Moreover, a high level cotton delegation from China met early this week with senior members and exporters of the Karachi Cotton Association (KCA) and also held talks w1th the top management of the Trading Corporation of Pakistan regarding the current cotton situation.
There are various reports in the media stating that the Chinese visitors have expressed their desire to lift a large chunk of cotton from the 1.5 million bales presently lying with the Trading Corporation of Pakistan (TCP) which is a very positive signal, even though the government has yet to announce how this cotton will be disposed. This development is also being constructively construed in the market.
Furthermore, the private exporters have registered a total of 573,283 bales for exports till this time during the current season (2004-2005) from which 54,535 bales pertain to the previous crop (2003-2004). According to market talk, the private exporters may manage to ship anywhere from 700,000 to 800,000 bales of cotton during the current season (August 2004-July 2005).
The Pakistan Cotton Ginners Association (PCGA) has reported that seedcotton (kapas/phutti) for a record 14,016,455 lint-equivalent bales of 167.28 kgs each arrived into 1020 ginning factories (822 in Punjab, 198 in Sindh and 4 in Balochistan) till the period ending on the 1st of February 2005.
The total arrivals from the 16th of January to the 1st of February 2005 comprise of 254,732 bales, which signifies that seedcotton (kapas/phutti) arrivals are now tapering off.
The ginners in Pakistan are construing the Pakistan Cotton Ginners Association (PCGA) report as constructive and are projecting an increase in lint prices by Rs 50 per maund (37.32 kgs) during the next week or 10 days. Much also depends on how the Trading Corporation of Pakistan (TCP) will dispose of its stocks of about 1.5 million bales.
There are various reports in the market that the TCP could export about 750,000 bales while it could sell and equal a number to the domestic spinners.
The domestic textile industry is still adding more and more spindles to its capacity after having reaped very good profits in recent years. Therefore, the consumption of cotton in Pakistan is rising continuously and is likely to increase further.
Anyhow, under the current situation, lint prices are likely to follow a steady course. On Thursday, lint prices in Sindh reportedly ranged from Rs 1900 to Rs 2200 per maund (37.32 kgs), while in the Punjab they are said to have ranged from Rs 1950 to Rs 2200 per maund (37.32 kgs).
The sellers are looking for the lint market to go up and are not at all in any bearish frame of mind. Thus if the total crop in Pakistan ends up at about 14.5 million domestic size bales, the mills will look for more cotton because the private exporters will have exported an estimated 800,000 bales, and the trade will still be living with the uncertainty of how the Trading Corporation of Pakistan (TCP) will dispose its stocks of about 1.5 million bales.
In this context, agents for international merchants in Karachi contend that Pakistan mills are again in the market to import cotton. It may be recalled that earlier in the season (August 2004-July 2005), mills in Pakistan had booked a lot of cotton for import but had opted out from their purchases when they learnt that Pakistan could reap a tremendously large record crop during the current season. But now the domestic mills are again reported to be booking some more cotton for import.
Generally the cotton prices displayed a tighter tendency in the evening as the ginners increased their asking prices. The increase of the ex-gin price of Grade 3 cotton by the Karachi Cotton Association (KCA) by Rs 25 per maund (37.32 kgs) on Thursday was quite reflective of the improving cotton prices in the market.
The Karachi Cotton Association (KCA) fixed the ex-gin price of Grade 3 cotton on Thursday at Rs 2100 per maund (37.32 kgs) which led to the fixing of the spot rate higher at Rs 2150 per maund which includes the upcountry expenses of Rs 50 per maund.
Therefore the main input which could determine the cotton prices in Pakistan hereafter would be the policy of the government regarding the sale of the cotton stocks held by the Trading Corporation of Pakistan (TCP) which are 1.5 million bales. According to the Chairman of TCP Masood Alam Rizvi, the TCP stock in hand could rise to 2 million bales by the end of this season.
The Chairman TCP is reported to have said that because current season (2004-2005) is practically over the stocks lying with the TCP could be sold to the domestic mills because the farmers would not suffer if the mills obtained these stocks.
Till the afternoon, a sale or about 2000 bales from the Sanghar district in Sindh was reported at Rs 1985/Rs 2050 per maund which was bought by an exporter, while 3000 bales from upper Sindh (K-68) were said to have been sold at Rs 2200 per maund. In the Punjab, 1000 bales from Shah Jamal were sold on Thursday at Rs 2250 per maund (37.32 kgs) but the veracity of this reported sale could not be verified.
The Chairman of the Karachi Cotton Association (KCA) Abdul Shakoor Dada welcomed a delegation of the China National Cotton Group Corporation.
(CNCGC) on last Tuesday (1st of February 2005) comprising of Sun Zhixin, trustee, Feng Guoguang, vice president and Tang Chun, international business department. The meeting was also attended by the Consul General of the People's Republ1c of China, his Excellency Sun Chunye and distinguished members of his corps.
Haji Abdul Shakoor Dada informed the distinguished guests of the sophisticated and successful marketing system, regulations, bylaws supervising of the Karachi Cotton Association (KCA) with neutral arbitration facilities including bylaws for running cotton futures market which has worked very commendably since 1934. Referring to the tremendous progress made by the cotton economy of Pakistan, Abdul Shakoor Dada said that Pakistan is the 4th largest cotton producing and 3rd biggest cotton consuming country in the world. Pakistan's current cotton production is being estimated at 14.7 million bales of 375 lbs each. Pakistan's domestic consumption of cotton is estimated at more than 14 million bales for the year 2004-05.