Cotton

Mills' and exporters' active demand seen on cotton market

KARACHI (July 09 2008): Mills' and exporters' active demand was seen on the cotton market on Tuesday as soaring dollar rate propelled them for forward buying, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3650, ihey said.

Phutti prices in Punjab were Rs 1650-1700 and in Sindh at Rs 1825-1850, they said. The prices of phitti and cotton are inching up due to strong demand by the mills and exporters and it looks that the rates may hold the steadier trend in the coming days, they added.

Some parts of cotton-belt in Punjab received rains this is good for the standing crop, they added. On Monday, cotton futures reeled from a commodity-wide selling spree to end sharply lower as the market was shut on Friday for a holiday. The key December cotton contract fell 2.59 cents to finish at 72.76 cents per lb, dealing from 72.35 to 75.70 cents. Volume in December stood at 15,148 lots at 2:43 pm EDT (1843 GMT).

THE FOLLOWING DEALS WERE REPORTED: some 800 bales from Burewala at Rs 3750-3800, 1600 bales from Sahiwal at Rs 3700-3750, 200 bales of cotton from Hyderabad at Rs 3800, 400 bales from Chichawatni at Rs 3750-3800,600 bales from Mian Channu at Rs 3750, 600 bales from Arifwala, 400 bales from Pakpattan and 600 bales from Bhawalnagar all finalised at the same rate, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.32 Kgs 3,650.00 50 3,700.00
Equivalent-------------------------------------------------
40 Kgs 3,912.00 50 3,962.00
===========================================================

Customs duty on cotton imports scrapped

New Delhi, July 09: Yielding to the demand from textile industry, the government has abolished customs duty on import of cotton, which recently saw sharp rise in prices. The cotton imports attracted 10 per cent basic customs duty and 4 per cent special additional duty.

"The customs duty on all types of cotton imports has been abolished along with special additional duty. Besides, drawback benefits (refund of local taxes) on exports of raw cotton have also been withdrawn," a senior Finance Ministry official said today.

A notification has also been issued in this regard by the Central Board of Excise and Customs.

About 3,000 yarn mills had announced to go on a strike today pressing for their demand to abolish customs duty on cotton imports and regulation of exports.

While welcoming the decision of the government, Deputy Chairman of Southern India Mills Association J Thulasidharan said, "Since the strike call had already been given, workers have not turned up." The cotton prices have gone up by more than 42 per cent since January this year, adding to cost of textile industry.

Textile Ministry was also pressing for scrapping of customs duty.

The industry official said the move would not adversely affect cotton growers since no stocks have been left with them.

Firmness prevails on cotton market
RECORDER REPORT
KARACHI (July 10 2008): Firmness prevailed on the cotton market on Wednesday as in most parts of Punjab rains started again and may help to stabilise rates in the coming days, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3650, dealers said.

Phutti prices in Punjab were Rs 1700-1750 and in Sindh was at Rs 1800-1850, they said. Meanwhile, cottonseed prices came down by Rs 100 to Rs 650 per maund, they said. According to the market sources the rates were firm due to strong demand by the exporters. Other leading factor was the news that India has scrapped import duty on raw cotton and withdrawn export incentives to boost domestic stocks, the government said on Wednesday, raising the prospect of higher imports and lower prices.

Trade officials said local prices, which have surged more than 35 percent in the past year, would soften while imports by traders and textiles mills could rise to one million bales (170 kg).

On Tuesday, Cotton futures finished lower on late investor sales and analysts feel the market may be able to stabilise in front of a pair of government reports due out at the end of the week, brokers said. The key December cotton contract shed 1.02 cents to finish at 71.74 cents per lb, dealing from 70.86 to 75.33 cents. Volume traded in the December contract stood at 22,775 lots at 2:41 pm EDT (1841 GMT).

