Even lower output of cotton at about 12.5 million bales on ex-gin basis than was being previously envisaged has not helped to resuscitate lint prices. The improvement in New York cotton futures prices in recent sessions has also been ignored by the domestic buyers.
No doubt some of the domestic mills had overbought during the previous season (2004-05) which cotton they are carrying over into the current year (August 2005/July 2006). Import booking for the present season (2005-06) may also have increased to about 2 million bales both fixed and on call basis, which is probably also having a dampening effect on the domestic prices.
Furthermore, the Trading Corporation of Pakistan (TCP) is still carrying an estimated 300,000 bales of unsold cotton procured during the previous season (2004-05) which presumably remains available to the trade and thus also is keeping a lid on the prices.
Be that as it may, domestic cotton prices for good quality cotton from upper Sindh (K-68) and Punjab have mostly been range-bound and ruled between Rs 2350 to about Rs 2425 per maund (37.32 kgs) over the past several weeks. Impending holidays due to approaching new year (2006), a string of Eid holidays followed by weekly closures thereafter in the second week of January 2006, and then succeeded by the Chinese new year may keep cotton trading activities at a low ebb.
With these features and fundamentals available to our market, cotton trading activity has been slow and quiet and has thus been maintaining a low profile.
No doubt that the New York cotton futures prices which had mostly been loitering in the lower 50 cents per pound have now gained strength and are trying to reach about 55 cents or more for the frontal months. Good export enquiries and encouraging shipment figures from the United States of America (USA) have imparted a steadiness to the cotton futures rates in New York.
Speculative buying by the funds is countered by trade selling which puts a damper on further increase in fibre prices. Next Monday the New York cotton futures market will remain closed for new year.
Textile sources added that though the knitting sector in Pakistan has been hit adversely, the other areas of the cotton textile industry are reported to be improving and growing. According to one report, about 30 knitting factories have closed down up to now.
However, industry circles are reporting that more shuttleless and airjet looms for weaving are being installed in Pakistan which augurs well for the overall development of the textile sector.
The cotton economy in Pakistan is also looking positively on the reported decision regarding reduction on agriculture subsidies in Europe and USA in the near future as decided in the WTO (World Trade Organisation) meetings held recently in Hong Kong which should benefit the farmers in the developing countries to grow more agriculture commodities beneficially.
The prices of seedcotton (kapas/phutti) in Sindh reportedly ranged from Rs 800 to Rs 1100 per 40 kgs, according to the quality. In the Punjab, they are said to have ranged from Rs 850 to Rs 1125 per 40 kgs on Thursday.
The price idea for cotton in Mirpurkhas in Sindh was said to be around Rs 2100 per maund (37.32 kgs); in Sanghar or Tando Adam it reportedly ranged from Rs 2200 to Rs 2225 per maund; in Shahdadpur the lint prices extended from Rs 2225 to Rs 2250 per maund; in Nawabshah district the cotton prices ranged from Rs 2275 to Rs 2300 per maund; in Khairpur district the cotton price was reported to be Rs 2350 per maund; in Upper Sindh (K-68) it was about Rs 2400 per maund, while in the Punjab it ranged from Rs 2250 to Rs 2400 per maund.
Brokers in Karachi described the price condition of the cotton market to be generally weak and quiet, but good quality cotton reportedly finds buyers. In another report, traders said that seedcotton arrivals in most areas was now going down. However, cotton sales were said to be on the low side with few business transactions being reported on the market.
Due to end of calendar year having arrived, banks are also reportedly asking for adjustment of working capital from the ginning factories and the textile mills, which is likely to be restored during the first week of January 2006. Thus the lint prices are presently under relative-constraint.
It is estimated that textile exports during the first six months starting July 2005 onwards will increase by one billion US dollars and touch US dollars 4.25 million. In this connection, Prime Minister Shaukat Aziz has advised the textile mills to focus on value addition of their products, conduct research and study and follow the world trends to achieve more competitiveness.
Addressing a leading group of businessmen last week in Faisalabad, federal minister for textile industry advised the various subsectors such as the yarn merchants, the spinners, powerloom owners and others to co-ordinate and cooperate with each other so that a balanced growth can be achieved in the textile sector.
Federal Minister Mushtaq Ali Cheema promised to provide further assistance to the textile industry so that they can become more competitive in the global setting. Mushtaq Ali Cheema was replying to the various points concerning problems in the textile industry which were earlier raised in the Faisalabad Chamer of Commerce and Industry (FCCI) by its president Mian Muhammad Hanif.
Till Thursday afternoon, only one sale of cotton could be obtained from the brokers comprising 400 bales from Sanghar in Sindh at Rs 2200 per maund (37.32 kgs). Slow trading and pressure on cotton prices continued to be the prevailing sentiment on Thursday ahead of various holidays at the end of this year (December 2005) and during the first fortnight of next year (January 2006).