Cotton prices shoot up suddenly

In about ten days time lint prices for the current crop (2006-07) took a quantum jump and increased from about Rs 2700 to Rs 2900 per maund (37.32 kgs). Furthermore, a ginner said to be holding about 15000 bales at his two ginning factories in Jehania and Tibba Sultan in Punjab was said to be asking Rs 3000 for a maund of his cotton.
With now only about 40,000 to 50,000 bales from the current crop left unsold with the ginners and the arrivals from new crop (2007-08) essentially still two months away, cotton prices are likely to sustain a tighter condition.
The general price idea for unsold cotton from the running season ranged from Rs 2500 to Rs 2900 per maund on Thursday with tendency to move higher. Depletion of domestic stocks, higher New York cotton futures prices prevailing in recent weeks and noticeable improvement in yarn rates are some of the factors which are pushing up the cotton prices in our market.
While earlier a sale of 1200 bales current crop cotton from Shujabad in Punjab was reported at Rs 2800 per maund (37.32 kgs), now a sale of 400 bales from Lodhran has been reported at Rs 2900 per maund. Therefore business for the better grades of cotton is transpiring at Rs 2900 per maund and the disposition of the market is clearly bullish.
Textile circles are also reporting that offtake of yarns is clearly better. Several spinners are reportedly declining to offer immediate deliveries of their products. Some counts of yarns are not easily available in the market.
Various sectors of the Pakistani textile industry are still presenting their respective problems to the government, but official quarters mostly feel that real improvement in the industry will only emerge if better and value-added products are produced, sale efforts in international markets are up-graded, workers and management are better trained and economies of scale are achieved.
Indian textile industry is facing several problems now because the rupee has been revalued by nearly 9 percent over the past several months. Pakistan textile industry could benefit from this development by energising its export performance.
With virtual depletion of cotton from the outgoing season (2006-07), attention of trade has now been mostly diverted to the arrival of new crop (2007-08) cotton in Pakistan. Other than some areas in Badin, Khokhrapar or adjoining region in Sindh, recent rains have not damaged the incoming crop (2007-08). In fact, moderate to good rains in the cotton belt including Punjab are being cumulatively construed to be beneficial.
New crop sales have been suspended by the ginners in recent weeks awaiting clearer picture regarding the behaviour of the weather. Moderately larger than normal rainfall has been forecast for the monsoon season. Pockets of Mealy Bugs have also been reported from a few areas in Sindh, but presently the problem is not deemed as serious or intensive. A local dam has also reportedly breached near Bahawalnagar which has also engulfed adjoining areas such as Madrasa, Fatehkot and Minchinabad, but the damage is small.
With these considerations in mind, it can be surmised that new crop cotton (2007-08) in Pakistan is basically intact and smaller arrivals of seedcotton (kapas/phutti) may commence within the next four to six weeks time. Dakkan winds have started blowing in the cotton fields which incidence is construed to be a salutary development for the incoming crop.
Unless a new feature or fundamental emerges later on, the next cotton crop (2007-08) in Pakistan could deliver an output close to the government target fixed earlier at 14.14 million bales (170 kgs) which is computed on an ex-farm basis.
Brokers in Karachi reported that small quantities of new crop (2007-08) seedcotton were sold for ready delivery in Mian Channu at Rs 1125 per 40 kgs, Marla Chowk in Punjab at Rs 1150 per 40 kgs, in Arifwalla at Rs 1265 per40 kgs and in Sahiwal at Rs 1275/Rs 1300 40 kilogrammes. Though these are smidgen sales but they do indicate the price trend of seedcotton values for the new crop fibre.
Therefore, we are mostly progressing normally in cotton and textile trade and should see a consumption of 16 or more million domestic size bales in the coming cotton year and hopefully the business should revive up soon with added fervour.