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Cotton market calm and quiet

DR ZAFAR HASSAN

LAHORE: Ready cotton market displayed calm and quiet disposition on Tuesday as lint values decreased further by Rs. 25 to Rs. 50 per maund (37.32 kg). Though recently the yarn prices have gone down, but generally the textile industry in Pakistan has been enjoying a profitable season. Even then, the Karachi cotton brokers are reporting money tightness in the market as several mills are not lifting the cotton purchased at relatively higher values recently. The spinners claim that the yarn prices have gone down by Rs. 10 to Rs. 15 per 10 lbs. In recent weeks and the offtake in the export market has also slowed down, but the end-users continue to complain of high yarn prices and its short supply.

Despite the news that sowing of cotton crop (2000-2001) would be delayed by four to six weeks in lower Sindh due to paucity of water in the rivers, and that the government is also not allowing sowing in Punjab till later in May and June to avoid pest problems, lint values of the current crop have gone down sizeably over the past few weeks. Not only are the diminishing New York cotton futures prices influencing the domestic lint prices in Pakistan, but the mills here are also apparently well-stocked and need not indulge in speedy buying.

The general failure of the Trading Corporation of Pakistan (TCP) to sell and ship its cotton stocks in the export market is also weighing upon the domestic price level. The TCP has still to sell more than 300,000 bales, but it refuses to dispose it of in the domestic market to avoid any further depression of local lint prices. The standing committee on cotton crop assessment, as also the Pakistan cotton Ginners Association, is against the selling of TCP cotton stocks in the domestic market. However, the All Pakistan Textile Mills Association (Aptma) wants the TCP to sell all its stocks of cotton to the local mills.

Without the 15 percent sales tax, the price idea for cotton from Mirpur Khas and Sultanabad in Sindh ranged from Rs. 1,650 to Rs. 1700 per maund (37.32 kg); that in Shahdadpur or Sanghar ranged from Rs. 1750 to Rs. 1800 per maund; in the Nawabshah district it ranged from Rs. 1800 to Rs. 1825 per maund; in the Khairpur district it ranged from Rs. 1825 to Rs. 1850 per maund; in Upper Sindh (K-68) it ranged from Rs. 1900 to Rs. 1925 per maund; while in Punjab the cotton prices generally ranged from Rs. 1850 to Rs. 1925 per maund.

In the afternoon, 500 bales of relatively lower grade of cotton from Dera Ghazi Khan and 660 bales from Mitroo, near Vihari in Punjab were sold at Rs. 1850 per maund (37.32 kg) on cash basis, while 500 bales from Vihari were said to have been sold at Rs. 2000 per maund on two months' credit.

According to Mian Abdul Waheed of Neelum Cotton, in Multan, the seed quality for the forthcoming new crop (2000-2001) is good and supply is also satisfactory so that keen sowing by growers, can be expected.

Regarding the role of the Trading Corporation of Pakistan (TCP), a team from the International Monetary Fund (IMF) strongly opposed the intervention of the government in the market to protect cotton growers and it termed the amount spent upon cotton procurement as wasteful expenditure of national resources. On his part, the federal minister for Food and Agriculture, Shafqat Ali Shah Jamote, assured the IMF that the government in future would only intervene in the market if a grave situation arises. The minister added that the government had to intervene as the volatile market was badly affecting the economy of the country and the faith of the agriculture sector of the country had been shattered, which could possibly lead to social unrest.

Mohsin Aziz was elected as Chairman of All Pakistan Textile Mills Association (Aptma) unopposed at a meeting of the central managing committee at Lahore last Wednesday, for the year 1999-2000. Mohsin Aziz is a prominent industrialist from the North West frontier Province (NWFP) and has remained chairman of Aptma NWFP Zone, president of Sarhad Chamber of Commerce and Industry, and also a member of the managing committee of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). Among his priorities for Aptma, he counted the promotion of new investment, the balancing and modernisation of the textile industry, and providing impetus to the value-addition of textile products.

A tussle between the ministry of commerce and agriculture has also been reported which is causing delay in the announcement of the cotton policy for the year 2000 Ñ 2001. The commerce ministry is reported to have urged the ministry of agriculture to do away with the support price of cotton so that forces of free market should prevail as in the preceding three years. On the other hand, the agriculture ministry claims the cartels in the cotton trade have been responsible for transferring Rs. 25 billion from the growers to the textile industry in the outgoing season. According to official sources in Islamabad, the cotton policy for the year 2000-2001 should be announced within this week. Next Saturday and Sunday have been declared as public holidays by the government in deference to the observance of Muharram.