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Fears of a smaller cotton crop for the current season (2006-2007) have again inspired a steady stance in the cotton market this week. Some reports indicate that total output this year could be lower by a hefty half to one million bales (170 kgs) in Pakistan.
According to trade talk this week, the total national output could now be only in the range of 11 (eleven) to 11.5 million (11,500,000) bales of cotton on an ex-gin basis. This has led the domestic asking price of the ginners to increase by at least rs.25 per maund (37.32 kgs) this week.
According to one broker, seed cotton (kapas/phutti) arrival in Sindh has dropped significantly. There were other reports of cotton quality deterioration and also mixing of inferior cotton in some areas. Amidst all these developments, a number of mills appear unhappy regarding their performance and prospects. Some units of open-end spinning, the garment and the towel sectors are also reported to be worried.
However, a leading stock exchange source said that the better managed mills and textile units in the organised sector are keeping up their performance positively. It is only the unorganised sector, which was living on export rebates, particularly in Faisalabad, who appear to be in the doldrums. Thus the stock exchange leaders are still looking forward to improvement in blue chip textile stocks.
Traders in central and southern Punjab said on Friday that the quality of cotton arriving in Rahimyar Khan, Bahawalpur, Sadiqabad, Rajanpur and Khanewal is mostly good while lint quality in Faisalabad, Vihari, Burewalla, Sahiwal and Bahawalnagar is relatively inferior.
Now it is said that more than 100,000 bales of cotton are being ginned daily throughout the country most of which is generally sold out. Mills in Pakistan are still expected to consume more than 15 million domestic size bales this year (August 2006/July 2007).
According to the brokers in Karachi, seed cotton prices in Sindh ruled between Rs 1075 to Rs 1150 per 40 kgs, while the BT seed cotton was said to be selling higher at Rs 1200 per 40 kgs, and even at Rs 1225 per 40 kilograms. In the Punjab, the seed cotton prices were said to have ranged from Rs 1100 to Rs 1150 per 40 kilograms on Friday according to the quality.
Few reports were received concerning lint sales till the afternoon but it was expected that larger transactions would materialise later at night. In Sindh, 200 bales of cotton from Khipro reportedly sold at Rs 2340 per maund (37.32 kgs), while 200 bales from Shahpur Chakar and 400 bales from Shahdadpur sold at Rs 2350 per maund each. The general price range of ginned cotton from Sindh reportedly ranged from Rs 2350 to Rs 2450 per maund, according to the quality.
In the Punjab, 300 bales from Multan and 1,000 bales of cotton from Khanewal reportedly sold at Rs 2450 per maund, while 2,000 bales of clean cotton from Khanpur were said to have been sold at Rs 2515 per maund, for which the base price was Rs 2450 per maund with a premium of Rs 65 per maund (37.32 kgs) for having much less contamination. The general price idea for pressed cotton from Punjab reportedly ranged from Rs 2400 to Rs 2450 per maund.
According to a recent report, Pakistan has allowed raw cotton import from India through the border at Wahga near Lahore. Some suppliers in India are offering moderate quantities of cotton through this new route.
Till now the domestic cotton prices in India ranged from steady to firm. However, with a record crop for this year (2006-2007) on the anvil estimated variously from 26.5 to 28 million bales at present, the cotton prices in India are expected to decline considerably. Cotton exports from India, which had hitherto been small may pick up measurably with decline of cotton prices there.
The Karachi Cotton Association (KCA) kept its ex-gin price of grade 3 cotton at Rs 2375 per maund (37.32 kgs) denoting continuing steadiness in the market. Lint prices are likely to retain their present levels for some time because many of the mills would want to pick up the better grades still available in the market because the quality of cotton could deteriorate within the next few weeks with the arrival of the third picking. In the evening, cotton prices were firmly held.

Copyright Business Recorder, 2006

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