Despite reports of bad weather with overcast skies and showers of rains in several parts of the cotton belt in both Sindh and Punjab, lint prices fell by Rs 25 to Rs 35 per maund (37.32 kgs) in the ready market on Thursday. Of course the arrivals of seedcotton (kapas/phutti) in the ginning factories have gone up and now about 30 percent of the factories in Pakistan are pressing the current crop (2005-06).
It is assumed that by next month a substantial number of the ginning factories will become operational. Traders are now estimating this year's national output of cotton in Pakistan to range from 13 to 13.5 million domestic size bales on an ex-gin basis.
The recorded consumption of cotton in Pakistan may be lower, but the actual need for lint may propel its use to anywhere from 14 to 15 million bales (170 kgs) this year.
There is therefore a mixed feeling regarding crop size and also the price sentiment in the market. The ministry of agriculture recently announced that if cotton prices fall, the Trading Corporation of Pakistan (TCP) would enter the market to support the prices.
The Trading Corporation of Pakistan (TCP) is also calling for bids through a tender for sale of 50,000 bales of old crop (2004-05) cotton to local exporters and the international merchants for Grades 2 and 3 as published in the press today.
With regard to sale of raw cotton to exporters and foreign consumers the chairman of the All Pakistan Textile Mills Association (Aptma), Arif Saeed, said recently that while the domestic mills bought cotton at the rate of Rs 2346 per maund (37.32 kgs) last year (2004-05).
The Trading Corporation of Pakistan (TCP) sold the cotton to the competitors of Pakistan at the rate of Rs 2170 per maund which caused a loss of about rupees one billion to the national exchequer. Arif Saeed has also complained about the rising costs of inputs like power, bank mark-ups and the minimum wages of the workers which is undermining the competitive edge of the domestic textile industry.
Mills sources further said that because the half a million bales of unsold cotton still held by the Trading Corporation of Pakistan (TCP) had become old crop, perhaps it may fetch around Rs 1900 per maund (37.32 kgs) in the export market, which is a low price.
The price of seedcotton (kapas/phutti) was reportedly lower by Rs 10 to Rs 15 per 40 kgs on Thursday. Thus the seedcotton price in Sindh was said to have ranged from Rs 885 to Rs 900 per 40 kgs, while in the Punjab it reportedly ranged from Rs 985 to Rs 1000 per 40 kgs.
Early in the week the domestic prices of lint had gone up just like increases in the New York cotton futures on last Tuesday and Wednesday. Now brokers from Karachi are reporting a sort of financial crisis and a type of slow down in the yarn market. Several mills are thus buying cotton only on a hand-to-mouth basis. Anyhow, ginning industry sources said on Thursday that an estimated 25,000 bales of cotton was being pressed daily.
In the evening the cotton market was quite subdued. A sale of 200 bales from Mirpurkhas in Sindh was reported at Rs 2125 per maund (37.32 kgs) in the morning, but cotton from this station was later being offered at Rs 2100 per maund; 1000 bales from Sanghar was said to have been sold at Rs 2100/Rs 2130 per maund; 400 bales from Sarari, 1000 bales from Tando Adam and 2000 bales from Shahdadpur sold at Rs 2150 per maund each. In the Punjab, 200 bales from Muridwalla and 400 bales from Bahawalnagar were reportedly sold at Rs 2225 per maund.
The New York cotton futures market continued its rising streak on Wednesday giving the impression that fibre prices may attempt to consolidate their gains over the 50 cents per pound level.
Thus on last Wednesday, the October 2005 delivery settled at US cents 51.25 per pound (up by 80 points), the December 2005 delivery ended the day at US cents 52.88 per pound (up by 110 points), while the March 2006 delivery closed for the session at US cents 54.22 per pound (up by 112 points). Thus the cotton futures prices in New York are said to have operated in a tight range on last Wednesday.
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