Slowly but steadily, lint prices have crawled to higher levels and have gained about Rs 125 to Rs 150 per maund (37.32 kgs) over the past week or ten days. On Thursday the tone and tenor of the cotton price line showed tightening tendency. Strong fundamentals arising out of shorter supply compared with the stronger demand for cotton has strengthened the price outlook.
Improvement in domestic yarn prices was reported to range from Rs 15 to Rs 20 per 400 lbs.
Climbing New York cotton futures, on prospects of re-entry of China for further purchases after the extended holidays this week, and sustained speculative buying, have pushed up cotton prices in Pakistan and at other origins.
According to some recent considerations, increase in cotton prices could well spill over into the next season viz. 2004-2005.
Moreover, the domestic ginners doubt that lint output would be anywhere close to 10 million domestic size bales on an ex-farm basis as recently announced by the Cotton Crop Assessment Committee.
Recently, there were reports from certain stations in Sindh and also elsewhere that arrivals of seed-cotton have somewhat increased whereas earlier they had slowed down.
It is estimated that seed-cotton for about 8.1 million to 8.2 million lint - equivalent bales of cotton had already arrived into the ginning factories by the end of December 2003 and seed-cotton for at least another one million domestic size bales is likely to arrive over the next several weeks.
Mills are estimated to have already lifted about 6 million to 6.1 million bales from this quantity while the exporters are estimated to have lifted about 200,000 bales.
It may thus be conjectured that at this time the mills have only covered half the quantity required by them till the end of this season (July 2004) viz about 12 million bales (170 kgs), but have also booked about one million bales (480 lbs/500 lbs) from several foreign origins.
Thus, the seed-cotton (kapas/phutti) prices have also gone up commensurately in Sindh. The seed-cotton prices reportedly ranged from Rs 1,100 to Rs 1,450 per 40 kgs on Thursday according to their qualitative content.
In the Punjab, seed-cotton prices were said to have ranged from Rs 1,500 per 40 kilogram's.
Without the 15 percent sales tax, the price idea for cotton from Mirpurkhas in Sindh reportedly ranged from Rs 2,700 to 2,750 per maund; in Sanghar, Shahdadpur or Tando Adam cotton prices ranged from Rs 2,950 to Rs 3,000 per maund; in Nawabshah district the price idea for cotton was about Rs 3,100 per maund (37.32 kgs); in Khairpur district the ginners were quoting Rs 3,150 to Rs 3,200 for a maund of cotton, whereas in upper Sindh (K-68) cotton was being offered from Rs 3,325 to Rs 3,350 per maund.
Without the sales tax, cotton in Punjab was being quoted from Rs 2,900 to Rs 3,350 per maund according to quality.
The New York cotton futures prices have sprung up again in recent weeks clearly reflecting the strong fundamentals arising out of tightening supplies against an improving demand.
Last Wednesday the March 2004 delivery settled at US cents 75.07 per pound (up by 70 points), the May 2004 delivery ended the session at US cents 76.13 per pound (up by 71 points), while the July 2004 delivery closed for the day at US cents 76.80 per pound (up by 82 points).
Current crop prices exhibited a strong tendency. New York cotton futures market will now reopen on next Monday.
In the evening, ready cotton prices in the domestic market became strong in the Punjab. 400 bales from Muridwalla, 450 bales from Tandlianwalla and 500 bales from Rahimyar Khan sold at Rs 3,325 per maund (37.32 kgs) each without the 15 percent sales tax; 1,000 bales from Samundari sold at Rs 3,350 per maund while 1,000 bales from Lodhran sold at Rs 3,400 per maund with 50 percent payment deferred for one month. The scarcity of good quality cotton has started being felt more perceptibly.
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