|
Main Page
|
 |
|
News Channel |
|
ANALYSIS: fall in New York prices depresses
domestic cotton
LAHORE (April 30
2004): Downswing in weekly export sales in the
United States of America (USA), hardening of the
US dollar, Chinese decision to rein in their
bloated economy and the worsening of war situation
in Iraq triggered a massive decline in the prices
of New York cotton futures, which, in turn,
dampened the price sentiment of domestic lint
prices.
Cotton prices suffered about Rs 25 to Rs 50 per
maund (37.32 kgs) on Thursday as anxious ginners
reportedly offered their lint at discounted prices
while the spinners mostly receded from the market.
There was occasional enquiry for higher class of
cotton possessing micronare values in the
neighbourhood of 4.5 but stock of such relatively
superior cotton would hardly amount to 100,000
bales but the ginners are still said to possess
about 900,000 bales lying unsold with them from
the current season (2003-2004).
Therefore, there is a slowdown in the market where
apparent activity has also decreased due to long
weekend stretching from Saturday to next Monday
because of public holidays in the country.
It is true that many mills still need to buy more
cotton before the commencement of the next season
(2004-2005) which is practically at least 4 months
away, however, for the present time the ginners
have once again come under pressure and at least
some of them appear to be worried at this
situation.
No doubt, the buying of better grades of cotton on
part of the mills will continue, as also some open
end spinners, will participate in further
purchases of cotton, but they are not panicky
about it.
Therefore, there are some cross-currents in the
market where prices are showing a weakening
tendency, but at the same time several spinners
enter the market to cash in by buying more cotton
at lower prices.
Domestic cotton prices for the current season
(2003-2004) have been gradually going sown since
attaining record nigh levels reported on October
28, 2003 when they scaled their apogee of Rs 3600
per maund (37.32 kgs) without the 15 percent sales
tax.
Moreover, many spinners cotton agents and traders
from Pakistan are also attending the cotton USA
conference being held on 5th of May, 2004 in Dubai
so that the next few days are likely to see little
activity in the domestic cotton market which will
also be undergoing extended holidays this weekend.
Mills are therefore likely to wait till next week
to reshape their cotton buying strategies.
In the evening, brokers from Karachi reported
continued lack of interest in the cotton market
wh1ch is not likely to rehabilitate itself before
next Tuesday.
Conditions in the cotton market are likely to
remain uncertain until some new feature or
fundamental becomes available to the traders.
Watching New York futures, even if they bear no
proportionate link to prices of physical cotton
for shipment from several origins, remains an
important factor which provides inspiration to
both buyers and sellers alike in many cotton
producing and consuming countries around the
world.
In Pakistan for the present time the growers are
showing greater enthusiasm to sow the new crop
(2004-2005) because they received unprecedentedly
high prices for their seed-cotton (kapas/phutti)
during the current season (2003-2004).
Moreover, Chinese buying options for the remainder
of the current season, the strength of the US
dollar and crop conditions around the world are
obvious phenomena which will guide the global
price-line of cotton.
Moderate business was reported in the domestic
market on Thursday. In Sindh a sale of 200 bales
of cotton said to be of better quality from Dadu
was reported at Rs 2750 per maund (37.32 kgs)
without the 15 percent sales tax; 600 bales of
lower quality cotton from Rasulabad in the
Khairpur district sold at Rs 2550 per maund; 100
bales from Kumbh sold at Rs 2725 per maund; 100
bales from Bucheri sold at Rs 2800 per maund; 600
bales of prime cotton from Kotri sold at Rs 2900
per maund; while 200 bales from Harunabad in the
Punjab were said to have been sold at Rs 2850 per
maund.
Seeing this relatively dull condition in the
market, brokers reported that a few ginners were
also predisposed to offer their cottons on credit
in order to unload their inventories.
Cotton futures in New York underwent something
close to haemorrhage on last Thursday in
consonance with news that China could be a
selective buyer henceforth and also coupled by
fall in prices of several commodities.
However, prices of actual cotton at different
origins did not necessarily reflect prorata
downfall as being witnessed in the fibre futures
in New York. Most delivers in both new and old
crops saw limit down settlements.
Outgoing May 2004 delivery tumbled to settle at US
cents 60.00 per pound (down by 485 points), the
July 2004 delivery ended the day at US cents 59.63
per pound (limit down by 300 points), while the
October 2004 delivery closed for the session at US
cents 60.90 per pound (down by 275 points).
The behaviour of the New York cotton futures
prices and its volatility remains baffling to many
observers because the fluctuations in the market
have become increasingly erratic.
Iqbal Umer Chairman of the Karachi Cotton
Association (KCA) has been unanimously elected as
a trustee of the Karachi Port Trust (KPT) for the
term 2004-2006.
The representative of the KCA on the board of KPT
always plays a vital and important role. Iqbal
Umer has vast experience in cotton, textile
trading and export business over the past many
years.
Courtesy Business Recorder
|
|
|
|
|
Pakissan.com; Advisory Point
|
|
