Larger seedcotton (kapas/phutti) arrivals into the ginning factories and piling of unginned stocks this week, lower local and international yarn prices and accumulation of yarn with the mills in addition to subdued prices on the New York futures market have all contributed to reduce lint prices in the domestic market.
Pour continuous holidays in the United States from Thursday through Sunday has also resulted in reduced marketing activity in the Pakistani cotton and textile industries.
Furthermore, a fresh assessment by the trade that total output of lint this year (2005-06) in Pakistan could be higher in the range of 12.5 million to 13 million bales on an ex-gin basis is also being construed as bearish.
This projection is about half a million bales higher than was being previously conceived.
Prominent broker Nasim Usman who is touring cotton growing areas in Punjab this week confirmed that the crop is coming up well and that though the lint quality from lower Sindh upto Nawabshah has deteriorated, cotton styles from Khairpur district, upper Sindh (K-68) and most of Punjab are still enjoying good grades.
According to reports from Rahimyar Khan, textile minister Mushtaq Ali Cheema told a gathering of growers and ginners that he would ensure a premium of Rs 50 per maund (37.32 kgs) for cleaner cotton without contamination.
Government has selected 31 factories which will pay premium to the growers for cleaner cotton and in turn the ginners will get higher ginning charges by Rs 30 per maund.
Seedcotton (kapas/phutt1) prices from both Sindh and Punjab were being quoted lower on Thursday. Prices for seedcotton from Sindh were being quoted from Rs 900 to Rs 1050 per 40 kgs, while prices for seedcotton from Punjab reportedly ranged from Rs 1050 to Rs 1125 per 40 kilogrammes.
Further acceleration of seedcotton arrivals could reduce the prices in the coming weeks but the leading mills would then be tempted to pick up good quality cotton to replenish their stocks.
Lint prices faced further erosion this week by Rs 25 to Rs 50 per maund (37.32 kgs) having tendency towards still more easing of values.
Brokers said in Karachi that the price idea for lint from Tando Adam in Sindh ranged from Rs 2250 to Rs 2275 per maund; in Shahdadpur cotton was being quoted from Rs 2325 to Rs 2350 per maund; prices in Sawabshah were said to have ranged from Rs 2350 to Rs 2375 per maund; in Khairpur district the prices of cotton extended from Rs 2375 to Rs 2400 per maund, while the price of cotton in upper Sindh (K-68) was said to be around Rs 2400 per maund. In Punjab cotton prices ranged from Rs 2375 to Rs 2400 per maund.
Sindh cotton market was remarkably quiet with few reported transactions while some more business was reported from Punjab on Thursday afternoon. Some ginners in Punjab were complaining that unsold cotton was piling up in their factories.
In the afternoon 200 bales each from Sakrand and Shahdadpur sold at Rs 2325 per maund while 200 bales from Shahpur Chakar sold at Rs 2340 per maund. In Punjab styles 1000 bales each from Mamun Kanjan and Dera Ghazi Khan sold at Rs 2375 per maund, while sale of 2000 bales each from Rahimyar Khan and Bahawalpur was reported at Rs 2400 per maund (37.32 kgs) signifying an overnight loss of Rs 25 per maund.
Mills sources added that though yarn prices were depressed, knitting sector was particularly facing very adverse circumstances. These news and developments have put cotton sellers on the defensive side, while the spinners are also facing pressure due to subdued yarn prices.
Therefore, the ginners are going through some difficult days and are also said to be disturbed by the lukewarm cotton situation in the market.