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Cotton market
remains dull
KARACHI: The cotton market passed through another dull session
on Thursday as buyers remained off the rings in view of
oncoming Muharram holidays. They were also reticent to chase
rising prices. Trading will gain normal pace after Ashura on
Monday, said a leading broker. However, the undertone remained
fully firm as ginners were in no mood to show any leniency to
the buyers. They drew strength from the report that TCP was
willing to purchase lint in export packing at much higher
rates than those offered by spinners. According to unconfirmed
reports, TCP has so far contracted 3 lakh bales of lint. TCP's
seasonal buying may soar to above half a million bales
imparting stability to lint prices.
Well-informed sources say that the TCP has the capacity to
lift one lakh bales of lint at a cost Rs1 billion as the SBP
has allocated it Rs10 billion for procuring one million bales
of current crop. In view of expected over 10 million bales of
cotton crop in sharp contrast to earlier fear of acute
shortfall, the buyers do not want to pay higher as king prices
which has put their competitive edge in jeopardy.
The distinct improvement in export outlook recently inspired
the spinners to cover their forward sales as early as possible
as they were keen on honouring their commitments. But now they
have realised that their aggressive buying has pushed up the
prices to abnormally high level. Hence they have gone slow as
part of tactic to check the rising spiral of prices. With the
expected jump in the export of textile products to the
European Union and the US still a long way off, the spinners
were not inclined to mop up lint even at higher prices.
Recently some South Punjab ginners have raised the price of
their lint to Rs1890 per maund which is well above the export
parity of yarn. While this has generated considerable optimism
among the ginners that the price would soon mount to Rs2000
level, the spinners have become cautious. Hence brokers said
that any further hike in price is meeting with strong
resistance from buyers.
The ginners' optimism is based on the fact that the stagnation
in the textile world is ending fast. This served as a wake-up
call to the local spinners who recently returned to the rings
with a bang. They wanted to avail themselves of the changing
scenario and make up for the loss in exports caused due to
9-11 incident and Afghan war which led to disruption of
exports.
TCP's strong presence was another source of strength to the
ginners. The improvement of New York futures too reinforced
bullish sentiments. But withdrawal of spinners to the
sidelines may take the winds out of ginners' sails soon, said
a leading broker.
The US has already sold about 10.4 million bales out of which
6million bales have already been shipped to different
destinations. The US economy is showing signs of recovery. It
is agreed on all hands that if the US does not reduce cotton
sowing during 2002-03, it will have to make extra effort to
sell out its surplus cotton in competition with other
exporting countries.
The US will have an ending stock of 8.6 million bales which is
equal to 14-month domestic consumption. Hence there is hardly
any ground for a surge in cotton prices. Official spot rate
remained unchanged at Rs1725. Ready off-take stood at a solo
deal of 200 bales Rasulabad sold at Rs1750.
Courtesy The News March
22, 2002
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Pakissan.com;
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