960421

Holiday mood pervading

cotton market

DR ZAFAR HASSAN

LAHORE: As and how "we near the Eid-ul-Azha holidays (29th April, 1996), the preceding holiday mood is now pervading the cotton and other business markets in Pakistan more perceptibly". Partial result of the onsetting holiday scenario is that lint prices have fallen by about Rs. 50 per maund during the last couple of days. Curiously enough, the Karachi Cotton Association (KCA) did not reduce its spot rates on Sunday, thus maintaining the price of Niab-78 at Rs. 2225 per maund, that of K-68 at Rs. 2395 per maund, while the spot rate for MNH-93 was determined at Rs. 2445 per maund.

Though the trading in cotton was thin on Sunday, Sunday's cotton pricing and activity at Karachi were described as a "buyer's market". Only premium cotton with prime micronaire value could fetch a higher value. Dull conditions in the yarn markets, considerable lint offerings by the exporters in the market, and the holidays, closures ahead are responsible for low volume of turnover in cotton sales. Some cotton exporters claim that as they are not receiving the requisite letters of credit from their buyers abroad, they are unloading their lint stocks in the local market. Only a few needy mills in Pakistan have picked up some cotton lots, and in the process are paying the truckowners exorbitant rates to carry their cotton from the ginning factories to their mills.

There is a moderate dullness in the domestic lint market, but several cotton ginners are reported to be eager to sell their cotton in the market. Thus only stray buying of cotton was evident on Sunday. A few cotton ginners may be anxious to sell their cottons as the values have eased relatively, and also because the ginners would now have to pay carrying charges to carry the unsold cotton possibly upto the second week of next month before they can commence regular sales.

One report from Karachi indicates that the new crop (1996-97) from Sindh is coming up very well, and that a prominent ginner from Mirpurkhas is willing to offer his new crop lint at Rs. 2200 per maund for July, 1996 delivery. The Karachi cotton brokers reported that the Cotton Export Corporation (CEC) production figure for the current 1995-96 cotton crop upto the 18th of April, 1996 is 9,932,000 bales (of 170 kgs each). The mills purchase for the commensurate period is 8,073,000 bales, while the lint purchase by the cotton exporters for the corresponding period is 1,483,000 bales.

About 200 bales of cotton from Rahimyar Khan sold on Sunday at Rs. 2320 per maund, but 200 bales from Kahror Pucca and 218 bales from Mailsi are said to have sold at Rs. 2350 per maund each. Then 300 bales from Bahawalpur are said to have sold at Rs. 2355 per maund. About 500 bales of prime mike cotton, from Rahimyar Khan where the micronaire value was more than 4, reportedly sold at Rs. 2400 per maund on Sunday.

On the foreign cotton front, despite a fall on last Friday by 25 cents, July, 1996 the more relevant month now for futures cotton, is still ruling above the mid-eighties cents per pound. There are fears also reflected in other frontal delivery months in New York, which hover much above the US cents 80/Lb mark as the traders reportedly remain apprehensive of losing cotton acreage to better paying competing crops in the USA, and also due to the drought conditions being monitored in West Texas. Thus on Friday, May 1996 delivery month closed at cent 84.23 per pound (down by 9 points), July 1996 closed at cents 85.34 per pound (down by 25 points), while the October 1996 delivery closed at cents 83.30 per pound (up by 5 points).