LAHORE (February 20 2004): Expectations of better output of domestic crop, lower advices from the New York futures market in recent weeks and decreasing yarn prices both here and abroad have brought a downturn in the cotton market.

Since most of this month, turnover in the domestic market has been much lower than anticipated earlier.

Therefore, brokers in Karachi have conveyed that very little business is being reported in the cotton market whereas the ginners reportedly remain keen to dispose of their outstanding stocks as early as possible.

According to trade talk the lint prices have gone down by Rs 50 to Rs 75 per mound (37.32 kgs) this week and could suffer further fall of Rs 100 per mound in the near future.

Traders added from Karachi that there is little buying interest for lint on the part of the spinners.

Therefore, the condition of the cotton market remains subdued. Lack of yarn sales is also being reported from the textile market where some spinners have reported a fall of Rs 20 to Rs 25 per bundle of 10 pounds.

Moreover, several mills have built up long positions in their cotton purchases so that they are presently satiated with their current inventories, which they claim to have piled up at higher prices, which were prevailing some weeks ago.

Some mandi towns in the cotton belt are reportedly still carrying considerable quantities of unsold seed-cotton (kapas/phutti) which is easily available for disposal, but the ginners do not appear anxious to lift this stock at current prices.

There is no panic on the part of the spinners to lift their remaining requirements of lint in a hurry.

According to the Pakistan Cotton Ginners Association (PCGA), seed-cotton (kapas/phutti) arrivals up to the middle of this month were 9,389,745 lint-equivalent bales from which the mills have lifted 7,568,016 bales.

Exporters are said to have lifted 167,417 bales. The ginners still possess an unsold stock of 1,654,312 bales, out of which 168,281 bales are in unginned form.

The price idea for lint from Mirpurkhas in Sindh reportedly ranged from Rs 2,500 to Rs 2,550 per mound (37.32 kgs) without the 15 percent sales tax; in Tando Adam, Sanghar or Shahdadpur, cotton was being quoted from Rs 2,600 to Rs 2,800 per mound; in both Nawabshah and the Khairpur districts the cotton was being offered from Rs 2,900 to Rs 2,950 per mound.

In Upper Sindh (K-68) ginners were offering their cotton from Rs 3,150 to Rs 3,200 per mound, while in the Punjab the ginned cotton was being offered anywhere from Rs 2,700 to Rs 3,200 per mound, according to quality.

With the receding lint prices, the rates for seed-cotton (kapas/phutti) also drifted lower on Thursday.

Thus, in Sindh the seed-cotton prices reportedly ranged from Rs 900 to Rs 1,300 per 40 kgs, while in the Punjab the seed-cotton prices were said to have ranged from Rs 1,000 to Rs 1,300/Rs 1,325 per 40 kilogram's.

In the morning and also in the afternoon, the cotton market was idling most of the time with a definitely quiet disposition.

Later in the evening, some transactions were reported but the condition of the market was hardly cheerful.

In fact, some ginners were reported to be anxiously searching for prospective buyers of cotton.

Later in the day, 200 bales of cotton from Sanghar in Sindh were reportedly sold at Rs 2,650 per mound without the 15 percent sales tax; 200 bales from Shahpur Chakar sold at Rs 2,810 per mound; 2,000 bales from Khairpur district were sold at Rs 2,900/Rs 2,950 per mound, while 1,000 bales from Rahimyar Khan in Punjab were sold on credit basis at Rs 3,300 per mound.

According to trade talk, the ex-gin cotton output in Pakistan during the current season (2003-2004) could now range higher in the vicinity of 9.8 million to 10 million bales.

A few also believe that it could be even higher than 10 million bales and thus exceed last year's (2002-2003) output.

While there is always some demand for the higher grades of cotton, there is not much enquiry for the lower class of cotton.

Thus, it makes many ginners unhappy at the present dull position of the cotton market.

Nevertheless, due to record high prices of seed-cotton (kapas/phutti) obtained by the growers this year (2003-2004) which even touched Rs 1,600 per 40 kgs at one time, preliminary projections indicate that larger sowing will be made for the next season (2004-2005) which could push up the cotton output in Pakistan to almost 13 million domestic size bales.

Of course, such a projection would very muck depend on conducive weather and the availability of sundry inputs at reasonable rates.

Though normally carrying a prescribed weight of 170 kgs, this year some cotton bales reportedly weighed as low as 140 kgs or 150 kgs only on net basis.

Courtesy Business Recorder