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Cotton remains cheerless,
depressed
KARACHI: The cotton market remained cheerless and depressed
even on Saturday. With all attention focused on Supreme Court
verdict in Referendum case, the market lacked trading
interest. Prices were subdued owing to preponderance of
sellers amid poor buying interest. Spinners remained glued to
the sidelines waiting for further slide in prices while weak
ginners were running helter-skelter to woo buyers for the
unsold stocks giving sleepless nights to them.
Official spot rate remained pegged at Rs1650 while in the
ready section, only a single deal in upper Sindh cotton was
finalised at Rs1720/1780, showing further erosion of value.
Though the SC verdict has removed the confusion about
referendum, the dust on the political front will settle down
only after April 30. The fear of confrontation between the
referendum and anti-referendum is still lurking in the minds
of the spinners and hence they have decided to lie low until
April 30. The verdict has undoubtedly inflicted a humiliating
moral defeat on the opposition groups, they may resort to
agitational politics leading to head on collision with the
official agencies. Thus spinners preferred to sit with their
fingers crossed till April 30.
The business community will certainly take a sigh of relief
after the SC verdict as they are in favour of referendum,
which will ensure continuity of present business-investment
friendly policies of the government. It will also ensure peace
and stability in the country sine qua non for the economic
progress of the country and revival of the investment climate.
Brokers said that after April 30, the deck will be cleared for
revival of normal business interest in the cotton market.
However, they are not in a hurry to jump into the fray. With
comfortable inventory position, they would like to avoid
indulging in panic buying so that the ginners do not hike the
prices taking undue advantage of the surge in demand.
Meanwhile, weak and cash strapped ginners have further lowered
the asking prices in a frantic bid to attract buyers but there
are no matching offers. It redounds to the credit of bigwigs
among ginners who have put up a brave face against heavy odds.
They have averted a price crash by holding on to their
positions. Meanwhile, it is reported that some Punjab spinners
are making direct purchases of lint from the ginning
factories. Forward deals have been struck in new crop as well
on deferred payment basis. Some spinners are inclined further
import of lint in view of decline in world cotton prices.
For the last two months, cotton prices have taken a steady
downhill course with bleak prospects of any improvement in the
situation. The business volume has shrunk to bare minimum
while some quantities are trickling in from Mailsi, Lodhran,
Kror Pucca, Chichawatni and Yazam Mandi in the Punjab, its
supply has also been reported from certain areas of upper
Sindh. With a loss of nearly 6 cents per pound in New York
cotton futures this month (May contract), domestic market in
Pakistan also sees no reason for cotton prices to rise in the
near future.
According to Naseem Usman, Secretary, Karachi Cotton Brokers
Association, the cotton market saw the extension of the last
two months' bear-run. In the past couple of months, the
official spot rate has been marked down by Rs150 per maund
though it remained unchanged at Rs1650 last week. Business
volume remained low because of the lack of buying interest on
the part of textile mills and spinners. The jittery ginners
kept contacting KCA brokers and Punjab ones for the disposal
of their piled up stocks but to no avail.
President Musharraf visited various cities and towns in
connection with his referendum campaign last week and held out
promise to the growers that the entire output of wheat and
cotton will be lifted. The ginners are still waiting for the
redemption of the pledge given to them by the President.
Though TCP has been picking up lint sporadically, it leaves
much to be desired if it has to achieve the set procurement
target of one million bales. It has so far purchased 4,25,000
bales out of which 2,50,000 bales' delivery has been received.
Last week, export of cotton showed some improvement. So far,
an export sale of 1,25,000 has been registered with the Export
Promotion Bureau. Meanwhile, a round 9 lakh bales of lint have
been imported from abroad. Another three to four lakh bales
are reported to be in the pipeline. While cotton yarn
continued to be in the local market last week but there was
improvement in price. The rate of payment was also slow
creating financial problems for the spinners. However, it is
heartening to learn that the foreign demand for Pakistani
textiles and yarn is on the increase. Particularly, exports to
European Union has perceptibly increased while the imposition
of anti-dumping duty on the import of Indian bed-linen by
European Union is expected to the advantage of Pakistani
exporters.
Meanwhile, whole week, resumption of hedge trading in cotton
remained under discussion. For, the SECP has set up National
Commodity Exchange Limited under the Karachi Stock Exchange
where futures trading in cotton, rice, wheat, edible oil etc
will take place. This has created furore in the Karachi Cotton
Association circles. Since 1934 to 1974, hedge trading in
cotton continued uninterruptedly. Hence these circles are
protesting against assignment of this responsibility to the
newly set up exchange. These sources complain that the stock
exchange wants to hijack hedge trading from the Karachi Cotton
Association.
In this connection, Naseem Usman talked to the KSE chairman
and chief of the newly set up commodity exchange said that
they had no intention to hijack hedge trading in cotton from
KCA but the responsibility had been assigned to KSE by the
government and hence have set up the commodity exchange and
got it registered.
Meanwhile, the international cotton market continued to depict
bearish tone. New York May contract fell to 33.50 cents per
lb. which is the lowest rate since February this year. Market
sources anticipate continuation of bearish trend in the local
and international market in coming days. Official spot rate
was unchanged at Rs1650. Ready business was confined to a
single deal of 1400 bales of Ghotki (K-68) sold at
Rs1720/1780.
courtesy Daily The News ,
29 April, 2002
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Pakissan.com;
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