Depleting domestic stocks of cotton and unfulfilled demand of the Pakistani mills is likely to keep cotton prices in a steady position. With about one million bales (170 kgs) or marginally more left unsold with the ginners from the current crop (2006-07) mills remain regular buyers of lint, particularly for the higher grades.
Reports indicate that between 1,000 to 1,500 bales of better class of cottons sold yesterday and today at Rs 2650 per maund (37.32 kgs) but it could be on credit or other concessional terms. Though yarn prices remain depressed, domestic requirements of cotton will remain unsatisfied because Pakistan is anticipated to consume anywhere from 15.5 million to 16 bales (170 kgs) of cotton during the current season (2006-07). It is now surmised that about two million bales (170 kgs) of imported cottons have been booked till now from which an estimated 1.4 million to 1.5 million bales (170 kgs) have already arrived in the country.
Despite deteriorating conditions in a considerable section of the domestic textile industry, mills must keep their spindles humming because partial or full closure of mills entails larger losses. Under these circumstances, ring spinners are likely to try their best to keep running their mills at least for the next few months. However, about 10 or 15 percent of the open end spinning units have closed down. However, the overall offtake of cotton should generally remain steady and brisk in our market.
It can be projected that from about one million bales still lying unsold with the ginners, nearly 500,000 bales will be lifted by the end of this month, while the remaining 500,000 bales may be sold out by the end of April 2007.
Therefore, despite some adverse circumstances, it is still likely that lifting of the domestic cotton will remain brisk. With sustained steadiness in the New York cotton futures prices in the open outcry session in recent sessions, lint prices of physical cottons are likely to maintain a stable disposition. Some recent reports regarding complaints of imported Indian cottons and certain delays or denial of shipments therefrom has brought an element of concern in our market.
Though now relatively small quantity of seedcotton (kapas/phutti) from the current crop (2006-07) is left unsold in the market, it is generally priced between Rs 1000 to Rs 1300 per 40 kgs according to the quality in both Sindh and Punjab.
In Sindh, cotton of below average grade was reportedly being quoted from Rs 2325 to Rs 2400 per maund (37.32 kgs); lint of average grades was being offered from Rs 2425 to Rs 2475 per maund; good quality of cotton including the BT cotton was priced between Rs 2500 to Rs 2570 per maund, while cotton from upper Sindh (K-68) was reportedly selling from Rs 2600 to Rs 2625 per maund. Punjab cotton was reportedly selling in a wide range anywhere from Rs 2250 to Rs 2625 per maund according to the quality.
This fortnight several commodity markets were shaken and thus suffered losses following global down turn in equity markets, but presently the cotton market has remained essentially stable and has not yet been overtly disturbed by the turbulence in the various stock exchanges around the world.
In our market, besides other variables the cotton market has now become primarily dependent on the profitability otherwise of the textile industry. No doubt the cotton prices have remained quite steady and stable throughout the current season (2006-07) because the supply has been less than the demand. This situation is likely to continue until we plant more cotton or go for the BT cotton after removing all doubts and apprehensions regarding some unwanted or undesirable side effects concerning the cultivation of BT cotton in Pakistan.
Since the past several months, mills have been claiming that cotton prices have mostly remained above their parity compared to the cost of producing yarns and other textile products. Recently, several textile mills, including some prominent units, have shown losses in their balance sheets. According to media reports, the Chairman of the National Assembly Standing Committee on Textile Industry (NASCTI), Chaudhry Nazir Ahmed Jatt and other members visited the All Pakistan Textile Mills Association (APTMA) in Lahore recently. The leaders of the various sectors of the textile industry apprised Chaudhary Nazir Ahmed Jatt about the critical situation of the industry and the adverse effect it was having on the overall economy of the country. The textile millers of Pakistan also gave details concerning incentives and other benefits the governments of competing countries are giving to their textile industry. Reports indicate that the Chairman of the Textile Committee of the National Assembly of Pakistan gave necessary assurances to the domestic textile industrialists that they will prevail on the government to salvage the domestic industry post-haste to forestall any large scale closure which would undoubtedly result in big unemployment in the country.
In this connection, domestic textile mills have been pleading with the government over the previous years, inter alia, to waive sundry local, provincial and federal taxes for a couple of years to put back the domestic textile industry on a firm footing. Actually, some of the taxes and their method of application were in the first place proposed by the representatives of the textile industry themselves. However, now the need of the hour is to consider all ways and means to put the textile industry on a competitive footing in the global market. Postponing this problem till the announcement of the next federal budget in coming May or June, 2007 would aggravate the working of the domestic textile industry needlessly.
Some exporters are busy picking up alaka grade cotton in the domestic market to export to India. Though the lower grade cottons have relatively few buyers in the domestic market, there is still good demand for the better class of cottons.
In conclusion it can be said that the unsold cotton left with the ginners would be lifted in the foreseeable future and that due to very handsome returns obtained by both the growers and the ginners, the sowing of the next crop (2007-08) will be made very enthusiastically.
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