Though cotton market was relatively quiet on Thursday afternoon, but the over all tempo of purchases has been quite brisk this week. Brokers said in Karachi that last Wednesday a turnover of 125,000 bales was reported in the ready market including the sales in Punjab.
Hitherto, all the main buyers including the domestic mills, the Trading Corporation of Pakistan (TCP) and the exporters have been very active in their purchases
Though the TCP has reportedly procured close to 400,000 bales from the ginners till now, with the gradual increase in cotton prices throughout this month, several ginners may now want to sell their cotton in the open market rather than go through the rigmarole of tendering their cotton to the state agency, namely the Trading Corporation of Pakistan (TCP).
Therefore, an upward trend of cotton prices has been observed since the inception of this month.
The price increase in cotton has simultaneously been brought about brisk buying of the spinners, the active participation of the TCP and also the definite interest of the exporters.
Recently, the government had decided to allow the TCP to lift up to 3,000 bales from each ginning factory against the earlier limit of 2,000 bales.
Now there is ample rolling in the cotton market so that almost all bales that are being pressed by the ginners are being sold out expeditiously.
With reported improvement in the prices of yarns and increasing loss in the value of Pakistani rupee against the United States dollar, cotton prices are expected to remain steady.
Textile exports are also likely to increase because local lint prices for good quality cotton which is arriving at present are very attractive.
It is commendable that most of more than 5 million bales of seedcotton (kapas/phutti) which will have arrived by the end of this month and which has been pressed will have been disposed to the buyers.
Though some deterioration in cotton quality is reported from lower Sindh or in Sahiwal in Punjab where some mixing of cotton is being reported, the bulk of cotton arriving in the ginning factories is still of good quality.
In fact one reason why the mills are keen to lift most of the lint readily is to make sure that they can build long-term stocks of superior lint now available in the market.
Seedcotton (kapas/phutti) prices reportedly ranged from Rs850 to Rs 900 per 40 kgs in Sindh, while in the Punjab the seedcotton prices ranged from Rs 875 to Rs 935/Rs 940 per 40 kilogrammes.
Therefore, the seedcotton prices are now approaching the government support price of Rs 925 per 40 kgs or have even surpassed it in case of the better quality.
Lint prices in Sindh were said to have ranged from r& 1925 to Rs 2025 per maund (37.32 kgs), while in Punjab the ginned cotton prices reportedly ranged from Rs 2075 to Rs 2100 per maund. Upper Sindh cotton was being quoted at Rs 2100 per maund.
Traders said on Thursday that 300,000 to 400,000 bales of Pakistani cotton could be exported this year. In case the lint prices remain low compared to international prices, even 500,000 bales could be exported from Pakistan this season (2004-2005).
Agents for international merchants added from Karachi the mills are losing interest in importing cotton for the time being , but cotton of superior grades, longer length and contamination-free cotton is still being imported selectively.
Traders in Karachi are still estimating a large cotton crop in Pakistan during the current season which is expected to be 13 million or more bales of domestic size.
However, there is a lurking fear that if the pests become more active and the plants continue to redden or wilt in some areas, a loss up to 500,000 bales cannot be ruled out.
Anyhow, under the prevailing circumstances a wholesome cotton crop is likely to be a boon and is basically expected to benefit all the sectors of the cotton economy viz. the growers, the ginners, the spinners, and the exporters
As a manifestation of higher turnover and improved prices on Wednesday which carried the positive sentiment at noon on Thursday, the Karachi Cotton Association (KCA) increased the ex-gin prices of grade 3 cotton by Rs 40 per maund (37.32 kgs) and fixed it at Rs 2040 per maund.
Thus the spot rate which includes up-country expenses of Rs 50 was determined at Rs 2090 per maund on Thursday.
In the afternoon, there was scarce business reported in the market. Most transactions these days are finalised later in the day after the night prayers.
However, sales of 400 bales from Gaggo and 600 bales from Gojra in the Punjab were reported at Rs 2075 per maund (37.32 kgs). Because the domestic mills estimate of consumption exceeds 13 million bales (170 kgs) at current reckoning cotton offtake may remain impressive which is presently being reported to be 100,000 bales daily.
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