Steady condition has prevailed over the cotton market during the past couple of days with normal turnovers. Due to dwindling stocks and higher advices from the New York cotton futures market for most of this week, spinners kept buying from the little stock of better quality of lint still lying with the ginners, while the exporters became active and took up fair quantities of cheaper cotton, particularly of low micronaire values.
According to trade talk, seedcotton (kapas/phutti) equivalent to about 11.2 million domestic size bales from the current season (2007-08) will have arrived at the ginning factories by the 1st of March 2008 while the total tally for this season could be close to 11.6 million bales on an ex-gin basis.
Encouraged by local demand and steep increases in New York cotton futures prices for most of this week, the Karachi Cotton Association (KCA) jacked up the ex-gin price of Grade 3 cotton to Rs 3200 per maund (37.32 kgs) this week and maintained that level on Thursday. Now most of the lint in the market is of lower grades with sprinkling of better class of cotton left in the stocks.
Barring a stray sale of 800 bales of cotton from a Punjab ginnery at Rs 3500 per maund (37.3 kgs), on last Wednesday which indicates a very high price level for lint, prices in both Sindh and Punjab were steadily held. Sindh cotton was reportedly priced between Rs 3150 to Rs 3400 per maund, while cotton from Punjab was offered from Rs 3100 to Rs 3400 per maund.
Seedcotton (kapas/phutti) prices both in Sindh and Punjab were said to have ranged from Rs 1300 to Rs 1500 per 40 kgs according to the quality. Now most of the growers will be preparing for the next crop (2008-09) sowing regarding which the Punjab government has warned that early sowing than advised would give rise to many problems including pest attacks. Therefore, the growers should wait several more weeks before planting the next cotton crop.
In ready sales on Thursday, 400 bales of Bt cotton from Mirpurkhas in Sindh reportedly sold at Rs 3300 per maund (37.32 kgs). In the Punjab, 1,200 bales of Rajanpur were said to have been sold at Rs 3100 per maund; 2,000 bales from Head Bakani sold at Rs 3200/Rs 3300 per maund; 1,000 bales from Harunabad and 2,000 bales from Rahimyar Khan sold at Rs 3250 per maund each; 2,000 bales from Lodhran sold at Rs 3275 per maund while 800 bales from Kot Addu and 1,000 bales from Kabula sold at Rs 3400 per maund each.
Cotton rates are therefore steady and presently appear unwilling to emulate the lofty level of Rs 3500 per maund (37.32 kgs) not only because not much is left of good quality lint in the market, but also due to the fact that it may take more time for several spinners to recover from their past losses and difficulties and to regain new momentum.
With diminishing interest of larger and more quality conscious mills in the domestic market, some of these units will be paying more attention to importing cotton. Market reports indicate, however, that several mills have already made large import commitments but the mills who made contracts to purchase cotton on unfixed basis are truly worried due to 4 years high rates attained by the New York cotton futures market in recent sessions. Tumultuous rise and fall in the New York cotton market in recent weeks has unnerved many spinners who are also reportedly not receiving their cottons from India which they had bought earlier at cheaper prices, or are receiving lower quality.
However, those Pakistani mills who are well stocked and generally covered for their cotton requirements till the beginning of the next season (August 2008) are reportedly doing well in their textile sales as they also possess higher qualities of cotton in their godowns. The quality and output of the next cotton crop (2008-09) in Pakistan remain big imponderables due to the setback of low output suffered during the current season (2007-2008). many experts are apprehensive that the quality and quantity of desirable type of cottonseed may not be available because of rampant adulteration of cottonseeds and other inputs during the current outgoing season (2007-08).
It is apt time that the federal minister for commerce, industry and privatisation Shahzada Alam Monnoo is visiting the Karachi Cotton Association (KCA) on the morning of the 1st of March 2008 to discuss the problems besetting the cotton trade and industry with the directors and leading members of the KCA.