Cotton prices concede ground

After having shot up by nearly Rs 150 to Rs 200 per maund during the first few days of this month (January 2004), cotton prices went down by about Rs 50 per maund (37.32 kgs) on Thursday.
Decrease in New York cotton futures prices and increased estimates made by a wide cross-section of domestic trade now projecting that Pakistan would harvest 9.5 million bales during the current season (2003-2004) on an ex-gin basis, have taken the steam out of the buoyancy which had built up in the cotton market at the beginning of this month.
In consequence of the easing tendency of lint prices on Thursday, the Karachi Cotton Association (KCA) pulled down the ex-gin price of grade 3 cotton by Rs 25 and fixed it at Rs 3275 per maund without the 15 percent sales tax and upcountry expenses.
As recently as last Tuesday, lint prices had continued their upward trajectory when the good grades having micronaire value of about 4.5 were selling between Rs 3350 to Rs 3400 per maund (37.32 kgs) without the 15 percent sales tax. Nearly 30,000 bales of cotton were reportedly transacted on last Tuesday.
Thus on Thursday the increasing tempo in cotton prices was tempered and they abated noticeably.
Easy tone on the cotton market was also reflected by decrease in seedcotton (kapas/phutti) prices which have also gone down by Rs 25 to Rs 50 per 40 kgs in both Sindh and Punjab.
Seedcotton prices in Sindh ranged lower from Rs 1200 to Rs 1450 per 40 kgs, while in the Punjab they were said to have ranged from Rs 1200 to Rs 1500 per 40 kilogrammes.
The price idea of lint from Mirpurkhas in Sindh reportedly ranged from Rs 2800 to Rs 2850 per maund (37.32 kgs) without the 15 percent sales tax; cotton prices in Sanghar, Shahdadpur or Tando Adam ranged from Rs 2950 to Rs 3050 per maund; in Nawabshah district the ginners were quoting Rs 3125 to Rs 3150 per maund; the price idea of lint in the Khairpur district was about Rs 3200 per maund; in upper Sindh (K-68) the cotton price was about Rs 3300 per maund, down by Rs 50 per maund, while in the Punjab the cotton prices reportedly ranged from Rs 2900 to Rs 3350 per maund on Thursday, down by about Rs 50 per maund.
The tone of the cotton market continued to remain easy in the evening. There were reports in the market that Pakistani spinners had bought anywhere from 150,000 to 200,000 bales of cotton from India till now during the current season (2003-2004) whereas India is said to have sold nearly 300,000 bales to Bangladesh this year.
Global restructuring of cotton output, use and exports and also the transfer of large scale textile activity from the USA to China, India, Pakistan and elsewhere is a paradigm shift of remarkable proportion. Leading cotton merchant William Dunavant Junior told a Beltwide Cotton Conference (BCC) in San Antonio in Texas recently that cotton consumption in the United States could go down further from 6.2 million to 5 million bales in the forthcoming years. Simultaneously, Dunavant added that US cotton exports could shoot up to 13.45 million to 14.2 million bales during the (2003-2004) season, primarily due to the robust demand from China. It may thus be recalled that mills consumption in the USA has fallen within a decade from about 11 million bales (480 lbs) to about 6 million bales at present.
It appears, however, that long term prospects for the lint prices should remain steady and stable because of demand exceeding the supply of cotton. Moreover, the massive outlay of the Chinese textile programme together with enhanced activity in South Asia viz Inda and Pakistan should keep cotton moving briskly.