Recent rains in the cotton belt, continuous lifting by the mills, stocks of about 1.6 million still lying unsold with the Trading Corporation of Pakistan (TCP) and regular interest of the exporters who have registered sales close to 600,000 bales till this point of the season have all contributed to keep the cotton market on a steady course.
Traders say that the domestic mills are likely to import at least 800,000 bales (170 kgs) this season (2004-2005) if not more, while the exporters are likely to ship 700,000 to 800,000 bales this season (August 2004-July 2005). Recently, however the exporters have moved to the sidelines with the increase in local lint prices.
Crop estimates for this season (2004-2005) still vacillate between 14.5 million to 15 million sales an ex-gin basis. However, some brokers point out that it would likely to be at the lower end of this range because seedcotton (kapas/phutti) arrivals during the preceding fortnight are as low as 136,000 domestic size bales.
There has been a daily turnover of about 25,000 to 30,000 bales recently, which is likely to slow down because Fridays are generally closed for some markets and ginning factories in the cotton belt, while coming Saturday has also been declared a closed holiday by the government.
Thus we are approaching an extended weekend so that lager business is only likely to resume next week. Due to continuing and increasing demand of the spinning mills in Pakistan, lint prices are likely to remain firm. However, it also depends upon the official policy regarding the disposal of about 1.6 million bales lying unsold with the Trading Corporation of Pakistan (TCP).
It is expected that a policy in this regard will be announced soon which will determine how much quantities will be exported or given to the domestic mills. Traders believe that most of the stocks held by the Trading Corporation of Pakistan (TCP) are of good quality.
In the mean time, it has been reported from Islamabad that the government has constituted three committees to finalise the Textile Sector Policy (TSP). For upgrading labour laws, make them more flexible and also make them socially complaint, the committee will be chaired by Mushtaq Ali Cheema, the Minister for Textiles.
The other committee to be chaired by Minister of Food and Agriculture, Sikandar Hayat Bosan would study and propose methods for obtaining contamination-free cotton and also to upgrade the ginning industry, while the third committee to be chaired by the deputy chairman of the Planing Commission, Dr Akram Sheikh would work to update the labour laws with a view to co-ordinate and streamline them throughout the supply chain to speed up the production, marketing and the dispatch of goods efficiently.
According to other reports, the government is considering to reduce certain duties and taxes on the import of raw materials and related accessories pertaining to the textile sector in a bid to provide necessary impetus to the challenges which it is facing following the quota-free situation existing from the beginning of this year (January 2005).
It is the endeavour of the Government of Pakistan to assist the domestic textile industry and provide it a level playing field in exporting its goods more competitively in relation to such countries like India and China.
For whatever cotton is still in the fields or lying with the growers, the price of seedcotton (kapas/phutti) in both Sindh and Punjab reportedly ranged from Rs 925 to Rs 1050 per 40 kilogrammes.
In the mean time the ginners are also selling sparingly. There is also the speculation that when the Trading Corporation of Pakistan (TCP) sells its higher grades to the domestic mills, the price could be Rs 2300 for a maund (37.32 kgs) of cotton.
On Thursday, the price idea for lint from Mirpurkhas reportedly ranged from Rs 2025 to Rs 2050 per maund (37.32 kgs); in Sanghar, Shahdadpur or Tando Adam, cotton prices extended from Rs 2050 to Rs 2100 per maund, in Nawabshah district the ginners were asking from Rs 2125 to Rs 2175 for a maund of cotton; in Khairpur district cotton prices ranged from Rs 2175 to Rs 2200 per maund, while in upper sindh (K-48) the cotton was being quoted from Rs 2225 to Rs 2250 per maund. In the Punjab the cotton prices ranged according to the quality from Rs 2000 to Rs 2250 per maund. In the evening, a tighter tendency in cotton prices was reported.
Yarn prices were reported to be relatively dull, mills sources stated that they had invested about 6 billion US dollars over the past 3 years and that their textile exports were going up fast. Therefore, textile industry in Pakistan is expected to progress very satisfactorily.
However, Pakistan will still not be able to capitalise on the full potential available to it in the global textile market due to lack of adequate number of professional personnel and also the relative absence of economies of scale.
The Pakistan Cotton Ginners Association (PCGA) reported seedcotton (kapas/phutti) arrivals upto the l5th of February 2005 to be 14,152,276 lint-equivalent bales from which the mills are said to have lifted 10,941,820 bales.
The Trading Corporation of Pakistan (TCP) has a stock of 1,581,770 bales, while the ginners are carrying a stock of 1,121,794 bales. Exporters had lifted 5,036,892 bales till the middle of this month from the current season (2004-2005). The arrivals of Seedcotton till now show an increase of about 51 percent compared to the same period in last year.