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Analysis: many mills active in cotton market




  • A flurry of buying activity was witnessed on cotton market when a number of mills purchased most of the available stocks in recent sessions. Moreover, lint prices rose about Rs 50 per maund (37.32 kgs) on Thursday with tendency to remain on the steady side.
    Those mills, which reportedly participated in recent buying of cotton, include Indus Dyeing, Sapphire, Colony, Gulistan, Bhanero, Kassim Textile, Tata, Baig, Allahwasaya, Kunjah, Shadman, Ittefaq, Suraj, and Shams.
    Mills are keen buyers because the quality of cotton arriving from Sindh is exceptionally good, while the cotton being received from Punjab is also acceptable to them despite being from the first picking, which is traditionally not fully mature.
    Traders say that the crop this year (2004-2005) has arrived earlier which is not only of a very good quality but it also carries the potential of being larger in quantity as compared to the previous season (2003-2004).
    Last year (2003-2004) the Pakistan Cotton Ginners Association (PCGA) computed the final output in Pakistan to be about 9.8 million bales (160-170 kgs). During the current season (2004-2005), some estimates even project the possible output to be around 11.5 million bales.
    Some mills have observed that such good quality of cotton being received currently was last seen three years ago.
    The good quality of cotton being received from Sindh is being variously assessed as being between 1,467 to 1,503 in grade.
    In other words, the current good quality of cotton coming from Sindh is comparable to higher side of grade three or even close to grade two of the Pakistan Cotton Standards Institute (PCSI).
    There are now reported to be above 70 ginning factories which have become operative, about 35 each in Sindh and Punjab, which are rolling out about 12,000 to 13,000 bales daily.
    The price of current crop (2004-2005) seed cotton (kapas/phutti) in Sindh was said to have ranged from Rs 950 to Rs 960 per 40 kilograms according to quality. In the Punjab, the prices of seed cotton reportedly ranged from Rs 980 to Rs 1,000 per 40 kilograms.
    According to a report, mills buying has been spurred up not only due to the very good quality of cotton which is arriving at present, but also because yarn pr1ces have improved further by Rs 5 to Rs 10 per ten pounds.
    Due to a fair rise in cotton prices on Thursday, now more ginning factories are expected to go into production soon.
    Moreover, brokers said that now less than 100,000 bales of leftover lint from the previous season (2003-2004) are estimated to be lying with the ginners, are expected to disappear w1thin a few weeks time. Now therefore the level of lint prices is hinging on the supply and demand criterion.
    Because the mills in Pakistan are projected to consume at least 13 million bales during the current season (2004-2005) lint prices are expected to remain steady for most part of the season.
    Brisk sales and good maturity of cotton at this stage will give more momentum to the ginning activity, which is likely to be accelerated further.
    Furthermore, ginners are reporting that they are receiving a good ginning out-turn (GOT) from the current crop which will not only increase the yield of lint but will also improve its quality.
    Also, the weight of cottonseed (kakra/binola) is also good which can yield more cottonseed oil in the extruder.
    Cotton sales on Thursday included 200 bales each from Tando Adam, Khadro and Khipro in Sindh at Rs 2,300 per maund (37.32 kgs), while 200 bales from Sultanabad, 400 bales from Tando Adam and 600 bales from Shahdadpur sold at Rs 2,325 per maund. In the Punjab, 200 bales each from Burewalla, Tandlianwalli and Chichawatni sold at Rs 2,250 per maund, 600 bales from Sahiwal sold at Rs 2,250/Rs 2,300 per maund (37.32 kgs) while 1,400 bales from Samundari were said to have been sold at Rs 2,300 per maund. In the evening, the cotton prices were said to have ranged from steady to firm.

    Courtesy: Business Recorder

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