Lethargy continues in lint market

General slackness continued this week in the cotton market with few positive features emerging at present which could promise an early revival.
Lowest prices in the New York cotton futures market since the last three months, continues slackness in yarn prices and closures for a public holiday this week and the approaching weekend have shifted any possible increase in daily turnover to next week.
This Thursday (March 23, 2006) is a public holiday being the Pakistan Day. Fridays are generally slack in rural areas and in the cotton belt, which will be followed by the incoming weekend. Under these circumstances, and no less because the New York cotton prices have opted for a downward direction after several weeks of playing mostly in a narrow band of 54 to 57 cents per pound for the key March and later the May 2006 delivery, spinners are biding time before entering the market more aggressively. However, some millers may prefer to indulge in scale-down buying.
Notable feature occurring recently in the cotton market was sale of 50,200 bales by the Trading Corporation of Pakistan to the domestic mills of Grade 3 cotton from the previous season (2004-05) of 1-1/32 inch staple length at prices reportedly ranging from Rs 2220 to Rs 2309 per maund (37.32 kgs) and to the exporters at prices ranging from US cents 45.56 to US cents 47.27 per pound, according to the quality. Mills are said to have bought 35,000 bales of cotton where as the exporters bought 15,200 bales from the above quantity from the TCP.
After the above sales, the Trading Corporation of Pakistan (TCP) still possesses an estimated 260,000 to 270,000 bales of unsold cotton which it is still carrying from the previous season (2004-05).
The ginners are also selling their leftover cotton from the current season (2005-06) slowly but steadily. Though the ginners presently possess about 1.3 million bales of unsold cotton with them today, this stock may be reduced to range from 1 million to 1.1 million bales by the 1st of April 2006.
It may be mentioned here that though the prices of cotton are generally weak in both the international and the domestic markets for the upland styles, the price of better grades of cotton in the domestic market is resisting any larger fall at present.
Thus the cotton prices were clearly portraying a weak tendency in a quiet market on Wednesday. In view of the weakness in lint prices, some of the ginners were said to be offering their cotton on credit basis which opportunity to lift cotton on easy terms is being availed by a few of the smaller mills.
Reports of ready sales were meager in the market evidencing slow movement in cotton transactions. Till Wednesday afternoon, a sale of 1400 bales of cotton was reported from Ghotki in Sindh at Rs 2450/Rs 2475 per maund (37.32 kgs), while 800 bales from Rahimyar Khan in Punjab were said to have been sold at Rs 2475 per maund. Generally speaking, however, lint prices in Sindh ranged from Rs 2150 to Rs 2450 per maund, while in the Punjab they were said to have ranged from Rs 2250 to Rs 2450 per maund according to the quality.
Some exporters and prominent traders who had earlier built up their stocks looking for cotton prices to move up were also reported to be willing to reduce their long positions in the market.
Last week the Pakistan Cotton Ginner's Association (PCGA) had reported that seedcotton (kapas/phutti) for about 12,342,819 lint-equivalent bales from the current season (2005-06) arrived at the ginning factories till the 15th of March 2006, signifying that not much more is expected to come later on. However, the government circles still expect this year's output at 13 million bales on an ex-farm basis.
The PCGA report indicated that the mills had lifted 10,817,097 domestic size bales till the middle of this month. In this context, most traders are still projecting that actual mills consumption of cotton in Pakistan this year ( August 2005/July 2006) is still likely to be 15 million or more bales.
Some spinners say that last season (2004-05) the mills had imported more than their actual requirement when cotton prices were low and that some of the surplus cotton from the previous year had been carried over to the current season (2005-06).
The forthcoming (2006-07) season is likely to start late by two or three weeks because wheat harvest has been delayed due to sporadic winter rains over the past several weeks. Normal wheat harvest clears the way for cotton sowing on a timely basis.