Most of the cotton crop estimates now appear converging between 12.5 and 13.0 million local weight bales. Cotton arrival and disposal report of 16th January, 07 reveals up-to date arrivals of seed-cotton equivalent to 11.555 million bales against 11.660 million bales received same time last year.
Local spinning mills purchased 9.464 million bales this season against 8.958 million bales procured same period last season. This season, stocks of total unsold bales is lower by 630,000 bales at 2,009,696 bales as compared to last season.
In Sindh province total unsold stocks of lint cotton are 533,573 bales which is 24.32 percent of total arrivals with two districts of Ghotki and Sukkur holding about 70 percent of total Sindh's stocks. Punjab is holding total unsold stocks of 1,476,123 bales which is 15.77 percent of total arrivals and its four districts viz: Rahimyarkhan, Bahawalpur, Vehari and Multan are holding 55 percent of total Punjab's unsold stocks of lint cotton.
As such, Sindh may be under selling pressure more than Punjab. Also, better grade cotton would selling as hot-cake due to its scarcity while low grade cotton being in abundance would receive selling pressure and its price may be discounted.
Trade circles think low grade cotton may be available at the level of Rs 2,200- 2,250 per maund ex-gin. This price would suit the local open-end mills and perhaps the exporters. In its recent meeting at Multan, official Cotton Crop Assessment Committee has assessed cotton production at 12.5 million bales this season.
Reports from Punjab areas reveal that local designated markets have sufficient stocks of seed-cotton and some of the ginners from Upper Sindh are buying such seed-cotton for their factories. Also some middlemen and potential growers are dumped seed-cotton in warehouse and are asking higher rates.
Introduction of GM technology in seed-breeding, Contract Farming, growing of Organic cotton and adoption of new technologies in irrigation and agronomy have greatly are helping India to increase its cotton production to new highs and improve quality of lint cotton greatly benefiting all cotton stake-holders specially the growers.
Pakistan is lacking behind in increasing its cotton production and in improving quality of its lint cotton. This season, India has export surplus of some 5 to 6 million bales. Our spinners who are using Indian cotton in their mills appreciate the improvement in grade and fibre properties, which help in spinning high quality finer yarn.
Lint cotton prices remained steady to firm in the local market and the Karachi Cotton Association increased its Sport Rate by Rs 50 to Rs 2,550 per maund ex-gin. Buyers preferred to pay premium for better grade cotton and maximum prices paid crossed the psychological level of Rs 2,600 per maund ex-gin. Some of the exporters have also bought better grade cotton recently hopefully on receiving viable rates in exports. A few contract of bulk quantity running up to 5,000 bales are reported to have been concluded above the level of Rs 2,600 per maund in Rahimyarkhan / Khanpur area in Punjab province.
Many ginners are still holding better quality cotton stocks in hope of getting better price. The other one representative of a spinner's group was discussing ways and means to settle import cotton bargains. Field reports indicate towards some indifferent interest of spinner-buyers in upper Sindh lint cotton due to stains / yellow spots. One upper Sindh ginner said that visits of the representatives of spinners to their ginning factories for inspection of cotton had been very limited.
The outcome of Memtex fair held in Frankfurt on 10-13th January, 07, is reported mixed by the participating spinners from Pakistan but Government version is for sizeable sales of yarn and textile goods. The spinners are reportedly planning to launch some media scheme to pressurise the government to allow them some viable concessions in payment of some utility trade and reducing interest rates on their borrowings. Reportedly, the Textile Strategic Committee has recommended concessions for textile mills which may cost government between Rs 80 and 100 billions. These recommendations are under active consideration of the government but some textile circles think action from government has already been delayed and further delay in this regard may reduce the efficacy of some positive action. Yarn and textile goods markets remain slack and liquidity crunch is affecting the trade adversely.
On New York cotton exchange, values moved in narrow range March, 07 could not come out of the range of 50 while May, 07 contract was a trifle above 50 level. Trade of physical cotton was also as usual slack. Crude oil prices in international market have dipped below the strong psychological level of US $50 per barrel. Slackness in other commodities markets is also affecting world market.
However, hope is there for some positive change in cotton and textile prices in the next month but US is holding some more than 12.0 million bales in loan which may be available for sale later or sooner. China is meeting its requirements from consignment cotton stocks and from local cotton. Cotton consumption and production figures of China quoted generally lack credence as officially actual figures are not available, cotton circles think.
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