Tuesday , October 17 2017
Home / Articles / Major Crops / Cotton prices steady on aggressive buying

Cotton prices steady on aggressive buying




  • KARACHI: The robust seed-cotton arrival figures, equivalent of 3.6 million bales, in the first fortnight of this month do indicate a larger cotton crop this season, but field reports indicate some damage to cotton crop due to pest attack and rains.
    As such, earlier crop estimates have been trimmed by 10 percent. One prominent cotton man was still estimating around 14.0 million bales while others now expect a crop of 12.0-12.5 million bales.
    Reports of spread of boll worm attack in Punjab cotton areas, damage by rains in lower and central Sindh cotton belt and stress on wheat sowing by November 15, not fully harvesting third pick of cotton make some sense in revising the earlier production estimates.
    Government estimates are at 11.5 million bales. Some circles think that larger third pick of cotton had increased cotton production last year but this season it may reduce the crop.
    Arrivals may not last longer this season and may stop abruptly. Cotton arrivals on October 1 were 86 percent larger than same time last year while that of October 15, the increase was reduced to 53 percent and, finally, it may come down to 20-25 percent to make the crop stand at 12.0 to 12.5 million 375-lb bales.
    Domestic cotton consumption is estimated around 13.5 million bales. However, our seasonal exports may go up to 500,000 bales and imports up to one million bales in 2004-05 season.
    Field reports indicate deterioration in quality of cotton both in Sindh and Punjab. Trading Corporation of Pakistan is understood to have made contracts of some 375,000 bales from ginners against which about 30,000 bales are reported received in TCP Korangi warehouse.
    The ginners are not bound to offer deliveries against contracts and are free to sell their cotton in the market if they get better price.
    Reportedly, TCP is making preparation for floating a tender of 20,000 bales for export sale next week. Since the international market is still looking for direction and prices have not stabilised so far, the international merchants may not show the required interest and eagerness in bidding.
    Exporters are understood to have sold some 170,000 bales in export and are aggressively making shipments.
    They are already offering around 44 – 44.50 cents per lb for Grade III Staple 1-1/32″ on FOB Karachi basis and TCP may not get better price than this.
    Lint prices in local market have appreciated by Rs 75 to Rs 100 per maund during last week when Spot Rate was raised by Rs 75 to 1,975 on close of the week. The exporters were quite active in covering their export sales. The spinners were also buying cotton.
    Lint prices in Lower Sindh were quoted around Rs 1,850-1,900 per maund of 37.324 kg, whereas in central Sindh up to Rs 2,000 and in Punjab between Rs 1,850 and Rs 2,025 per maund.
    The growers are still not getting the government-assured rate of Rs 925 per 40 kg for their phutti which ranges between Rs 850 and Rs 900 per 40 kg.
    Cottonseed prices are weak, around Rs 350, and are not supporting seed-cotton prices. Trade circles expect the prices to come down by Rs 100 to Rs 150 per maund in the months of November and December when accumulating of unsold cotton stocks would cross the level of two million bales and the spinners would take a break after covering bulk of their seasonal requirements.
    In New York Cotton Exchange, lint prices showed mixed trend. December contract closed at 45.67 cents losing marginally 15 C/Pts and March contract finished at 45.54 cents, losing 87 C/Pts.
    US export sales for the week ending October 14 were 187,100 Running Bales and shipments 103,800 R/Bales. US Export/Shipments details are as under: (In 480-lb bales).

    ======================================================
    Sales Shipments
    ------------------------------------------------------
    Upland cotton 5,882,300 1,293,600
    Pima Cotton 194,200 44,600
    ------------------------------------------------------
    Totals Bales 6,076,500 1,338,200
    ======================================================

    Prominent buyers of US cotton were: Mexico 1,371,000 bales, Indonesia 733,000, Turkey 635,000, Thailand 457,000, Korea Rep 430,000, China 394,000, Pakistan 336,000, Canada 266,000, Japan 221,000, Taiwan 174,000, Hong Kong 131,000 and India 98,000 bales.
    A study of cotton figures in the table would be of great interest for the readers and some conclusion may be drawn regarding trend of cotton prices in world market.
    This report has mentioned Pakistan’s cotton production at 9.0 million 480-lb bales(equivalent to 11.52 million 375-lb bales) and imports as 1.6 million bales (=2.048 million 375-lb bales).
    Trade circles estimate production at 12.5 million local bales (=9.765 million 480-lb bales) and imports around 1.0 million 480-lb bales instead of 1.6 million bales.
    Also, India’s cotton production has been officially estimated around 19.0-19.5 million 375-lb bales equivalent to 14.84-15.23 million 480-lb bales, against 14.2 million bales mentioned in USDA report.
    Thus, in India and Pakistan both, USDA has mentioned about 1.75 million 480-lb bales less than local estimates.
    International merchants are playing very cautiously on the backdrop of financial losses made in cotton business last season. China is slowly and steadily buying cotton without any bullish effect on the market.
    Last season, China had lost heavily in cotton buying when the prices were pushed above the level of 80 cents. The start of WTO regime from January is also a problem for many countries.
    How textile economies would perform in the post-quota era is only a guess and every country would face problems of different kinds which would require correct and immediate solution to take benefit of the market.
    Taking availability and consumption figures of globe, general idea is bearish, but how far is a matter of thinking and research.
    Cotton Balance-sheet of World & some countries updated in October,2004, by USDA (million bales).

    =========================================================================
    Beginning Production Mill Imports Exports End-
    Stock -use Stock
    -------------------------------------------------------------------------
    World 33.5 109.7 101.4 31.9 31.7 42.0
    USA 3.5 21.5 6.1 00 12.3 6.7
    China 6.2 29.5 34.8 6.9 0.2 7.6
    Pakistan 2.0 9.0 10.0 1.6 0.2 2.4
    India 4.1 14.2 14.0 0.8 0. 4.6
    Central Asia 1.5 7.7 2.0 00 5.2 2.0
    Australia 0.6 2.2 0.1 00 1.6 1.2
    Brazil 4.6 6.0 4.0 0.5 2.2 5.1
    Indonesia 0.4 00 2.2 2.3 00 0.4
    Selected Asia 1.9 0.2 8.3 8.5 0.1 2.2
    Mexico 1.1 0.6 1.9 1.5 0.2 1.0
    Turkey 1.4 4.4 6.1 2.2 0.3 1.6
    =========================================================================

    Courtesy: The DAWN

    About admin

    Check Also

    Potential areas for oil seeds production

    Report Issue: * Suggest Edit Copyright Infringment Claim Article Invalid Contents Broken Links Your Name: …

    Leave a Reply

    Be the First to Comment!

    Notify of
    avatar
    wpDiscuz