In the last fortnight, cotton arrivals were viewed as quite satisfactory in the face of reports of a short crop. During the period from October 1 to 15, 1,268,041 bales seed-cotton (phutti) was received in the ginneries, against 1,439,611 received in the same period of last year.
The shortfall works out to 11.92 percent whereas total shortfall is 29.67 percent (This season 2,541,595 bales while last season 3,613,817 bales). Admittedly, this crop is reported late by 2 to 3 weeks, particularly in Punjab, and by taking this factor into account, the crop size appears quite satisfactory between 13.0 and 13.5 million bales.
By examining the arrival figures of Sindh district-wise, it is evident that cotton arrivals in 3-4 early sown cotton districts have surpassed the corresponding arrival figures of last year. Hopefully, cotton arrivals in the second fortnight of this month would surpass the figures of corresponding period of last year.
In the absence of any regular official crop assessment figures, the speculations work either side. The Government has kept silent on this point. Field reports are still favouring a better crop--in the range of 13.0 to 13.5 million bales. Major loss to crop was done by heavy rain and floods, which was estimated around 1.0 million bales.
Lint cotton prices which had touched the level of Rs 2,500 per maund ex-gin two weeks ago lost Rs 150-200 but again gained Rs 50 on the close of the week. In Sindh, lint prices touched the low level of Rs 2,150. Quality in Mirpurkhas and Sanghar stations is reported to have deteriorated but in other stations like Shahdadpur, Tando Adam and Nawabshah it is quite satisfactory. Apparently, there was no cogent reason for recovery of Rs 50 in lint prices on Saturday except speculation on crop size. KCA''s Port Rate on Saturday was 2,350 per maund ex-gin.
Karachi Cotton Association has commenced commercial testing of cotton fibre on its new HVI machine. The KCA should also take up the job of preparation of full range of export types so as to standardise Pakistan''s export types. Presently, all exporting companies are preparing export types with the same names such as ''Afzal'', ''Alaka'', ''Adnas'', ''1502'' and ''1505'' but with a wide variation in grade and quality.
This creates confusion in the minds of foreign buyers, and exporters with comparatively low types get the business over those exporters with genuine types. When the Export Types would be the same then competition would be in rate and credibility of the exporter. This would help in creating healthy competition among exporters. The KCA can hire services of cotton professionals in preparation of ''Export Types'' and this is a viable project from financial point of view also.
The Trading Corporation of Pakistan (TCP) has rejected the appeal of the textile sector to allow participation by spinning mills in the cotton sale tenders and also local delivery of cotton instead of only export. Presently, exporters are out of market on disparity ground. Besides, the exporters are buying cotton from TCP.
The exporters had sold cotton in exports at low prices around 44-47 cents per lb fob Karachi but could not cover their requirements from local market as prices soon shot up by Rs 100 to 150 per maund, and some ginners reportedly did not deliver cotton.
TCP then came to their rescue and sold some 90,000 bales from the 2004-05 stock in last two tenders to these exporters. Now, the exporters are in comfortable long position.
Spinning mills are also reportedly maintaining a bulk inventory of their raw cotton stocks. Most of the mills are said to have covered their raw cotton requirements up to December and many more up to March. Import of raw cotton is continuing which would add to their inventories. This season, local spinners are not active in buying US Pima cotton perhaps because of larger carryover stocks and very high prices--around 115cents/lb. Pakistan spinners are also slow in booking US cotton this season but are showing more interest in other growths such as Brazilian, South African and Indian.
YARN PRICES ARE NOT PICKING UP:
Our next door neighbour is harvesting a record high crop of over 25.0 million bales of 170 kg and is carrying a large carryover stock. US is likely to produce 2.5 million bales of 480 lb. CIS and African growths are in abundance and mostly available for export. China is emerging as the largest importer of cotton around 14.0 million 480 lb bales beside other five prominent cotton importing countries. Indonesia, Mexico, Bangladesh, South Korea and Taiwan jointly import some 8.2 million 480lb bales.
Brazil and Australia have surplus for export some 3.5 million bales. The study of cotton figures gives an indication of lower global cotton consumption than last year while beginning stocks this season were well above last year''s level.
Trade disputes over import of textile goods from China to EU and USA countries have not been settled creating uncertainty over global foreign textile trade.
Last week cotton prices on New York Futures market remained under selling pressure.
Ruling December contract lost 2.44 cents and March contract lost 1.99 cents to settle at 54.49 and 56.42 cents per lb respectively. Speculators are holding total open interests at 120,599 contracts and their settlements would exert selling pressure in next 2-3 weeks. The trend in cotton is reportedly unsteady.
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