960419

Lint prices trend

remains uppish

SHAFI AHMAD SYED

KARACHI: Since it is now quite clear that the size of the cotton crop has dwarfed, the fact offers ground for the demand and supply principle to come into play. Prices have been going up gradually. Ginners long wait has enabled them to earn good profits but has also made them complacent. The situation does not end there. Financially sound spinners with touch and clot with the banks and exporters of cotton abroad have been exploring prospects of importing cotton from countries which have low cost cotton - such as India and CIS. But the lesser ones will have to frequent the market willy nilly to mop up left-over lots. The more needy will have to, willingly or otherwise, oblige sellers at their dictated price. Last week gave a semblance of such exigency which pushed the prices to season's peak at Rs. 2500 and more. But how high the prices will go is uncertain and unpredictable. Cotton pundits are placing the stretch upto Rs. 2700. The question arises why this much?

However, the trend last week remained uppish. The Sindh types - Niab and K-68 - rose by Rs. 25 and Rs. 85 respectively. But the MNH-93, supreme quality gained Rs. 80. The wide difference the latter attained against K-68 is a little surprising. In ready, with exception of premium lots, prices of K-68 and MNH-93 ran neck and neck. Any way, the Niab, which opened its account last week at Rs. 2225, closed at Rs. 2250. The K-68 commenced the week at Rs. 2345 and wound up at Rs. 2420. The MNH-93 started at Rs. 2390 and ended at Rs. 2470.

The New York cotton futures, though closed slightly higher yet the amount was considerably lower. On Thursday, traders said, NYCE cotton futures were trading higher on commission houses and light speculative buying. Meanwhile, talk that China is in the market for cotton and drought in West Texas added fuel, industry sources said. However, May opened at 88.75 cents a pound and after trading between 88.30 cents and 86.25 cents closed at 83.45 cents after trading between 83.85 and 83.02 cents. July traded between 84.90 and 84.10 cents a pound.

On the local front again, we have already observed what the spinners and ginners have been doing. In this context the role of exporters has been very shrewd and they performed their role very efficiently. They exploited the size of cotton crop at every level, always keeping it on the higher side of our needs. But today people are claiming that we are short of one million bales. However, the active exporters got registered some 23,19,289 bales and exported 17,40,380 bales, including around 7,213 bales last week.

Last week was cut short by one day on account of strike on Thursday. However, sketchy deals were reported by brokers.

Meanwhile, Aptma in a representation to the government has urged to suspend shipment against committed contracts. Besides this plea, they want that export of lint should be banned, without indulging in unending debate, it is difficult to understand how such action by the government will keep dishonour away if shipment is discontinued? Besides, the voice has also been raised against unbriddled exports of cotton yarn, contestants are too many, but there seem to be no umpire. We say some way must be found out so that the contestants are ascertained of even deals. At the moment they look for everything to Islamabad. If the spinners are bent upon importing one million bales of cotton, and that they deserve it, they should be given permission. They want permission to import cotton from India and duties like regulatory duty waived.

The exact quantity of contracts registered and cancelled on any account has not been clear. Had it been ever revealed by any quarter, things would have been clearer. Incidental cancellations have been made due to political conflicts in China, Taiwan and Bangladesh, but in these cases, exact quantities have not been given. Last year, a bad year, spinners had shown eagerness to compensate their shortfall by importing cotton from abroad. Deals were struck, consignments started reaching. But at one stage ship loaded with cotton had to return without unloading cotton. Two versions circulate for this untoward incident: prices had fallen in the meantime, and that consignments were not required any more. A clarification would be welcome.

Some reports need to be mentioned here: (1) The Ministry of Commerce has given a nod for grading cotton and prices fixed according to grades. Grade three out of total of five will form the base. This may settle the score persisting for ever. The cotton buyer deduct five percent on presumption, that all's not well with Pakistan cotton, (2) Aptma chief has cited examples of Thailand and Indonesia turning our biggest competitors as they enjoy favourable duty and other facilities, (3) Sales Tax being imposed under the pressure of IMF is strongly criticised by cotton, textile and made-up sectors, (4) Collector of Customs has said strictly the textile components of the export consignments will be paid duty drawback, (5) According to a fabrics exporters to Far East, exports have slowed down due to complaints of yarn being contaminated. They claimed having paid 50,000 dollars in claims made by the buyers and (6) EPB plans to set up ECO textile laboratory in Karachi. The Lab will examine and point out, if any, harmful constituents used in production of textiles such as Azodyes etc.

TAIL PIECE: The proposition is not new. But it is very encouraging. In fact, the proposal was given solemn recognition to be forgotten like that.

The Speaker of Punjab Assembly, Hanif Ramay, has tried to bring the issue to surface again. He has urged the relevant quarters that emphasis be given on manufacture and exports of value-added goods. This issue was given full recognition in the hazy days of Dr. Mahbubul Haq. But with the change of government the policy gets changed in Pakistan.

In case of tea etc imported from abroad and taken practically nothing from Pakistan be introduced Special Trading Agreement (STA) but was nullified later. However, exports of value-added goods were given recognition in those days. It was agreed that exports of raw materials like cotton and semi-raw material like yarn should not be given precedence over the textile and made-ups. But then a tirade against him started and the whole issue subsided into the background with the passage of time.