The following deals were reported: some 200 bales of cotton from Shahdadpur at Rs 3850, 800 bales from Arifwala, 600 bales from Chichawatni, 800 bales from Bureawala, 600 bales from Pakpattan, 400 bales from Depalpur and 600 from Mian Channu at the same rate finished at Rs 3800-3850, 200 bales from Gojra at Rs 3800, same figure from Hyderabad at Rs 3825, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.32 Kgs 3,650.00 50 3,700.00
Equivalent-------------------------------------------------
40 Kgs 3,912.00 50 3,962.00
===========================================================

New York cotton settles firmer
NEW YORK (July 10 2008): Cotton futures finished firmer on Wednesday on trade and suspected mill buying as the severe selling spree in the market appears to have run its course for now, brokers said. The key December cotton contract rose 1.76 cents to finish at 73.50 cents per lb, dealing from 71.76 to 73.81 cents. Volume traded in the December contract stood at 9,586 lots at 2:48 p.m. EDT (1848 GMT).

Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said cotton simply got "too cheap" and this triggered some short-covering and trade/mill fixation buying at the market's lows. Cotton popped higher from the start, riding the exhaustion of selling pressure to hit its highs for the day before backing off a little going into the close of trade, said dealers. Johnson said some follow-through buying could drive cotton higher tomorrow but most players should go to the sidelines in front of a key government crop report at the end of the week.

She and other analysts said the market will digest the US Agriculture Department's weekly export sales report on Thursday. Cotton brokers said total US cotton sales should reach from 100,000 to 150,000 running bales (RBs, 500-lbs each), versus sales in last week's report of 108,400 RBs.

The brokers said they expect US cotton export shipments of previously booked orders should hit 350,000 to 400,000 RBs, from 384,800 RBs in last week's data. Then, the trade will focus on the USDA's monthly supply/demand report on Friday.

Brokers Flanagan Trading Corp sees support in the December contract at 72.50 and 71.65 cents, with resistance at 73.60 and 74.40 cents. Volume traded Tuesday hit 28,748 lots, exchange data showed. Open interest in the cotton market fell 783 lots to 218,245 lots as of July 8, exchange data showed

India allows duty-free cotton imports

NEW DELHI (July 10 2008): India has scrapped import duty on raw cotton and withdrawn export incentives to boost domestic stocks, the government said on Wednesday, raising the prospect of higher imports and lower prices. Trade officials said local prices, which have surged more than 35 percent in the past year, would soften while imports by traders and textiles mills could rise to 1 million bales (170 million kg).

"As an immediate result, some imports will take place now and will rise gradually. This has been a long-pending demand to ensure textile mills have sufficient stocks," Shishir Jaipuria, vice-chairman of the Confederation of Indian Textile Industry (CITI), said.

The government said in a statement the new rules would be applied from July 8. Last week, CITI said India cotton imports were likely to rise to 650,000 bales in the crop year ending September 2008 from 500,000 bales a year ago. It said growth in imports had been slowed by duties that add up to 14 percent.

The trade body urged the government to allow duty-free imports and discourage exports to rein in prices which have spiralled despite record production. Jaipuria said last week higher exports and stockpiling by big international trading firms, which want to trade it globally have led to the spike in prices. Cotton output is expected to hit a record 35 million bales in the next crop year, government estimates show, largely due to increasing usage of genetically modified seeds.

India's cotton exports are seen rising by 72 percent to 10 million bales in the crop year to September, while production is forecast to rise 17 percent to a record 31.5 million bales in 2007/08, according to CITI.

Positive increase in cotton prices

LAHORE (July 11 2008): Due to recent rains in some parts of the Punjab cotton belt and interruption of ginning thereafter coupled with relative slump in the value of the Pakistan rupee against the United States dollar, both seedcotton (kapas/phutti) and lint prices shot up sharply this week compared to last week.

Quality of lint has also suffered in some areas following the rains which factor has also strengthened the prices for better grades of cotton available from areas spared by the rains. Last Wednesday's correctional increase in New York cotton futures prices after earlier extended malaise in that market also induced our market positively.

According to official sources, cotton output for the forthcoming season (2008-2009) may go down from 14.1 million bales (170 kgs) to about 12.69 million bales, or a total decline of about 10 percent from the target. Production of cotton on ex-gin basis would thus be close to 12 million bales in case there is no pest or weather damage to the crop.

