-96) Sultanabad station sold at Rs. 1850 per maund, quantities being anywhere from 1000 to 1200 bales. However, 800 bales of new crop from Mirpurkhas reportedly sold at Rs. 1900 per maund. More ginning factories are preparing to run in Sindh on August 15, 1995 soon after the three or four holidays immediately ahead of us. According to the current computation, already nine ginning factories are running in Mirpurkhas, three in Tando Allahyar, two in Tando Adam, one each is running in Sultanabad, Jamesabad, and Sanghar (was scheduled for operation on Tuesday), and another two are running in Sahiwal in the Punjab, using seed-cotton (kapas) from lower Sindh.

On the issue of reopening the cotton hedge market, sources close to the KCA indicate that the KCA is fully pressing its case with the competent authorities in Islamabad and remains hopeful that cotton hedge trading will be resumed in the foreseeable future in Pakistan. The Pakistan Cotton Ginners Association (PCGA) and some members of the All Pakistan Textile Mills Association (Aptma) are opposing the reopening of the cotton hedge market in Pakistan, but cotton experts and analysts feel that the PCGA and Aptma have not really studied the issue with an open or impassionate mind, or may yet have some vested interest in opposing the reopening of the cotton hedge market in Pakistan. Anonymous advertisements have appeared in the local press recently opposing the opening of the cotton hedge market in Pakistan, but they do not merit attention as they have not disclosed the identity of their proponents properly.

Indeed there are indications that when the commerce ministry functionaries find time in the near future from the urgent business involving anti-dumping duties on Pakistani cotton yarn imposed or intended to be applied by Japan and Taiwan, they would give serious, sincere and impartial considerations with a view to reopen the cotton hedge market in Pakistan under the aegis of the KCA.

Cotton yarn prices continue to remain a low level locally. The price of 20/1 yarn used for powerlooms or autolooms is said to be Rs 350/Rs. 355 per ten pounds, that for 20/1 used on shuttleless loom is about Rs. 360 per ten pounds, and 20/1 cotton yarn used on airject looms is being quoted at Rs. 370 per ten pounds in the local market

Due to relative decrease of lint prices recently, the Cotton Export Corporation (CEC) has reportedly reduced the price of its imported CIS lint from Rs. 2350 to Rs. 2115 per maund. Even the mills who had earlier bought imported lint at Rs. 2350 from the CEC, would be allowed credit for the difference between the price of Rs. 2350 and Rs. 2115 per maund, against which the buyers/mills may lift further cotton stocks from the CEC without any additional payment. Now the CEC has reportedly sold upto 45,000 bales of imported CIS cotton against its total imported cotton of 80,000 bales till now.

In the evening on Tuesday, another 500 bales of new crop cotton from Sultanabad were sold at Rs. 1900 per maund.

Another lot of new cotton crop from Sindh was later sold at Rs 1925 per maund.