950803

Cotton prices collapse

in local market

ZAFAR HASSAN

KARACHI: The cotton prices for the new 1995-96 crop collapsed in the local market as prices fell from Rs 2200 to Rs 1700 per maund within one week ending on Thursday for the Sindh Niab-78 variety, as ginners lopped off Rs 500 per maund in making fresh offers for their lint. It is feared that due to this massive fall in lint values within one week's time, several mills may not lift the cotton lots they had recently purchased at higher prices, which would result in the non-performance of cotton contracts in the ready market.

On Thursday morning, there were reports that Sindh lint from Tando Allahyrar, and also possibly from Tando Ghulam Mohammad (formally Jamesabad) had both sold at Rs 1850 per maund. It may be recalled that a day earlier on Wednesday the cotton from Tando Adam had sold at Rs 1915 per maund. However, by Thursday afternoon over the week-end, a prominent ginner from Sultanabad had sold at least 300 bales of his cotton at Rs 1700 per maund, which is the lowest price of cotton for the new season (1995-96).

The fall in lint prices were triggered by further closures in the textile spinning capacity in Pakistan, which are reported to be quite sizeable. Many textile mills are also reported to be cutting down more working shifts in their operations. Moreover, lower lint price advices in the New York and other markets, together with prospects of a fairly healthy glbal cotton output predicted recently in most other markets, have also instigated the sizeable decline in lint values. No sale of current crop cotton (1994-95) was reported.

Renewed crime including two dozen or more deaths reported in various incidents in Karachi over the past couple of days has again raised the specture of increased civil unrest and turmoil in the city, the economic effects which are bound to extend to other parts of Pakistan in the northern areas.

The seed-cotton (Kapas) prices also registered a sympathetic decline with lint values and were ruling from Rs 730 to Rs 735 per 40 kgs. Cotton-seed (Binola/Kakra) prices also fell to Rs 220 per maund. Textile goods prices continued to decline notably as a number of more spinning units are expected to close down soon. Reports of anti-dumping duties applied by Japan and Taiwan against the import of Pakistani cotton yarns have further dampened the spirits of the textile industry.

As of date, lesser rains in the cotton-growing areas in Pakistan compared to last year have kept prospects for a better 1995-96 cotton crop in good stead. In the mean time, many cotton ginners, together with a number of spinners, are opposing the reopening of the cotton hedge market in Pakistan. However, the Karachi Cotton Association (KCA) has again reportedly written to the Federal Commerce Ministry in Islamabad to expedite the government's formal permission to allow the reopening of the cotton hedge market.

KCA Chairman Abdul Sattar Balagamwalla is also seeking time with the authorities in the federal capital at Islamabad to convince them about the overall benefits of opening the cotton hedge market to all sectors of the cotton trade, in case any further clarification is required. It may be recalled that the KCA has already sent the amended and upto date by laws and other recommendations for reopening the cotton hedge market to the government authorities.