Due to extended Eid holidays stretching from Monday through Thursday this week and persisting post-holiday hangover thereafter, full scale business in cotton is only likely to resume next week. Ginners usually close their factories on Friday so no activity was reported from the market.
Some brokers went to the Karachi Cotton Association (KCA) on Friday but closed shop in the afternoon after exchanging Eidd greetings and felicitations When contacted, a couple of cotton brokers said on the sidelines of the festivities that weak condition is likely to continue when business resumes next week in both raw cotton and the yarn markets.
Despondency in a considerable section of the textile industry regarding low returns and reduced off take still characterises the condition therein. One trader said that the situation in the cotton market was the same, which prevailed last week with hardly any change. In other words, a bearish cotton market would probably persist when it opens next week.
A rough idea of seed cotton (kapas/phutti) prices in Sindh would range from Rs 1,075 to Rs 1,100 per 40 kgs while in the Punjab the seed cotton prices may be presumed to extend from Rs 1,100 to Rs 1,125 per 40 kilograms. Similarly, lint prices in Sindh would range from Rs 2,300 to Rs 2,325 per maund (37.32 kgs) while in Punjab they may be presumed to extend from Rs 2,375 to Rs 2,400/Rs 2,415 per maund.
These are the lowest levels of lint prices for this season (2006-2007). Hardly any significant change in the weather condition was reported this week to influence the cotton prices. Other news included reports from Sindh, which indicated the presence of yellow spots in cotton from the Khairpur district, while the cotton arriving from Nawabshah was said to be dull.
In the Punjab, some reports speak of considerable virus presence on the cotton plants, but the provincial Agriculture Minister Arshad Lodhi still estimates this year's (2006-2007) output in the province to be 10,800,000 bales (170 kgs). However, traders in southern Punjab said that the quality and condition of the cotton in Bahawalpur, Rahimyar Khan and Sadiqabad is good.
While on the one hand the textile millers are unhappy because their cost of doing business is purportedly high due to high rates of bank mark-up, fuel cost and high rates of other utilities. The raw cotton exporters are also mostly sitting idle because they claim that their parity is only achieved when the lint prices come down to Rs 2,200 per maund (37.32 kgs) or lower.
In the New York cotton futures market, recent sessions have seen increase in prices by a couple of cents per pound after suffering bearish pressure over the previous dealings earlier in the month. However, some analysts feel doubtful that the recent improvement in cotton futures prices would sustain itself. Speculators provided props during last Thursday's New York cotton futures operations while traders appeared to be selling persistently. These dealings show an element of uncertainty in the fibre futures dealings in New York for the coming days.
On last Thursday, the December 2006 delivery on the New York cotton futures market settled at US cents 50.60 per pound (up by 68 points), the March 2007 delivery ended the session at US cents 53.64 per pound (up by 65 points), while the May 2007 delivery closed for the day at US cents 54.95 per pound (up by 60 points).
Domestic cotton market has been mostly closed for the week but informal enquiries indicate that even when the market opens properly next week the sentiment is likely to remain calm and quiet. No hustle bustle is expected in the market in the near future.
Ginners are expected to start ginning operations again on Saturday following this week's Eid holidays and their weekly closure on Friday. With more seed cotton (kapas/phutti) arrivals expected next week and anticipation of increase in momentum of seed cotton supplies in a substantial way, lint prices could face considerable pressure. However, trade buying at the lower levels when the big mills may find the prices to be attractive could create a bottom for the fibre values and the decrease could be thereby stalled.
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