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The speculation about the size of current cotton crop has now come to an end when it has been determined around 10.0 million bales ex-gin.
The size of unsold stock is the most important factor directly affecting the prices of cotton.
The final crop figures may be available in the first week of April. Sowing of new crop is already in progress in Lower Sindh while preparation of land and arrangement of necessary inputs are in hand in central Sindh.
The government is preparing details of sowing intentions / targets for 2004-05 crop which is expected around 3.1 million hectares with production target around 11.4 million 170-kg bales on the basis of average yield of 625 kg per hectare.
This is not an over-ambitious target but is quite realistic, and achievable. All concerned government, semi-government and private agencies/ organisations should pool all their resources and energy to achieve the production target of 11.4 million bales of cotton.
Simultaneously, the government and all cotton stakeholders should make all-out efforts to implement the Cotton Standardisation/ Grading System at ginning stage which would, to a great extent, bring all-out improvement in quality of our lint cotton.
Cotton trade expects that Tariq Mahmood, the newly appointed Secretary, Ministry of Agriculture, Food and Livestock (Minfal) to play a positive role in the implementation of the provisions of Cotton Standardisation Ordinance, from the new cotton season, which was promulgated by the President of Pakistan in October, 2002.
Yar Mohammad Khan, Federal Agriculture Minister, is already reportedly very much anxious to take all necessary steps for improving the quality of Pakistan cotton.
The implementation of Cotton Grading / Standardisation System at the ginning stage would be a historic event as it would improve quality of our cotton to international level and would immensely benefit all cotton stakeholders, specially cotton growers.
Local cotton market remained dull during last week and small business was transacted.
The spinners were not showing much interest in cotton purchases in view of slack demand and weak prices of cotton yarn in local as well as international market.
The Karachi Cotton Association reduced Spot Rate by Rs 25 to Rs 2,950 per mound ex-gin. Better grade cotton was selling between Rs 2,900 and Rs 3,000 per maund; Average Grade prime micronaire Rs 2,800 to Rs 2,900; and low grade low micronaire down to Rs 2,500.
In the final cotton report of 2003-04 cotton season, which is likely to be released in the first week of April by Pakistan Cotton Ginners' Association, the most important figure would be of unsold stocks which would guide the cotton market.
Some circles think that the unsold stocks are much more than what is reported by the PCGA.
However, unsold stock of 1.3 million bales by the end of March would exert pressure on cotton prices which may tend to ease further in the wake of weak prices and poor off-take of yarn.
Actually, yarn problem is global which has depressed cotton prices.
New York cotton futures market put an easy show last week when ruling May closed at 64.62 cents and July at 66.04 cents a pound, losing 330 and 308 cent-points respectively.
The New York futures market appeared to be under the control of speculators who were playing with the market by buying and selling, alternately. May contract is reportedly long by around 4 percent.
The speculators have almost squared up their position but traders/merchants are holding large cotton stocks for sale.
The psychological pressure of a next bumper cotton crop is resisting increase in cotton prices.
The speculators are building up their long position in new crop contracts like October, December, and March. In the next couple of months, the New York futures market is likely to be ruled by speculators till physical arrivals of new crop start.
US has made export sales of 122,700 Running Bales in the week ended on March 18, 04. Total export sales have reached 11.991 million 480-lb bales and shipments 7.143 million bales including Pima cotton.
The top ten buyers of US cotton were: ( all in million bales) China 4.484, Mexico 1.661, Turkey 1,176, Indonesia 0.762, Korea Rep 0.452, Canada 0.419, Pakistan 0.384, Thailand 0.346, Japan 0.330, Brazil 0.294 (million bales).
The share of these top ten countries is 89.28 percent. US has export target of 13.8 million bales for the running season and this target would easily be achieved.
Cotton prices in China are also showing weakness and are ruling lower in view of low buying interest.
This cotton season perhaps benefited only cotton growers while ginners, merchants and spinners sustained losses perhaps due to unreasonably high cotton prices touching the level of '84.
The China factor did work but disturbed global market and it also hurt Chinese textile industry. Revival of cotton prices is dependent on improvement in yarn prices.

Copyright Business Recorder, 2004


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