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Cotton market barely steady

DR ZAFAR HASSAN

LAHORE: Weak to barely steady conditions were reported in the cotton market on Tuesday. Punjab lint prices were reduced in the ready market, though Sindh style managed to maintain the overnight price level. Trading was conducted till the afternoon in a carefree manner by the spinners. Total cotton transactions were estimated at 10,000 bales (170 kgs). The seedcotton (kapas/phutti) arrivals are now decreasing with 80 percent of the ginning factories being reportedly closed down by now.

Lint prices have changed to a small extent on the lower side but the Karachi Cotton Association has reduced its spot rates for two of its prime varieties from upper Sindh (K-68) and Punjab, though the spot rate for Niab-78 remained unchanged on Tuesday. The spot rate for Niab-78 has been unchanged at Rs 1,765 per maund (37.32 kgs), including the 15 percent sales tax, that for K-68 has reduced to Rs 2,052.50 per maund, while the spot rate for MNH-93 has decreased to Rs 2,079.75 per maund.

It is believed that nearly 9.6 million lint-equivalent bales (170 kgs) of seedcotton have arrived into the ginning factories up to now, out of which the domestic mills have lifted about 7.6 million bales. The exporters are said to have lifted about 250,000 bales up to now, while the Trading Corporation of Pakistan (TCP) has procured nearly half a million bales this season (1999-2000). According to one estimate, Pakistan may export nearly 300,000 to 400,000 bales during this season, out of which nearly 125,000 bales have already been shipped out, Indonesia, Bangladesh, Thailand, Korea and Taiwan being prominent destinations. Cotton has also been shipped this year to Malaysia, Vietnam and the Phillipines.

It is still hoped that Pakistan will produce nearly 10 million bales (170 kgs) of cotton this year. The Cotton Crop Assessment Committee is meeting again on February 21, 2000, at Aptma House in Lahore to deliberate on the prospects of the production and disposal of this year's crop in Pakistan.

In the evening there were more sellers than buyers of cotton with tendency of the market to appear on the weak side.

A distressing note evident in the market was the serious concern expressed by the ginners claiming that the TCP had not paid for the cotton it had purchased from the ginners during the last three months. The Chairman of the Pakistan Cotton Ginners Association (PCGA), Shaikh Mohammed Saeed, has pointed out that the delay in payment by the TCP was creating acute problems and difficulties for the ginners. Originally, the TCP had promised to pay ginners within 15 days of the receipt of cotton. The delay of the TCP payments to the ginners is in turn creating difficulties in payment to the growers against their supply of seedcotton to the ginners.

In actual sales of cotton on Tuesday, 100 bales of cotton from Mirpurkhas in Sindh reportedly sold at Rs 1,450 per maund (37.32 kgs), without the 15 percent sales tax, another 200 bales of better grade cotton from Mirpurkhas sold at Rs 1,475 per maund, 500 bales from Bandi sold at Rs 1,525 per maund, while 200 bales from Bandi sold at Rs 1,550 per maund, 400 bales of seedstuff cotton from Nayabad sold at Rs 1,600 per maund, 200 bales from Kandiaro sold at Rs 1,625 per maund, 200 bales for Khipro (seedstuff) sold at Rs 1,650 per maund, while 1,200 bales from Mirpur Mathelo, Daharki and Ghotki in upper Sindh (K-68) are said to have been sold at Rs 1,835 per maund on two-month credit basis.

In Punjab on Tuesday 500 bales of cotton from Muridwalla are said to have been sold at Rs 1,700 per maund (37.32 kgs), without the 15 percent sales tax, 600 bales from Bahawalpur sold at Rs 1,735 per maund on one-month credit basis, 200 bales from Kahror Pucca reportedly sold at Rs 1,750 per maund, while 500 bales from Rahimyar Khan sold at Rs 1,775 per maund on Karachi delivery basis.

In the New York cotton futures market, March 2000 delivery closed higher at 57.26 US cents per pound (up 29 points) on last Monday. The May 2000 delivery settled higher at 59.36 cents per pound (up 47 points), while the July 2000 delivery also moved up to end the session at 60.52 cents per pound (up 38 points). The asking prices for shipment cottons, both upland and long staple styles, have also been increased by the international merchants. Offers are tighter at certain origins like the Central Asian Cottons (CIS).

According to Mian Rahman Naseem, a prominent spinner from Multan, any change in the domestic cotton priceline would depend on the future sale activity of the TCP. In the next tender for foreign sales of Pakistan cotton, the TCP could get two or three cents more per pound of cotton due to relative increase in lint prices abroad since the last tenders. Pakistani mills are still offering to lift the unsold stocks lying with the TCP The international rates of cotton which they may receive in the next auction. At present the Pakistan mills have sold out their yarns for the next few months in both the domestic market as well as in exports. Therefore, the yarn prices are firm despite the fall in domestic lint prices by Rs 150 to Rs 200 per maund (37.32 kgs) in recent weeks. Generally, the fabric prices are also very good. The loomowners are said to be charging higher rates for producing fabrics on contract for the exporters.