20000317

Cotton business at standstill

DR. ZAFAR HASSAN

LAHORE: In a preamble to the Eid-ul-Azha festival holidays commencing this Friday, dull and drab conditions have persisted in the ready cotton market where scant business was reported over the past several days. However, the tone of cotton prices has remained fairly strong due to decreasing disposable stocks now available with the ginners. The ginners are reported to be sitting comfortably tight over their unsold stocks estimated to be more or less 700,000 bales (170 kgs) of cotton Business is now likely to resume next Tuesday because on Monday next week the traders would exchange their traditional hugs and greetings associated with the Eid festival.

This year the water shortage in dams and rivers is signalling some problem with sowing of the next cotton crop (2000-2001). While some sowing has started in lower Sindh, the government authorities are reportedly restraining the cotton growers in Punjab from planting their crop now and want to delay it for a later date. In fact, the officials in Punjab are suggesting that sowing should not commence before May. There are even reports that some plantings in Gojra and Khanewal in Punjab have been uprooted by the district authorities for later sowing.

The prices of cotton continue to be perceived as firm as unsold cotton has now mostly accumulated in the fold of the ginners. Out of the estimated 9.7 million lint-equivalent bales (170 kgs) of seedcotton (kapas/phutti reportedly) received by the ginners this season (1999-2000), the mills have lifted more than 8.1 million bales, while the Trading Corporation of Pakistan (TCP) and the exporters have procured 525,000 bales and 350,000 bales respectively. The ginners would ostensibly be now having less than 700,000 bales to sell, which should not be difficult.

In view of the manifest strength of cotton prices, the Karachi Cotton Association (KCA) deemed it fit to again raise the spot rates of all the notified varieties after keeping them unchanged on Wednesday. Thus the spot rate for Niab-78 was increased by Rs 28.75 to be fixed at Rs 2,167.50 per maund (37.32 kgs), including 15 percent sales tax, that for K-68 was increased by Rs 28.75 to be filled at Rs 2,368.75 per maund, while the spot rate for MNH-93 was enhanced by Rs 40.25 per maund and established at Rs 2,407.50 per maund on Thursday.

The unmistakable increase in cotton prices at the New York futures market, as well as general rise in values for shipment cottons, has kept lint prices in Pakistan at increased levels. Moreover, private exporters are continuing to make their presence felt in the ready cotton market, which is also a source of sustenance for the ginners. Though the yarn and cloth markets decided to close this Thursday, earlier reports indicated steadiness in the prices of most textile products. Spinners gained confidence when the Federal Ministry of Commerce spokesman stated that no decision has been taken by the government to restrict export of yarn or impose export duty on it. However, rumours remained rife in the textile market that some sort of yarn restriction would be imposed by the government after the Eid holidays.

The average price idea for cotton in the ready market was Rs 1,850 per maund (37.32 kgs) for Niab-78, without the 15 percent sales tax; Rs 2,025 per maund for K-68 and Rs 2,050 per maund for the better quality of lint in Punjab. While the previous tender floated by the (TCP) did not evince suitable interest, it has floated another tender to export 70,000 bales of Pakistan raw cotton Ñ 50,000 bales of type Afzal and 20,000 bales of type Alaka Ñ with staple of 1-1/16 inch, which is valid for bidding till March 24.

While the New York cotton futures price for key May 2000 delivery suffered a slight loss, the forward months and new crop (2000-2001) deliveries posted gains. Thus the May 2000 delivery month closed for the day on last Wednesday at 63.22 US cents per pound (down by 14 points), the July 2000 delivery settled at 64.54 cents per pound (up by four points), while the October 2000 delivery ended the session at 64.50 per pound (up by 45 points). Steady buying in December 2000 contributed to support the new crop delivery prices.

Unconfirmed reports in the evening stated that growers in Sultanabad in Sindh had settled their fixation for 2,400 bales with the ginners at Rs 1,700 per maund (37.32 kgs) for the corresponding lint, while 500 bales from Mirpurkhas were said to have been transacted at Rs 1,900 per maund, without the 15 percent sales tax. There was anticipation that the ready rates of cotton would open on a firm note next week.