These developments portend a steady to firm price trend for Pakistan cottons from the new crop (2008-2009) as we are a net cotton deficit nation with one of the largest textile industry of the world. Lint prices approaching Rs 4000 per maund (37.32 kgs) as appearing now are reminiscent of the historic high prices attained on 12th of June 2008 when cotton from Ghotki was reportedly sold at Rs 4100 per maund. Because the Pakistan rupee has devalued further since last month, domestic cotton prices in rupee terms should thus rule steady to strong.

Recent rise in cotton prices is also ascribed to increasing presence of both the exporters and the spinners in the market who have placed their inquiries for ready cotton following fall of Pakistani rupee to nearly 74 per United States dollar at one time earlier this week. On Thursday it was said to be hovering around 71.13 per unit of the greenback during the day. Various rumours regarding restrictions on cotton export from India are also aiding the firm sentiment in our cotton market.

Thus it was seen that both seedcotton and lint prices in Pakistan jumped up suddenly this week and changed course compared to last week's weakness. It was said that seedcotton (kapas/phutti) prices had risen to range from Rs 1825 to Rs 1850 per 40 kgs in Sindh and also ranged higher from Rs 1700 to Rs 1725 per 40 kgs in Punjab compared to the previous week gaining at least Rs 150 per 40 kilogrammes. Lint prices in both Sindh and Punjab went up at by Rs 200 to Rs 250 per maund (37.32 kgs) on Thursday with propensity to gain more.

A sale of 200 bales of new crop each from Muridwalla and Sahiwal in Punjab was reported on Thursday at Rs 3950 per maund (37.32 kgs) with price sentiment entering a tight condition.

For the time being, therefore, we may say that next year's (2008-2009) lint output in Pakistan could range from 11 to 12 million domestic size bales if there is no bug problem or adversities arising out of intemperate weather. Provided the millowners do not close their units to protest against the government to reduce the gas prices on which the larger textile mills may run their powerhouses economically, we may initially venture to guess that during the 2008-2009 cotton season the mills in Pakistan may consume anywhere from 15 to 16 million bales of cotton of domestic size under normal situation.

Reports received initially in the evening said that in a meeting on Thursday afternoon the All Pakistan Textile Mills Association (Aptma) had decided not to close down their units as a protest against the announcement by the government last month to substantially increase the gas prices for the captive power plants of the mills.

It appears that for the other operatives of the textile industry like sundry spinners who are not members of Aptma, or that portion of the textile industry which must rely for their power supply from the Water and Power Development Authority (Wapda), or the Pakistan Textile Exporters Association Faisalabad, Pakistan Hosiery Manufactures Association (north zone), they must decide their further course of action themselves in case the government does not assist them to rationalise their duty drawbacks, reduce high cost of power or provide Research and Development (R & D) funds to them.

Under these circumstances, cotton prices are tending towards a tighter situation and any serious setback to the new cotton crop (2008-2009) in Pakistan could further aggravate the performance and profits of the textile industry with a number units heading to wards closure.

Drought feared in Maharashtra
10 Jul 2008 1:43 pm

Mumbai - The delayed second phase of monsoon has caused a drought-like situation in around 60 per cent area of Maharashtra. Of the total 355 revenue tehsils, 164 are facing an alarming situation in absence of rains. These tehsils have received 50 per cent below average rainfall.

According to the State's Revenue Department, 16 out of the 31 districts have received 50 per cent below average rainfall as of July 9. While eight districts have received 50 per cent to 75 per cent below average rainfall. Only five districts in the State have received 100 per cent rainfall this monsoon so far.

The Met Department is not expecting any improvement in the situation till July 14. This has alerted the State government to be ready to tackle with the drought-like situation. State authorities are fearing that the kharif would be disappointing. It may be mentioned that 80 per cent of agriculture in Maharashtra depends on rainfall.


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Cotton lint quoted firm in west India
10 Jul 2008 4:56 pm

Mumbai - Cotton lint prices remained at the previous level at major markets across western India Thursday.

After the Central government yesterday scrapped the import duty on raw cotton, a few millers in south India entered the first import deal and committed to buy around 10,000 bales of cotton from Zambia at a rate of 76-77 cents per pound.

At Kadi market in Gujarat, cotton lint S-6 A-grade was quoted at Rs 27,500-Rs 27,800/candy while average-grade traded at Rs 27,000-Rs 27,300/candy.

