The Pakistan Cotton Ginners Association (PCGA) reported earlier this week that seedcotton (kapas/phutti) equivalent to a record-smashing 13,102,354 lint-equivalent bales had already arrived in the various ginning factories in Pakistan by January 1, 2005. This shows a national growth in cotton output by 56.31 percent over the previous season (2003-2004) when nearly 8,382,181 domestic size bales were received till the same period of time.
The calculus of cotton remains an enigma for most of the time and only at the approaching end of the season the figures of arrivals and dispersals start becoming clearer. Over the past few years the traders, government agencies, domestic mills and the exporters conducted serious and hectic exercises to see if Pakistan could produce a crop of about 15 million bales (170 kgs) to meet the rapidly expanding demand for cotton by the textile industry at home.
Now most sectors of the cotton trade believe that output of lint in Pakistan is likely to touch the figure of about 15 million bales this season (August 2004-July 2005) on an ex-gin basis, which would be a massive gain of production by about 50 percent.
Conducive weather, higher aggregate prices received by the growers over the past several years and rapidly rising demand of the domestic textile industry have seen primarily instrumental in catapulting the cotton production in Pakistan to new heights.
The pest-free environment for most of the current season (2004-2005) has also helped immensely to obtain the massive growth in lint output this year. Almost all the sectors of the cotton economy in Pakistan are presently making good progress and earning profits in their operations.
The current computation of cotton arrivals and disposals therefore would appear to be about 15 million bales output on domestic size bales basis, where as the mills are likely to consume nearly 14 million bales. Exports of cotton can be 600,000 or 700,000 bales by the private sector, where as exports by the state managed Trading Corporation of Pakistan (TCP) would be guided by official policy.
By this Friday, seedcotton (kapas/phutti) for about 13,600,000 lint-equivalent bales are expected to have arrived at the ginning factories throughout Pakistan, from which the domestic mills are estimated to have lifted about 9,600,000 bales. From an estimated 2.5 million bales bought by the Trading Corporation of Pakistan (TCP) till now, they have lifted nearly 1,350,000 bales.
The private exporters are said to have procured nearly 450,000 bales while the ginners probably possess about 2,200,000 bales which include about 1.5 million bales on the account of the TCP.
While the enquiry for the lower grades of cottons is comparatively less, the better class of cottons were in good demand on Thursday. In fact some of the ginners were reluctant sellers. The last few days have seen an increase in lint prices by Rs 50 to Rs 100 per maund (37.32 kgs).
The tone of the cotton prices was described to be tight in the evening amidst reports that spinners were making good profits in their yarn sales at the current lint prices. Some weavers were also reporting a tighter position of yarn supplies.
Likewise, the price of seedcotton (kapas/phutt) has also recorded gains so that in Sindh its prices ranged from Rs 750 to Rs 925 per 40 kgs according to the quality, where as in Punjab the prices of seedcotton reportedly ranged from Rs 750 to Rs 940 per 40 kilogrammes. In fact, higher quality of seedcotton in Haroonabad is said to have fetched Rs 950′ per 40 kilogrammes. Though the exporters were relatively withdrawn from the market claiming that they cannot find their export parity at the present price levels of cotton, domestic mills remained keen buyers.
In fact, there are several mills which have not covered good quality of cotton and are now searching for the higher grades of lint.
According to one observation, some of the increase in cotton output is due to more reporting this year (2004-2005) compared to the previous seasons as sales tax has been withdrawn which used to hinder normal marketing activity.
Anyhow, Pakistan will still harvest a phenomenally higher cotton crop this year which is marvellous and will provide a massive boost to the gross domestic product (GDP).
Federal Commerce Minister Humayun Akhtar Khan presided over an inter-ministerial committee in Islamabad on last Tuesday which was also attended by Textile Industry Minister Mushtaq Ali Cheema and Agriculture Minister Sikandar Hayat Bosan where it was decided that the Trading Corporation of Pakistan (TCP) would continue to buy cotton from the ginners to ensure the payment of support price of seedcotton fixed by the government to the growers.
It is interesting that despite record crops expected in all the major cotton producers in the world including China, the United States, India, Pakistan and the Commonwealth of Independent States (CIS), the New York futures prices moved up to two and a half month high levels on last Wednesday.
Thus the prices in New York pierced an important psychological benchmark of 45 cents a pound and displayed a firmness in a reportedly active trading session.
The March 2005 delivery settled at US cents 45.68 per pound (up by 119 points), the May 2005 delivery ended the session at US cents 46.16 per pound (up by 120 points), while the July 2005 delivery closed for the session at US cents 47.10 per pound (up by 131 points).
It appears that higher projected cotton consumption of cotton in China, India, Pakistan and elsewhere is somewhat instrumental in increasing the price for the fibre. Cotton prices from Mirpurkhas in Sindh reportedly ranged from Rs 1725 to
Rs 1750 per maund; in Shahdadpur, Sanghar or Tando Adama, lint prices were quoted from Rs 1750 to Rs 1800 per maund (37.32 kgs); cotton was being offered in Nawabshah from Rs 1850 to Rs 1875 per maund; in Khairpur district the cotton prices reportedly ranged from Rs 1900 to Rs 1925 per maund; in upper Sindh (K-68), the asking price for cotton was Rs 2050 per maund, where as in the Punjab the price of better quality of cotton was also Rs 2050 per maund but there were few sellers.
Till the afternoon, sales of 1000 bales from upper Sindh was reported at Rs 2050 per maund, while 2600 bales from Rahimyar Khan were sold at Rs 2000 per maund. Brokers in Karachi said that the price of Polyester Staple Fibre (PSF) was reduced by Rs 5 per kilogramme beginning of this week.
Courtesy: Business Recorder