LAHORE: Prices of ready cotton have firmed up within this fortnight primarily due to exporters entry in the market coupled with a positive purchasing stance displayed by the Trading Corporation of Pakistan (TCP). Domestic mills are also buying regularly as both the prices and quality of Pakistan cotton at this stage is quite attractive for the buyers.
After a meeting with chairman Masood Alam Rizvi and other officials of the Trading Corporation of Pakistan in Multan, Haji Mohammad Ebrahim, chairman of the Pakistan Cotton Ginners Association (PCGA), has stated that the TCP has decided to remain in the market to support the price of seedcotton (kapas/phutti) which have been declared at Rs 925 per 40 kgs, which converts to Rs 2159 per maund (37.32 kgs) of lint of grade 3 having a length of 1-1/32 of an inch with a micronaire range of 3.8 to 4.9 with moisture not exceeding 8.5 percent.
Haji Ebrahim added that premia and discount will be applied for different grades of cotton which are better or lower than the grade 3 cotton.
Market sources indicate that the TCP may have purchased upto 200,000 bales till now and has declared its willingness to lift more cotton to support the prices at the level declared by the government.
With increase in purchases of cotton by the exporters, the TCP and also the mills, lint prices increased by Rs 25 to Rs 50 per maund (37.32 kgs) on Thursday.
Leading exporters like Haji Khuda Bux, Dadasons, Rehmoumer, Naseem Enterprises, Hakimuddin Hormusji, Meezan Enterprises, Cargil and Haji Dossa have reportedly been active in recent weeks.
Most estimates continue to place the current crop (2004-2005) output in Pakistan to be around 13 million domestic size bales on ex-gin basis due to ideal weather conditions and higher prices of seedcotton the growers received during the previous season (2003-2004).
The prices of seedcotton also went up by Rs 25 to Rs 50 per 40 kilograms on Thursday. In Sindh the prices of seedcotton reportedly ranged from Rs 800 to Rs 875/ Rs 900 per 40 kgs as per quality, while in the Punjab the prices of seedcotton were said to have ranged from Rs 850 to Rs 900 per 40 kilograms.
Both the mills and the exporters have set their target purchase price at Rs 1950 per maund (37.32 kgs).
Though some areas in Punjab are reporting approach of army worms and redenning of the leaves following the recent rains, but overall the quality of cotton in both Sindh and Punjab is said to be of fair to good condition.
An estimated 100,000 bales are now reportedly being ginned daily but this speed could slow down with the commencement of the holy month of Ramazan within a couple of days.
On Thursday, 200 bales from Tando Adam in Sindh reportedly sold at Rs 1890 per maund (37.32 kgs), while another 200 bales from the same station were said to have been sold at Rs 1900 per maund; 400 bales from Nawabshah sold at Rs 1900 per maund while 1000 bales from the Khairpur district sold at Rs 1950 per maund. In the Punjab 200 bales from Gojra and 400 bales each from Muridwalla and Harunabad sold at Rs 1975 per maund, while 200 bales from Gojra also sold at Rs 2000 per maund. The tone of cotton price continued to remain steady through the evening.
While the global cotton supply situation remains over all bearish, both domestic and foreign buyers see the current cotton prices in Pakistan to be attractive. with mills in Pakistan poised to consume 13 or more mill on domestic size bales during the current season (2004-2005), it seems likely that most of the cotton output in Pakistan should be disposed off in due course of time.
According to the monthly supply and demand report issued by the United States Department of Agriculture (USDA) on last Tuesday, the global output of cotton during the current season (2004-2005) has risen to a gargantuan 109.67 million bales (480 lbs) which has increased from last months figure of 107.25 million bales.
Similarly, the estimate of cotton production in the United States of America (USA) has also been elevated to a record 21.54 million bales compared to last month’s estimate of 20.9 million bales. Global cotton consumption this year has been hiked to 101.40 million bales.
Major increases in cotton production are construed to occur in India, the United States, Pakistan and Turkey. On the face of it, such increased output should weigh heavily on cotton prices eagerly in search for consumers, but low prices could conceivably create a good demand for the silver fibre.