In Maharashtra, the 28-mm cotton lint traded at Rs 27,300-Rs 27,700/candy; 29-mm cotton lint traded at Rs 27,800-Rs 28,200/candy; while 30-mm cotton lint traded at Rs 28,500-Rs 28,800/candy.

At Sendhwa market in Madhya Pradesh, the 28-mm cotton lint traded at Rs 27,500-Rs 27,800/candy; 29/30-mm cotton lint traded at Rs 28,000-Rs 28,500/candy; and 31 mm cotton lint at Rs 28,700-Rs 29,500/candy.


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Cotton lint steady in north India
10 Jul 2008 4:51 pm

Abohar - Cotton lint prices were quoted steady at major markets across north India Thursday.

After the Central government yesterday scrapped the import duty on raw cotton, a few millers in south India entered the first import deal and committed to buy around 10,000 bales of cotton from Zambia at a rate of 76-77 cents per pound.

Across Punjab, cotton lint traded at Rs 2,810-Rs 2,815/maund at Fazilka, Kotakpura, Muktasar and Bathinda; Rs 2,810-Rs 2,815/maund at Malot and Gidarbha; Rs 2,800/maund at Abohar; Rs 2,790/maund at Manasa; and at Rs 2,840-Rs 2,845/maund at Rampura, Barnala and Budhaldha.

Cotton lint traded at Rs 2,760-Rs 2,790/maund in Haryana and at Rs 2,660-Rs 2,710/maund in Rajasthan.

New York cotton settles firmer

NEW YORK (July 10 2008): Cotton futures finished firmer on Wednesday on trade and suspected mill buying as the severe selling spree in the market appears to have run its course for now, brokers said. The key December cotton contract rose 1.76 cents to finish at 73.50 cents per lb, dealing from 71.76 to 73.81 cents. Volume traded in the December contract stood at 9,586 lots at 2:48 p.m. EDT (1848 GMT).

Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said cotton simply got "too cheap" and this triggered some short-covering and trade/mill fixation buying at the market's lows. Cotton popped higher from the start, riding the exhaustion of selling pressure to hit its highs for the day before backing off a little going into the close of trade, said dealers. Johnson said some follow-through buying could drive cotton higher tomorrow but most players should go to the sidelines in front of a key government crop report at the end of the week.

She and other analysts said the market will digest the US Agriculture Department's weekly export sales report on Thursday. Cotton brokers said total US cotton sales should reach from 100,000 to 150,000 running bales (RBs, 500-lbs each), versus sales in last week's report of 108,400 RBs.

The brokers said they expect US cotton export shipments of previously booked orders should hit 350,000 to 400,000 RBs, from 384,800 RBs in last week's data. Then, the trade will focus on the USDA's monthly supply/demand report on Friday.

Brokers Flanagan Trading Corp sees support in the December contract at 72.50 and 71.65 cents, with resistance at 73.60 and 74.40 cents. Volume traded Tuesday hit 28,748 lots, exchange data showed. Open interest in the cotton market fell 783 lots to 218,245 lots as of July 8, exchange data showed.

Exporters' interest seen increasing on cotton market

KARACHI (July 11 2008): Attractive rates of phutti propelled the exporters to make forward buying due to better return prospects in days to come, dealers said on cotton market on Thursday. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3650, they said.

Phutti prices in Punjab were at Rs 1700-1725 and in Sindh at Rs 1825-1850, they said. Market sources said that good crop in size and quality indicates that the growers and ginners will get the better profits as prices were moving up with passage of time after the sharp rise in the oil prices.

On the other hand, news that India has scrapped import duty on raw cotton raised expectations that prices of local cotton will improve further, the said.

On Wednesday, cotton futures finished firmer on trade and suspected mill buying as the severe selling spree in the market appears to have run its course for now, brokers said.

The key December cotton contract rose 1.76 cents to finish at 73.50 cents per lb, dealing from 71.76 to 73.81 cents. Volume traded in the December contract stood at 9,586 lots at 2:48 pm EDT (1848 GMT).

