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ANALYSIS: cotton prices reeling under intense pressure
LAHORE (July 09 2004): Cotton prices fell precipitously and
recorded a large fall of Rs200 to Rs300 per maund (37.32kgs)
over the past one month or so.
While the Karachi Cotton Association (KCA) pulled down its
ex-gin price for grade 3 cotton in 10 days time by Rs225 per
maund, market sources said that cotton prices have gone down
by about Rs100 per maund since the beginning of this week
alone.
Global slump in yarn prices, bad performance by Chinese
textile industry components of which are still carrying
considerable cotton stocks bought at higher prices earlier in
this season and anticipated larger production of cotton in the
forthcoming season (2004-05) is putting strong pressure on
lint prices everywhere.
In Pakistan, the yarn prices have lost nearly Rs6 per pound
over the past 10 days with proclivity to suffer more.
Some United States buyers of fine counts or yarn are also
reported to have reduced their interest in Pakistani yarns.
So in view of this despondent situation, mills are only buying
on a hand-to-mouth basis, but recently some exporters are
making enquiry in the cotton market in view of lower lint
values now prevailing.
Though pressure continued to amount on cotton prices on
Thursday, but turnover reportedly improved as some spinners
decided to capitalise on the lower levels or lint values
prevailing now, with the added interest of certain exporters,
the current cotton prices could consolidate at these levels.
Though there were few buyers in the morning, sales picked up
gradually and a respectable amount of trading materialised on
Thursday after several dull sessions in the previous few
weeks.
It appears that now the ginners have decided to ditch their
unsold stocks of about 450,000 bales at the current low price
levels as they have lost hope of any early revival of cotton
prices.
Early in the day, unconfirmed reports indicated that 200 bales
of current crop (2003-04) from Nauashehro Feroze in Sindh were
sold at Rs2250 per maund, and 400 bales from Sanghar sold at
Rs2300 per maund.
If these sales are confirmed, they would signify a decrease of
lint prices by about Rs300 per maund within about 15 days
time.
Regular sales reported by the cotton brokers in Karachi, 200
bales of Rasulabad in Sindh were sold at Rs2200 per maund
(37.32 kgs); 300 bales from Nayabad were sold at Rs2300 per
maund; 200 bales from Dadu sold at Rs2400 per maund; 1000
bales from Rohri and 500 bales from Khanewal in Punjab sold at
Rs2700 per maund, while 3000 bales from Mehrabpur in Sindh
were sold at Rs2800 per maund.
Despite the fact that mills in Pakistan are reportedly running
anywhere from 8.5 to 9 million spindles at present and are
estimated to add about 2 million spindles between the years
2003 and 2004, local lint prices refuse to rise to the
occasion.
Generally speaking, the lower quality of lint was reportedly
being offered from Rs2100 and Rs2200 per maund, while the
higher grades of cotton were being quoted anywhere from Rs2700
to Rs2800 per maund (37.32kgs).
In the evening, the general feeling was that while the cotton
market could consolidate at the current price levels, the
scope for any large improvement was restricted, even though
the Pakistani mills are increasingly using more and more
cotton each month and each year that is passing.
It seems that mills in Pakistan are importing increasingly
more cotton and would continue to do so during the forthcoming
years.
Curtesy: Business Recorder
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Pakissan.com;
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