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Cotton subdued
amid moderate buying
KARACHI-The cotton market remained subdued on Saturday, owing
to the spinners' reluctance to chase the rising prices'. The
ginners too, got jittery after the release of the PCGA report,
which gave credence to official crop estimate of 10.5 million
bales. They relented in the buyers' favour to ensure speedy
clearance of accumulated stocks.
About 5000 bales changed hands at prices matching the
spinners' export parity. Some buying interest was witnessed,
after the lull of a couple of days. In fact, the cotton market
depicted an easy tone with the prices down by Rs50 to 75per
maund. The bearish trend was more pronounced after the release
of the Pakistan Cotton Ginners Association's report, which
revealed that up to April 1, over 10 million bales of cotton
reached the ginneries.
This belied those, who were predicting a crop shortfall due to
the shortage of water. The initial arrival of phutti was
relatively small because of the late sowing but the latest
figure indicated an increase of 0.31 per cent in the arrivals
over the corresponding figure of the previous year.
Following the publication of the report, the spinners who were
making hasty purchases fearing shortage of supplies in coming
days, withdrew to the sidelines. Consequently, the lint prices
fell by Rs50 to 75 per maund. The fine quality lint of Punjab
and Sindh, which was fetching Rs 1875/1900, started changing
hands at Rs 1800/1825.
Similarly, the price for inferior quality lint fell from
Rs1550/1575 to RS 1475/1500. Yet the spinners are showing
restraint and thus the buying is confined to selected lots.
The arrival of phutti into the ginning factories is also
declining and according to an estimate, only 1.5 to 2 lakh
bales of additional phutti is expected to arrive at the fag
end of the season.
There is some improvement in the demand for yarn in the local
yarn market, but the prices are pegged at the previous level.
This has created a serious liquidity problem for the trade.
This is intriguing; because of late the slackness in weaving
and knitting sectors seemed to be ending fast which had led to
a distinct improvement in the demand for lint.
The cotton dealers had taken a sigh of relief after learning
that a large number of looms lying idle had come on stream
again while the knitting machines too had be en reactivated.
But suddenly, the projection of larger cotton crop by PCGA
came as a bolt from the blue for the ginners. Gloom again
descended on the market following withdrawal of the spinners'
demand.
According to All Pakistan Textile Mills' Association, the
number of spindles and looms has increased so much in the last
two to three years that next year; the domestic consumption of
lint may exceed 11 million bales. The most interesting thing
about cotton trade is; that while the import of foreign cotton
continues unabated, export of the commodity from Pakistn is
also taking place simultaneously.
So far, 830,000 bales of lint have been imported while exports
stand at 110,000 bales. Last week, polyester fibre producers
enhanced the price of the fibre by Rs4 per kilo, which means
accumulative increase of Rs7, within a month raising the price
of the commodity to RS 57 per kilo. The polyester fibre
producers attribute the hike to an abnormal hike of $160 per
ton in the price of PTA used in the manufacture of the fibre.
Hence, the local manufacturers' are still suffering a loss of
Rs2 to Rs3, after hiking the rate by Rs7.00 per kilo. The
manufacturers' do not rule out the possibility of further hike
in its price. Meanwhile, business circles are looking forward
to a positive impact of President Musharraf's decision to hold
referendum on cotton trade.
They hope that to ensure a positive outcome of the exercise,
business climate will be improved and grievances of business
community removed. The Trading Corporation of Pakistan is
continuing its procurement drive in a bid to stabilise lint
prices. So far it has finalised a deal for 3.75 lakh bales out
of which the delivery of 2.25 lakh bales has been received.
According to latest PCGA report until April 1, 10.1 million
bales of phutti have arrived into the ginning factories as
compared to 10.085 million b ales last year. The ginners are
still saddled with an unsold stock of 1.4 million bales.
Meanwhile, cotton sowing has started in the lower Sindh.
Official spot rate remained unchanged at Rs1800 on Saturday.
Ready off-take stood at 5000 bales out of which 3200 bales
were from Sindh and the rest from Punjab.
Of Sindh cotton, 1300 bales Khipro were sold at Rs1500, 500
bales Khadro at Rs1500, 1000 bales Akri at Rs1650 and 400
bales Punjmoro at Rs1650. Of Punjab cotton, 200 bales Burewala
changed hands at Rs1775, 200 bales Burewala at Rs1800, 100
bales Gojra at Rs1575, 500 bales Kasowal at Rs1775 and 200
bales Chichawatni at Rs1650.
courtesy Daily The News, 8
April, 2002
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Pakissan.com;
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