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ANALYSIS: cotton prices continue to crumble
LAHORE (April 02 2004): Tumbling prices on the New
York Cotton Futures Market and lower yarn rates in
the home market have humbled the domestic cotton
prices by another Rs 25 to Rs 50 per mound, Sharp
decline in domestic yarn prices have further
punished cotton prices which continue to crumble
and remain under relentless pressure.
Higher planting intentions in the United States of
America crop for the forthcoming season
(2004-2005) to a total of 14.4 million acres
signifies an increase of 7 percent over last year,
resulting in limit down recorded in prices of the
frontal months on the New York Cotton Futures
Market on last Wednesday.
The subsequent months viz October 2004 down to May
2005 lost between 205 to 165 points. After some
initial rally in the early part of the session,
the speculators hammered the market to penalise
the fibre prices in the downward spree.
Thus on last Wednesday the cotton prices on the
New York futures market settled at US cents 62.10
per pound for the May 2004 delivery (lint down by
300 points), the July 2004 delivery ended the
session at US cents 63.90 per pound (lint down by
300 points), while the October 2004 delivery
finished for the day at US cents 65.40 per pound
(down by 205 points).
The sentiment in cotton prices divorced itself
from the continuing rallies in soyabean and corn
futures in Chicago after news of the surprising
rise reported in plantings of cotton for the
forthcoming season in the United States of
America.
In the meantime, domestic yarn prices are reported
to have declined by Rs 6 to Rs 7 per pound in
recent weeks for the 20/1 count of yarn.
However, the only silver lining is that fabric
producers are receiving more enquiries for their
products following the sharp drop in yarn prices.
Moreover,, brokers said in Faisalabad on Thursday
that they perceive better enquiries for the higher
counts of yarns.
Therefore, with lower lint and yarn prices, some
activity may pick up in the weaving sector but the
overall impression in the cotton trade remains
somber.
There were reports received from Bahawalpur in the
Punjab that still more seed-cotton (kapas/phutti)
from the current crop (2003-2004) is being
received there.
Therefore, concerned sources said that lint output
this year could cross the 10 million bales mark on
an ex-gin basis.
Sources close to the ginners said that the average
weight of a bale of cotton would be in the range
of 158 kgs to 160 each.
Due to continuing arrivals of seed-cotton for the
current season (2003-2004), sources close to the
ginning industry have observed that Pakistan
Cotton Ginners Association (PCGA) is likely to
report the arrivals figures till 1st of April and
also the 15th of April 2004 in due course of time.
Traders said in Karachi that the ginners still
hold an unsold quantity of cotton estimated around
1.1 million bales but are unable to dispose them
of speedily.
However, this may be lifted in due course of time
during the following few weeks because the
domestic mills still need more cotton before the
start op the new season (August 2004/July 2005).
Seed-cotton (kapas/phutti) prices for the current
crop (2003-2004) in Sindh reportedly ranged from
Rs 800 to Rs 1100/Rs 1150 per 40 kgs, while in the
Punjab they are said to have ranged from Rs 850 to
Rs 1150 per 40 kgs depending on the quality.
The price idea for cotton from Mirpurkhas in Sindh
was Rs 2400 per mound (37.32 kgs) without the 15
percent sales tax; in Sanghar, Shahdadpur or Tando
Adam, cotton prices were quoted from Rs 2400 to Rs
2500/Rs 2550 per mound; in Nawabshah district
cotton was being offered from Rs 2700 to Rs 2750
per mound; in Khairpur district the ginners were
asking between Rs 2650 to Rs 2750 for a mound of
their cotton; in Upper Sindh (K-68) the price idea
of cotton was said to have ranged from Rs 2500 to
Rs 2900 per mound, while in the Punjab the prices
of cotton were said to have ranged from Rs 2200 to
Rs 2960 per mound according to quality.
In other cotton news last week the government of
Pakistan increased the support price for seed
cotton (kapas/phutti) for the growers from Rs 850
to Rs 925 per 40 kilogram's for the forthcoming
season (2004-2005), which is an increase of Rs 75
per 40 kgs compared with the previous season
(2003-2004), which should encourage the growers to
plant more cotton.
On Thursday the Karachi Cotton Association (KCA)
slashed the ex-gin price of grade 3 cotton by Rs
25 per mound (37.32 kgs) and fixed it at Rs 2925
per mound which converts to a spot rate of Rs
3413.75 per mound including the upcountry expenses
and the 15 percent sales tax.
In the evening, the condition of the cotton market
verged on the weaker side and appeared to remain
easy with little expected recovery in sight. No
report of ready sales was available till the
evening.
Courtesy Business Recorder |
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Pakissan.com; Advisory Point
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