LAHORE (January 30 2004): Due to impending weekend followed by a string of holidays, cotton business in Pakistan is likely to dwindle this week and then close down for most of the following ten days or so.

Chinese inactivity for the current week in the international arena now to be followed by Eid-ul-Azha in all the Muslim countries beginning from the First of February will reduce or close most of cotton trading activity till the second week of February 2004.

In the meantime, drastic fall in the New York cotton futures prices in recent sessions has raised a big question mark whether china will continue to stay away from cotton purchases for the near future. China remains the linchpin which mostly holds together the global price structure of cotton , being the largest producer and consumer.

As usual, most cotton activity and functioning is guided by the next move which china may make. Moreover, the timing of Chinese operations will continue to remain crucial to cotton price movements hereafter; the bulls continue to harbour the hope that China will make a meaningful entry into the cotton market after about a fortnight to cover its remaining requirements till the end of the current season (2003-2004).

Lint prices in Pakistan are also subdued due to extended holidays and also the glaring recessionary tendency in the New York cotton futures market. In the domestic market, the turnover has dwindled so that reported business has been reduced to around 5.000 bales daily in recent past, which will also taper off at the close of this week.

Already the holiday mood in Pakistan has gripped the cotton market. In fact, with the increase in transport charges for the time being trading in cotton is subsiding.

Brokers said in Karachi that though some ginners are showing signs of desperation, others holding better qualities of cotton are refusing to reduce their price line.

It would thus remain to be seen how the cotton prices behave when proper activity in our market resumes during the second week of February. News of textile activity will also be better known when the far east markets resume full time business soon after the Chinese new year.

Therefore, any movement in cotton market has been increasingly restricted during the current week in the domestic market.

The mills in Pakistan also appear to be fairly covered for the near future and are therefore in no hurry to increase their inventories in a sluggish market. However, some mills are reported to be enquiring for more imported cottons if they can buy cheap at bargain rates.

Nevertheless, analysts in Europe and the United States still point out to technically shorter supply positions of cash cottons till the arrival of the new crop 2004-2005 around the world. Thus cotton business in Pakistan is taking a breather for the time being.

It is interesting to note that even with reduction of business activity this week, some ginners were still asking for Rs 3,400 per mound (37.32 kgs) for their higher grade styles, while a few mills countered them with their price ideas ranging between Rs 3,325 to Rs 3350 per mound without the sales tax.

However, scant business was reported. Lower grades are selling at discounts of Rs 300 to Rs 400 or more per maund. In fact, there was some fear that cotton prices could take a lower track after the impending holidays.

In other relevant news, both private and official circles remain very upbeat regarding the increasingly better prospects for the textile industry in Pakistan during the forthcoming years.

Recently, the chairman of the export promotion bureau (EPB), Tariq Ikram, said that Pakistan will become the foremost textile exporting country in the world within a period of 10 years as the demand for its products is increasing steadily. Tariq Ikram was referring to a survey conducted by the export promotion bureau (EPB) at the Heimtextil exhibition held at Frankfurt in Germany early this month which disclosed that several buyers around the world were appreciating the remarkable improvement of Pakistan textile products.

Tariq Ikram is reported to have said that total textile and garments exports of the world stand at about 8 billion United States dollars, and that Pakistan will become the number one country in the global textile and garments exports business within the next 10 years, and that China and India are foreseen to take the number 2 and 3 positions after the year 2005.

Early this week the minister of state for food and agriculture, Sikandar Hayat Bosan, disclosed at a meeting of the cotton crop assessment committee (PCGA) that a new agriculture policy (NAP) will be introduced next month for the 2004-2005 season after duly consulting all the stakeholders including the growers, ginners, spinners, weavers, pesticide dealers, seed producers and others.

During the deliberations of the cotton crop assessment committee (CCAC), the chairman of the Pakistan cotton ginners association (PCGA), Seth Jetha Nand Kohistani, described the claim of the government that Pakistan would produce 10 million bales of cotton this season 2003-2004 as unrealistic and baseless and said that the cotton output during the current season would not exceed 9.5 million bales of 165.5 kgs each; the output figures were presumably being discussed on an ex-farm basis.

Traders in Karachi, however, are now clearly banking on an output of nearly 9.5 million bales of cotton on an ex-gin basis.

With China absenting itself from the cotton market for the Chinese new year holidays, the futures prices in New York could not hold and tumbled unmistakably for lack of any other positive feature or fundamental, the speculators were said to have liquidated their long positions and according to last Wednesday's reporting, cotton registered a decline of 6 cents a pound following the close of Chinese new year holiday period.

On last Wednesday, the March 2004 delivery settled limit down at US cents 70.76 per pound (down by 300 points), the May 2004 delivery also closed limit down for the day at US cents 72.06 per pound (down by 300 points), while the July 2004 delivery likewise ended the session limit down at US cents 72.90 per pound (down by 300 points). The sharp decline in New York cotton futures prices are close to being at six-week low levels.

Other news of interest includes a report that J.C. penny, the famous US department store chain, is hoping to increase its textile imports from Pakistan to more than US dollars 200 million per annum within the following few years, this was revealed during a meeting Rodney Berkins, a vice president and director of J.C. Penny had recently with federal finance minister Shaukat Aziz.

During the meeting, Shaukat Aziz informed Rodney Berkins about the steps taken by Pakistan to improve the business environment.

Rodney Berkins was accompanied by a large group of his senior executives who are exploring and evaluating the Pakistan garment industry for sourcing their requirements.

Press reports from Karachi also indicated that the local main manufacturers of polyester staple fibres (PSF) were mulling over the proposal to increase the price of polyester staple fibre (PSF) by Rs 1.50 to Rs 2 per kilogramme very soon.

In the evening, it was difficult to obtain any idea of business transactions as brokers reported the cotton market to be in a quiet and weakish condition with tendency to ease further later on.

Courtesy Business Recorder