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