Cotton Steady On Export Hopes, Easy In Pakistan

Cotton prices are likely to ease in Pakistan next week on ginners selling but firm in India on hope of more exports, dealers said yesterday.

In Pakistan, NIAB-78 fell Rs 44 per maund (37.32 kg) this week amid heavy selling by ginners and looked set to fall further, dealer A E Mohammadi at the private Karachi Cotton Association (KCA) said. Ginners had 1.207 million 375-lb bales of unsold cotton against 789,000 in the year-ago period, figures released by the state-run Cotton Export Corporation (CEC) show.

Mohammadi said ginners, who had held back stocks in the hope of firmer prices, causing liquidity problems for themselves and farmers, were now unloading their cotton in the local market.

He said the KCA had again asked the government to allow hedge trading in cotton to overcome such problems, but there was no immediate hope of this being allowed. Pakistan banned hedge trading in 1974. Cotton output is not likely to surpass 8.7 million bales in 1996/97 (July-June) compared to 9.94 million in 1995/96, Mohammadi said.

The CEC said on Friday 1996/97 (July-June) cotton output had reached a provisional 8.58 million 375-lb bales, down from 9.788 million in the year-ago period. In India, traders were gearing up to resume cotton futures trading in the next two months after a three decade gap.

We have to strengthen the existing infrastructure. Some fine tuning is required and that is being done, said C.H. Mirani, former president of the East India Cotton Association (EICA). In the 1997/98 (April/March) budget, finance minister P Chidambaram announced permission for cotton futures trading, a long-standing EICA demand.

India banned cotton futures trading in 1966 to prevent speculation and hoarding and stabilise prices. Indias cotton crop in the 1996/97 (October/September) season has been officially estimated at 16 million (170-kg) bales, the same as the previous year.

The government has so far allowed exports of 1.2 million bales this season against 1.59 million in 1995/96. Cotton prices remained firm in the week despite losing some initial gains on hopes the government would allow more exports.

Spot Bengal-deshi rose Rs 45/50 to Rs 885/950 per maund (37.32 kgs). Punjab saw-ginned gained Rs 30 to 1,490/1,630. Gujarat Kalyan (medium-staple) firmed Rs 500/800 to 12,000/12,500 per candy (355.56 kg). Traders said about 12-13 million bales of the new crop had been marketed so far. I expect limited arrivals and there could be a shortage of good quality cotton in the coming days, said a trader.

We have to strengthen the infrastructure. Some fine tuning (before resuming futures trading) is required and that is being done C H Mirani, ex-chief, East India Cotton Association