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Cotton business resumes on steady note

DR ZAFAR HASSAN

LAHORE: Following closure for three days last weekend and a quiet session on Monday, cotton sales revived in respectable proportions on Tuesday with tendency for the prices to go up. In fact, according to one assessment, lint prices in actual sales and general offerings were higher by Rs 25 to Rs 50 per maund (37.32 kgs) in the ready market. Nearly 6,000 bales of cotton were reportedly sold on Tuesday with the anticipation that off-take would become brisk in the succeeding sessions.

In foreign news, however, New York cotton futures prices declined substantially. Better cotton production prospects in the US due to beneficial rains in Texas, contributed to the negative tone in New York where traders and speculators both indulged in pronounced selling.

According to various global reports, foreign buyers are fairly well covered for the second quarter and are negotiating for their cotton requirements for the third quarter of this year. Whereafter, the new crop (2000-2001) would find its way into the world markets.

In this context, it may be mentioned that the Trading Corporation of Pakistan (TCP) is sitting over a huge pile of unsold and unshipped cotton. The TCP could conceivably lose its initiative and advantage of a profitable market and up in an adverse situation unless it speeds up it sales and shipments of cotton without further loss of time.

There is speculation in the market that the TCP tender for the sales of 70,000 bales due for opening next Friday may turn out to be as disappointing as the last tender. Up to now, the TCP has failed to sell its desired quantities of cotton which could have an adverse effect on the domestic market and the economy.

The New York cotton futures prices lost sizeably across the board on last Monday. Thus the May 2000 delivery month fell to settle at US cents 61.14 per pound (down 155 points), the July 2000 delivery slumped to settle at US cents 62.54 per pound (down 159 points), while the October 2000 delivery also suffered to settle at US cents 62.40 per pound (down 160 points). With better rainfall in West Texas and the delta area in the US, new crop (2000-2001) prices could feel some pressure.

Speaking in Jhang in the Punjab recently, the member of the National Security Council Shaffi Niaz told a gathering of growers that support prices for cotton would be announced this month.

He further said that profits accruing from the purchase and sale of cotton by the TCP would be transferred to a special fund.

The actual size of the current (1999-2000) cotton crop in Pakistan is expected to be about 10 million bales (170-kgs) on an ex-gin basis, though the recorded output may be registered lower.

Without the 15 percent sales tax, the price idea for cotton from Mirpurkhas in Sindh was said to range from Rs 1,850 to Rs 1,900 per maund on Tuesday; 400 bales from Naushehro Feroze reportedly sold at Rs 1,900 per maund (37.32-kgs), 200 bales from Shahdadpur sold at Rs 1,975 per maund.

The price idea for cotton from the Khairpur district ranged from Rs 1,950 to Rs 2,000 per maund, 200 bales of seedstuff quality from Tando Adam sold at Rs 2,050 per maund, 1200 bales from Salehput (K-68) were said to have been sold at Rs 2,050 per maund.

Without the sales tax, then Punjab cotton prices reportedly ranged from Rs 1,900 to Rs 2,150 per maund.

In actual sales, 1,900 bales of cotton from Fazilpur reportedly sold at Rs 2,050 per maund while 1,000 bales from Kabirwalla sold at Rs 2,150 per maund. The Karachi Cotton Association (KCA) spot rates were kept unchanged.

Finance Minister, Shaukat Aziz declared last Monday that the federal budget would be announced in May this year, instead of June. Normally, budget announcements are made in June before the commencement of the financial year in July each year.