Cotton prices beat a retreat over the last couple of days and conceded about Rs 100 per maund (37.32 kgs).
Even though widespread rains were reported in Pakistan's premier cotton producing province of Punjab, which will delay the seed cotton (kapas/phutti) arrivals, prices in the market remained easy. Seed cotton prices also lost ground on Thursday.
In the morning, 100 bales of new crop (2004-2005) cotton from Pithoro, 200 bales from Sultanabad and 1,500 bales from Mirpurkhas in Sindh were sold at Rs 2,300 per maund each. Later on, 200 bales from Mirpurkhas sold lower at Rs 2,290 per maund, and by the afternoon 200 bales also from Mirpurkhas were sold at Rs 2,250 per maund.
In Punjab 1,500 bales from Samundari were sold at Rs 2,325 per maund. The slide in cotton prices could breach the barrier of Rs 2,000 per maund and later in September the lint prices could fall further with the speedy arrivals of seed cotton unless adverse weather or any other problem intervenes.
Seed cotton (kapas/phutti) prices also receded and ranged from Rs 950 to Rs 960 per 40 kgs in Sindh, while in the Punjab they were also said to have ranged lower from Rs 1,025 to Rs 1,050 per 40 kgs.
Nearly 10 ginning factories each in Punjab and Sindh are now rolling out about 4,000 bales of cotton daily.
Spinners said that now they are receiving better inquiries for yarns from both the home and foreign markets but local demand was more persistent. The domestic weaving, knitting and textile finishing industry appears to be expanding steadily.
The coming August 14, 2004 is a closed holiday in Pakistan due to Independence Day. Most concerns in Europe will also close in August for their annual holidays.
New York cotton futures took a nosedive on Thursday when official estimate of output for the 2004-2005 crop in the USA was raised to about 20 million bales. This development could be catastrophic for cotton prices.
Thus for the time being, a big surplus of cotton supply is forecast in the global context for the new season (2004-2005).
The output close to 20 million bales, which has been forecast for the USA, would be one of the best outputs in its history.
Further slowdown and curtailment of cotton use forecast in the USA over the next few years could also dampen cotton prices.
On Thursday night key December 2004 delivery sank by nearly three cents per pound but then had gained about one cent at around mid-session when the market was still operative.
There is an element of panic in the United States textile industry where certain alarmists see a drop in cotton consumption from the present six million to two million bales within 2 or 3 year's time when heavy government subsidies will be reduced on raw cotton and textiles commencing from the 1st of January 2005 under the new WTO rules.
American manufacturers fear that the Chinese textile juggernaut will trample the textile industry in the USA once the quotas are removed. It has been further reported that China is likely to pick up US dollars 200 billion in clothing trade alone once the protective barriers are removed.
In view of the deteriorating situation being projected by the captains of the American textile industry, they are calling upon their legislators and President Bush to extend the textiles quota system for some more years to avoid what they expect to be extinction of their industry.
Textile millers in the USA believe that the impending relocation of textile manufacturing from the United States to other countries is a paradigm shift which is threatening their very survival.
United States textile industry has thrived over the past couple of centuries but now appears to be in deep trouble.
Traders said in Karachi that India and Pakistan are also projected to benefit from the freeing or global textile trade which had been straight-jacketed by quotas and restrictions principally imposed by the United States and Europe over the past half a century.
Now that a more level playing ground would hopefully be available, textile entrepreneurs in Pakistan and India are expected to continue their heavy investment over the next few years to capitalise on the relatively more equitable trading order, which they hope will become available.
Textile quarters in Pakistan have confirmed that heavy investment in spinning capacity is continuing unabated, while finishing and dyeing capacity is also being enhanced speedily.
More weaving capacity and over all modernisation of the textile industry in Pakistan is going ahead.
With these projections being presented by the domestic textile 1ndustry, we may expect the cotton consumption in Pakistan to go up to about 15 million bales (170 kgs) in the near future.
Though there was improved turnover in cotton sales on Thursday, the prices remained subdued.
However, there is hardly any demand or inquiry for the old (2003-2004) cotton crop. The downward price tendency in the domestic market is likely to continue definitely in view of the bearish global situation.