Seedcotton (kapas/phutti) prices in Sindh reportedly ranged from Rs 1050 to Rs 1100 per 40 kgs, while in the Punjab they are also said to have ranged higher on Thursday from Rs 1100 to Rs 1150 per 40 killogrammes. Some growers in Bahawalpur were even asking for Rs 1170 per 40 kgs of their seedcotton. With this situation, the ginners said that they need to obtain at least Rs 2500 per maund of their cotton to achieve their parity.
Several ginners are said to be holding surplus stocks of pressed bales because either the price of seedcotton remains unfixed or they stand to lose money in case they buy seedcotton at the current high rates.
Be that as it may, some leading spinners are said to be anxious buyers in order to be able to book good quality of cotton which is now available in Punjab with its second picking. While the quality of cotton has deteriorated in lower Sindh significantly, lint from the Khairpur district and the fresh arrivals from upper Sindh (K-68) are quite good.
The price idea for lint from Mirpurkhas and Sanghar in Sindh reportedly ranged from Rs 2225 to Rs 2250 per maund (37.32 kgs); in Tando Adam the cotton price was being quoted at Rs 2275 per maund; in Shahdadpur cotton was being offered from Rs 2325 to Rs 2350 per maund; in Nawabshah cotton prices ranged from Rs 2350 to Rs 2375 per maund; in both Khairpur district and Sukkur division the lint prices were being quoted at Rs 2400 per maund, while in the Punjab cotton prices reportedly ranged from Rs 2400 to Rs 2425 per maund.
Most sales of local cotton materialise later at night Pakistan time when New York cotton futures market starts its session, trade sources said in Karachi that according to the agents of international merchants, Pakistani spinners have booked nearly 1.2 million bales of imported cotton till now for the current season (2005-06). Moreover, a sizeable quantity of these purchases are said to have been made on unfixed basis. Anyhow, price sentiment remained tight in the evening. Many mills in Pakistan still hold a bearish view of the cotton market.
A few ready sales reported till Thursday afternoon included 200 bales of cotton from Shahdadpur in Sindh at Rs 2325 per maund (37.32 kgs) while another 200 bales from Tando Adam were said to have been sold at Rs 2275 per maund. In the Punjab, 600 bales from Bahawalnagar sold at Rs 2415 per maund while 1000 bales from Rahimyar Khan were sold at Rs 2425 per maund. One broker said that some ginners from Alipur and Rajanpur in Punjab were even asking Rs 2450 for a maund (37.32 kgs) of their cotton.
According to the brokers, the fear of a short crop in Pakistan against higher consumption has been pulling up the domestic cotton prices. Thus the sentiment in the market looks firm at present. Traders say that Pakistani mills may consume close to 16 million bales (170 kgs) this year. China had already been reporting a short crop besides lowering of output estimates this season (2005-06) in Pakistan, but now reports from India are also portraying a picture of lesser cotton production than what was being earlier envisaged.
According to prominent cotton merchant Vijay Shah of Messrs Vijay Cotton and Fibre Company in Indore in India, due to excessive rains and bad weather over the past couple of months, the trade there is now talking about a smaller crop. Earlier the trade was expecting 27 million Indian size bales, while the official Cotton Advisory Board (CAB) estimate was 2.5 million bales. Now the trade is talking of a crop not more than 23 million bales. Vijay Shah remains hopeful of obtaining a crop of 24.5 million bales this season in India.
It may be noted that several mills in Pakistan are unhappy about increasing domestic cotton prices as the yarn prices have not risen commensurately. Therefore, on the one hand the ginners claim that they cannot make money due to high prices of seedcotton (kapas/phutti), on the other hand the spinners have expressed their worry over the rising cotton prices in the domestic market which they say will put them out of parity due to comparatively low yarn prices. The cotton market thus stands at a crossroads.
Referring to an article by S. A. Aziz Shah in Business Recorder of November 07, 2005, the Karachi Cotton Association (KCA) has said that unless the exporters of cotton from Pakistan and the foreign buyers stipulate arbitration by the Karachi Cotton Association (KCA), the KCA cannot undertake to intermediate between the respective parties. However, the KCA welcomes the suggestion that government should make it mandatory for all exporters from Pakistan to become members of the Karachi Cotton Association (KCA) to eliminate unscrupulous elements as it has done in case of export of rice from Pakistan.