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ANALYSIS: rapid rise in cotton prices
LAHORE (May 28 2004): Lint prices have risen by Rs 100 to Rs
200 per maund (37.32kg) during the last week or 10 days
denoting a firm price sentiment prevailing in the market.
About 200,000 bales have been sold within a fortnight in the
domestic market leaving nearly 600,000 bales of unsold cotton
with the ginners from the current crop (2003-04).
The mills are likely to gobble up this leftover lint with the
ginners within the next few weeks time.
While the price increase in average grades of cottons has been
around Rs 100 per maund (37.32kg), the higher class of cotton
possessing prime micronaire readings of 4 and above are
commanding an increase of about Rs 200 per maund (37.32kg) as
demand by the mills has resulted in rapid rise in lint values.
At present, chances for further improvement in cotton prices
remain positive with little scope for lint values to recede
appreciably.
Though ultimately there is ample possibility that water supply
for the forthcoming cotton crop (2004-05) will be adequate,
but there are reports that in some areas the availability of
irrigation water could be delayed by two or three weeks time.
Thus, some tail-end growers are reportedly facing shortage of
water in lower Sindh, while reports have also been received
from southern Punjab about the delay in water supply.
However, officials have assured the cotton growers that their
anxieties regarding water shortage will be alleviated soon so
that increase of water supply in the rivers is expected.
There were also recent reports that dust storms accompanied by
rains lashed certain areas in Multan and Bahawalpur, which
will necessitate resowing there. However, the occurrence was
not extensive.
These developments concerning some possible delay in arrival
of next crop (2004-05) and continuous increase in domestic
demand for cotton by the mills are likely to keep the prices
in positive territory for the time being.
The voracious appetite of domestic mills to consume more
cotton is continuing unabated.
According to one assessment, increase or cotton consumption in
Pakistan could take a quantum jump from this year's (2003-04)
estimate of nearly 12.5 million bales (170kg) to almost 13.5
million bales during the forthcoming (2004-05) season.
Mills in Pakistan had already imported 1,321,848 bales (170kg)
from August 2003 to March 2004. Out of these, it is reported
that 352,235 bales have been imported during March 2004 alone.
It is, thus, projected that mills in Pakistan may import a
record 2,000,000 or more bales (170kg) this season (August
2003 to July 2004).
Recent reports indicate that the Pakistan textile industry and
its sub-sectors are growing strongly in all directions and are
showing increase in production, consumption, exports and
value-addition on a remarkable scale.
Traders said in Karachi that Pakistani mills have recently
booked nearly 300,000 bales of cotton for imports for delivery
during the next 12 months on both fixed and unfixed basis.
These imports would also partly help the spinners in keeping
continuity in order to achieve transition from the current
season (2003-04) to the next (2004-05).
Furthermore, much of this cotton pertains to different fibre
characteristics, which are not produced domestically and are
needed by the spinners to produce better quality,
contamination-free and higher counts of yarns which in turn go
into the manufacture of value-added textile products
predominantly for the export markets.
Till late on Thursday afternoon, brokers in Karachi reported a
turnover of nearly 10,000 bales of cotton as prices were
sustained in a steady to firm market.
Without the 15 percent sales tax, 400 bales from Khipro in
Sindh were reportedly sold at Rs 2,725 per maund (37.32kg);
600 bales from Shahdadpur were sold by an exporter at Rs 2,850
per maund on Karachi delivery basis.
While 600 bales from Dadu and 200 bales of relatively lower
quality from Rohri were sold at Rs 2,900 per maund.
In Punjab, 1,000 bales from Salehput reportedly sold at Rs
2,850 per maund (37.32kg) without the 15 percent sales tax;
600 bales from Liaqatpur sold at Rs 3,150 per maund; 500 bales
of different Punjab stations were sold by an exporter in
Karachi to textile mills at Rs 3,200 per maund; 1,900 bales
from Bahawalpur were sold at Rs 3,200 per maund, while 1,000
bales from Ahmadpur East were said to have been sold at Rs
3,225 per maund.
Earlier on last Wednesday, 200 bales from Haroonabad in Punjab
had been sold at Rs 3,300 per maund, but on credit basis. It
was reported on Thursday that spinners had initiated active
inquiries and considerable buying materialised in a steadily
held cotton market.
Courtsy
Business Recorder
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Pakissan.com;
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