THE FOLLOWING DEALS WERE REPORTED: some 200 bales of cotton from Sanghar sold at Rs 3900, 800 Bales from Burewala at the same rate, 600 bales from Arifwala at Rs 3875-3900, 800 bales from Chichawatni, 600 bales from Sahiwal, 400 bales from Mian Channu, 400 bales from Haroonabad, 200 bales from Dipalpur at Rs 3875, 400 bales each from Burewala, Mureedwala and Sahiwal sold at Rs 3950, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.32 Kgs 3,650.00 50 3,700.00
Equivalent-------------------------------------------------
40 Kgs 3,912.00 50 3,962.00
===========================================================

USDA to cut old-crop cotton exports
11 Jul 2008 11:26 am

New York - Continued shipping issues could cause the US Department of Agriculture to trim projections for 2007-08 US cotton exports, while production for the new 2008-09 crop may be also be revised lower due to adjustments in planted acreage or abandonment, analysts said.

The USDA is scheduled to release its monthly supply and demand report at 8:30 am EDT (06.00 pm IST) Friday.

The average of analysts' estimates puts 2007-08 US cotton exports at 13.84 million bales, a reduction from the 13.9 million projected by the USDA in June.

Continued high freight rates and container shortages are crimping US cotton shipments, analysts said.

Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta, said US weekly cotton exports would have to average 352,000 bales of cotton per week until July 31 -- the end of the marketing year -- to meet the USDA's June estimate. Of the seven analysts surveyed, Johnson's export estimate of 13.6 million bales was the lowest.

News that India has dropped cotton import duties and export incentives as prices there rise amid tight supply prompted Bill Raffety, analyst at Penson GHCO in New York, to estimate US exports at 14 million bales, the highest among the analysts surveyed.

The US could see a bump in light of increased exports to India, Raffety said.

As a result of the average decreased export projection, analysts expect the USDA to adjust 2007-08 cotton carryout slightly higher at 10.25 million bales, compared to the USDA's June estimate of 10.2 million.

With regard to 2007-08 US production, the average analyst estimate of 19.2 million bales is slightly below the 19.21 million projected by the USDA in June. Analysts expected domestic consumption to come in unchanged at 4.6 million bales.

New-Crop Production Depends On Plantings, Abandonment

US cotton production in 2008-09 will be reduced to 14.05 million bales, according to the average of analysts' estimates. The USDA projected new-crop production at 14.50 million bales in June.

Some analysts blamed inclement weather and higher grains prices for a reduction in acres planted to cotton, while others said the level of abandonment would be the number to watch.

In June, the USDA projected 2008-09 cotton plantings at 9.24 million acres. Analysts, however, had expected that number to be lower at 8.89 million acres due to inclement weather in cotton-growing areas and increased corn and soybean plantings due to higher prices for those commodities.

Weather may not have taken a significant toll on the acreage while historically high cotton prices, though comparatively lower than grains, are still attractive to farmers, said Alan Brugler, president of Brugler Marketing & Management in Omaha, Neb.

"You're not going to have as much abandonment overall because (historically high cotton) prices are going to make you do the extra things to make that crop salvageable," said Brugler, who projected new-crop production at 14.85 million bales, the highest analyst estimate.

Growing conditions in Texas may not be ideal, but the state's irrigated acres are less prone to drought damage, he said. Additionally, improved weather in the Southeast and Delta stands to offset abandonment expectations in Texas, he said. Texas is projected to plant more than half of the entire US cotton crop.

Not all analysts agree that abandonment will shrink.

"It is unlikely abandonment will be smaller and (it) could grow," said First Capitol Group's Johnson, whose production estimate of 13.3 million bales was the lowest of the analysts surveyed.

The USDA estimated 10% abandonment, but Johnson predicted 12% abandonment.

For the 2008-09 marketing year, cotton exports are expected to slip. The average of analysts' estimates is for exports of 14.57 million bales, down from the USDA's June projection of 15 million bales.

Domestic consumption is seen rising to 4.32 million bales, according to analysts, slightly higher than the USDA's June estimate of 4.3 million.

US cotton carryout for 2008-09 is expected slightly higher at 5.41 million bales compared to the USDA's projection of 5.40 million.

Analysts expected changes in 2008-09 world supply and demand data to be muted at this point in the year, though downward revisions in global consumption may crop up in later reports if the slowing economy continues to weigh on demand, they said.