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Analysis

New crop lint prices

fall further

DR ZAFAR HASSAN

KARACHI: Local lint prices of new crop fell further on Sunday as about 1000 or more bales Niab-78 from Sindh were traded at Rs 1950 per maund, thus registering a fall from Rs 2100 per maund, the highest price at which the same variety of cotton was sold on Saturday.

Cotton brokers pointed out, however, that sales of new crop Sindh cotton at Rs 1950 per maund on Sunday also incorporated compensation given by the ginners to the spinners to afford an incentive to the spinners to lift the cotton they had earlier bought at much higher prices recently.

Sindh stations which sold new crop cotton at Rs 1950 per maund on Sunday include Jhol, Tando Allahyar, Shahdadpur and Hyderabad. Later, in the afternoon, two cotton lots, one each from Tando Allahyar and Shahdadpur, also sold at Rs 2000 per maund on reports that arrivals of seed-cotton (kapas) were barely maintained or perhaps even signifying more competition between more and more ginners commencing lint production for the new season ahead of us.

One prominent ginner who is also an exporter recalled that over the last couple of years or so, the trade had expected normal or better lint production in the early part of the season, only to be disappointed later on. Again this year, cotton trade is hoping to reap anywhere from 9.5 to 10 million bales (of 170 kgs, each) or more for the forthcoming season in Pakistan, but several rain bouts in areas like Multan or even Khanewal bring apprehensions to some quarters of the cotton trade regarding the size of the next cotton crop. Even the monsoon buildup in Bangladesh or Rajasthan, according to the meteorologists, still poses possible threat of rain and inclement weather which could adversely affect the next cotton crop.

There were also rumours in the local cotton market that the Cotton Export Corporation (CEC) may release another 40,000 bales of imported CIS cotton to the spinners within the next two or three days, which would be in addition to the 60,000 bales already sold by the CEC over the past few month_s. The All Pakistan Textile Mills Association (Aptma) are hoping that the CEC would sell the imported CIS cotton at Rs 2000 per maund, but the CEC may not concede anything less than Rs 2115 per maund, at least not under the present circumstances.

According to cotton broker Naseem Usman, cotton prices have fallen and then risen by Rs 600 or Rs 700 per maund during the past one month or so, thus registering up and down price movements of Rs 1200 per maund or more when taken together, which has created a crisis of sorts in the market. The recent price fluctuations of ready cotton in the market is damaging the cotton economy as a whole.