KARACHI, Oct 23: Contracts for export of about $4 million worth of cotton have been registered with the Export Promotion Bureau in last three weeks of October and market watchers are confident of registration of further $1 million export contract in the current week.
Cotton export contracts are registered with the Export Promotion Bureau. The Bureau reported registration of 53,000 bales of cotton export contracts till Friday worth over $9.5 million. Officials reported cotton export of a little over $6 million in first quarter July-September 2004.
Pakistani cotton is being demanded in Indonesia, Bangladesh and a few other Far Eastern countries. The mounting demand of cotton in export market has pushed up the prices in the local market where for last three days it ranged between Rs1,575 and 1,580 a maund. Early this week the cotton prices in the local market were Rs1,525 and Rs1,550 a maund.
Export planners projected cotton export of $60 million in the current fiscal year as against $48 million. Cotton exports were worth $6 million in the first quarter 04-05 lower than the proportionate target of $9 million but market watchers say that by end-October the proceeds of cotton export will match the proportionate target and outgrow the target in November.
Business circles expect cotton export exceeding $100 million, which does not amuse much the spinners who are not happy that cotton was being supplied at lower rate to their competitors in Far Eastern countries.
The mounting export demand for cotton has pushed up the lint prices in the open market during last three days. Cotton prices are being quoted at Rs1,750 a maund for last three days as against Rs1,925 and Rs1,950 early this week.
Market sources said that out of 3 million bales pressed so far, the millers and exporters have booked and are in process of taking delivery of 2.8 million bales. The Trading Corporation of Pakistan (TCP) has also concluded contracts for purchase of 375,000 bales but has actually lifted hardly a few thousand bales.
The TCP has intervened in cotton market on government intervention to ensure grower a minimum price of Rs925 a maund. As the buying of cotton by millers and traders is getting brisk, market watchers predict cotton prices in open market will match to that of the TCP at Rs2,159 for 40 kg.
"We will not mind if the ginners back out from contract with us and offer cotton to the miller or trader at higher prices," a well-placed source in the TCP said. The TCP officials say that their cotton purchase contract does not have any punitive clause for breach. "I wish very much the ginners sold cotton to the miller or trader," a senior official said. "We are in cotton market not to make money but help the grower," he said.
Millers, too, are bracing for more cotton purchase as they estimate requirements of domestic industry at 13 to 14 million bales. They said that heavy investment has been made in textile industry and machinery worth about $600m is expected to be received in the current fiscal year. Bulk of the investment is in spinning which is pretty capital-intensive. Official statistics show import of textile machinery worth about $162m and business sources say more than $450m worth of machinery is in the pipeline.