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Easy condition continues in cotton market




  • cottonAfter a decline of about Rs 50 per maund (37.32 kgs) since the inception of this week, lint prices continued to show an easy tendency on Thursday. Seedcotton (kapas/phutti) prices also showed a sagging tendency. In the midst of this downsliding price movement, the Trading Corporation of Pakistan (TCP) has continued its buying operations at a remarkable speed which is arguably responsible for preventing any steep decline of cotton prices till now.
    In about 2 month’s time, the Trading Corporation of Pakistan has bought nearly 1.5 million bales (170 kgs) from the ginners till now, out of which an estimated 600,000 to 700,000 bales will have already reached into its godowns within this week.
    In line with the directions of Prime Minister Shaukat Aziz, the Trading Corporation of Pakistan (TCP) is likely to lift all the lint offered to it in order to assist the farmers to obtain Rs 925 per 40 kgs for their seedcotton.
    According to trade talk, a lint-equivalent of about 10.4 million bales (170 kgs) of seedcotton from the current crop (2004-2005) has arrived into the ginning factories till now.
    The domestic mills are estimated to have lifted about 7 million bales as of today, while the TCP will have received up to 700,000 bales in its godowns by the end of this week and the exporters have picked up nearly 400,000 bales.
    Thus nearly 75 percent of the current cotton crop (2004-2005) has arrived into the ginning factories while another 25 percent of the crop is likely to follow. Ginners are presently carrying seedcotton equivalent to 2.2 million to 2.3 lint-equivalent bales in unpressed form.
    According to market estimates, 2 million to 2.5 million lint-equivalent bales of seedcotton is expected to arrive in the ginning factories during the month of December 2004.
    Most traders are now expecting that lint output during the current season (2004-2005) should yield a record crop ranging from 13 million to 13.5 million bales (170 kgs) on an ex-gin basis due to ideal weather prevailing in the cotton belt and much higher prices of seedcotton (kapas/phutti) received by the growers during the preceding season (2003-2004).
    Lint prices prevailing today half sunk to half compared to the peak level obtained during the previous season (2003-2004) which had leapt to Rs 3600 per maund (37.32 kgs). Therefore, with the presently prevailing cheap prices of cotton, the spinners in Pakistan are operating at peak capacities and are projected to consume up to 14 million bales this season (2004-2005).
    According to the textile manufacturers in Karachi, Multan, Lahore and Faisalabad, Pakistan is likely to take up the production and export of lower end of value-added textiles which may be relinquished by China while China itself will fill the gap expected to be created by the higher end fashion fabrics and garments industry in Europe and the United States of America (USA).
    In a recent report datelined Beijing, Wang Xianfeng, a senior official of a leading Chinese textile export company, said that while competition from Pakistan would increase after the elimination of textile quotas in January 2005, but he ruled out the notion that China would dominate the textile market in 2005 and thereafter.
    He maintained that if China wants to move higher, it will obviously give up the low end of textile manufactures to other countries such as Pakistan, Vietnam and Bangladesh. Chinese exporters ruled out the idea of monopolising global textile markets in 2005 and thereafter.
    Thus Pakistan is poised to catapult itself as a leading player in the global textile markets and is making related efforts to expand, modernise its machinery and train its workers accordingly.
    Though several exporters continued to make regular enquiries, general price idea for both seedcotton and lint remained on the easy side in the evening. Seedcotton (kapas/phutti) prices in Sindh reported ranged from Rs 700 to Rs 820 per 40 kilogrammes, while in the Punjab they are said to have extended from Rs 800 to Rs 850 per 40 kilogrammes according to the quality.
    Price idea for lint in Sindh reportedly ranged from Rs 1600 to Rs 1875 per maund (37.32 kgs), while it extended from Rs 1650 to Rs 1875 per maund in the Punjab.
    In the Punjab, 1000 bales from Gojra sold at Rs 1825 per maund (37.32 kgs), 1000 bales each from Yazman Mandi and Bahawalpur sold at Rs 1875 per maund, while 1000 bales from Rahimyar Khan reportedly sold at Rs 1875/Rs 1900 per maund.
    Citing increase in the price of their raw material viz. PTA, the domestic manufacturers of polyester staple fibre (PSF) increased their prices by Rs 3 and raised it to Rs 95 per kilogramme from the 1st of December 2004. Market sources anticipated that the price of locally produced PSF could be further 1ncreased to Rs 100 per kilogramme in January 2005.
    Discarding a steadier stance earlier this week, the New York cotton futures prices relapsed to lose ground across the board on last Wednesday. Both trade and producer selling are cited as having motivated the market into negative territory.
    The December 2004 delivery settled lower at US cents 47.88 per pound (down by 77 points), the key March 2005 delivery closed for the day at US cents 43.89 per pound (down by 89 points), while the May 2005 delivery ended the session at US cents 44.41 per pound (down by 57 points).
    Last week the president of the Liverpool Cotton Association (LCA) Andrew Macdonald, OBE (Order of the British Empire) accompanied by the 1st vice president Fritz Grobien visited the Karachi Cotton Association (KCA). The chairman of KCA, Abdul Shakoor Dada, welcomed the guests. In his address, the chairman of KCA informed the LCA dignitaries about the great strides which the cotton and textile industry had taken in Pakistan since 1947 when virtually no textile industry existed. Abdul Shakoor Dada informed the president of LCA that there was a need to suitably amend the LCA bylaws to make them unbiased against the buyers which should be done in consultation with the KCA.
    The chairman KCA further stressed the need that in view of the changed scenario due to the progress Pakistan had made in the sizeable development of cotton and textile industry, the LCA should include representatives of the KCA on the board of directors of the Liverpool Cotton Association (LCA).
    In his turn, Andrew Macdonald explained the various clauses of the LCA bylaws including arbitration, breach of contract, appointment of umpire and shipment of contracted goods. Andrew Macdonald agreed to the proposal to include representatives of the KCA on the panel of arbitrators at the LCA and also agreed to hold a seminar in Pakistan to elaborate on various provisions of the bylaws of the LCA. The president of LCA also informed the directors and prominent members of the KCA that with effect from the 9th of December 2004, the name of the Liverpool Cotton Association will be changed to International Cotton Association (ICA). Andrew Macdonald welcomed the suggestion to amend the LCA by laws in consultation with the KCA and suggested that the proposals of the KCA should be forwarded to the LCA for their consideration.
    Shahzad Saleem of Nishat Group recently attended the Cotton Council International (CCI) summit at a San Diego in the United States where he presented a comprehensive paper on the extra-ordinary growth and development taking place in the textile industry in Pakistan. Shahzad Saleem dwelt at length on the vast potential and importance of the Pakistan textile industry in the global setting. His presentation was appreciated by more than 400 delegates attending the summit from all parts of the world. It would be of immense help if other captains of trade and industry in Pakistan make similar presentations in international fora to portray the economic development taking place in Pakistan in a rapid way.

    Courtesy: `Business Recorder

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