Strong sentiment continued to prevail in the market as both current (2005-06) and new crop (2006-07) cotton were traded on Thursday. With yarn prices also reported to be holding on steadily, lint prices were said to be showing a stable condition.
With about 200,000 unsold bales of cotton from the current crop (2005-06) remaining with the ginners and hardly 60,000 bales of old crop (2004-05) left over with the Trading Corporation of Pakistan (TCP), which put together will be hardly enough to be just one week's consumption of the domestic mills at the estimated use of 16 million bales (170 kgs) per annum, prices of lint will not relent.
Though fair amount of business for good grade cottons has been conducted at higher rates, but generally the price of lint reportedly ranged from Rs 2350 to Rs 2650 per maund (37.32 kgs) in Sindh while in the Punjab the prices are said to have ranged from Rs 2400 to Rs 2600 per maund on Thursday.
The Karachi Cotton Association (KCA) maintained its ex-gin price of Grade 3 cotton at Rs 2600 per maund (37.32 kgs) this week signifying a firm price tendency in the market. Out of the tender for sale of 33,000 bales of cotton invited by the Trading Corporation of Pakistan (TCP) till the 26th of June 2006, it reportedly sold 3,000 bales at Rs 2575 per maund and 6000 bales at Rs 2450 per maund, even though the bidding by the buyers was for a total of 111,000 bales.
From the current crop (2005-06) 1000 bales of cotton were sold by one mill to another mill in the Punjab at Rs 2635 per maund, 4098 bales of various types of cotton were sold by an exporter to a mill at Rs 2685 per maund (37.32 kgs) on ex-Karachi basis; 1000 bales of different types of cotton were sold by one exporter to another at Rs 2695 per maund on ex-Karachi basis, while 300 bales of cotton from Daulatpur in Sindh were sold at Rs 2800 per maund on two months credit basis. Additionally, agents for international merchants in Karachi said that mills had bought sizeable quantities of imported cottons this month. One mill bought some cotton on un-fixed basis with delivery stipulated for December 2008.
While most of new crop (2006-07) cotton may arrive late by two or three weeks time, some seedcotton (kapas/putti) pertaining to the new crop has already arrived at such lower Sindh stations as Jhudo, Digri, Pangrio and Tando Jan Mohammad. Seedcotton sales of about twenty truckloads (about 300 maunds each) from the new crop in lower Sindh is said to have been done at Rs 1110 to Rs 1125 per 40 kilogrammes. One factory each in Sanghar and Mirpurkhas is going to start ginning soon and has reportedly sold cottonseed (binola/kakra) at Rs 525 per maund (37.2 kgs) for delivery on the 15th of July 2006. Recent rains in Thar region in lower Sindh are being construed as being beneficial. New crop (2006-07) seedcotton in Chichawatni in Punjab was also sold at Rs 1050 per 40 kgs, the lower price being due to some moisture in the seedcotton. The quantity sold was just about 100 maunds. Brokers said in Karachi that some quantities of cotton being any where from 150,000 to 200,000 bales may arrive in August or September, but larger or commercial quantities of new crop should arrive later in September in Sindh and October 2006 in Punjab.
As the other inputs are being deemed satisfactory, weather is likely to remain the main determinant of the size and quality of the new cotton crop (2006-07) in Pakistan. With this situation in view, domestic lint prices are likely to remain steady to strong because there is not much floating stock left in the market. Mills in Pakistan are mostly looking forward to obtain and use the new domestic cotton crop as soon as possible.
Textile millers remain quite concerned and disappointed because nothing seemed to have been done in the federal budget announced early this month regarding their handicaps compared to their competitors like China, India and Bangladesh in the export market. However, there are reports and speculations in the market that the grievances of the domestic textile industry will be addressed in the forthcoming trade policy which is expected to be announced soon.