June 19, 2002	Wednesday	Rabi-us-Sani 7, 1423

KARACHI, June 18: Cotton prices on Tuesday tended further higher as reports of falling unsold stocks and expensive foreign lint did not allow mills and spinners to keep to the sidelines.

Reports that ginners are holding on to their positions entertaining further increase in prices was said to be another contributory supporting factor, keeping prices on the higher side for the last about two weeks.

“After rising by Rs25 per maund after each alternate day, lint prices over the last about six weeks have risen by Rs150 per maund, a phenomenon quite contrary to spinner perceptions”, says a cotton broker.

He said the market’s rebound from the early seasonal lows at the fag-end of the season is typical as normally prices decline during this period because of quality factors.

“Two main factors seem to have contributed to the current price flare-up”, claims a local cotton consult “sharp increase of over 10m bales in the annual mill consumption and rebound in New York cotton futures being on the top pulling the local market out of strong hold of spinners”.

There is a tussle between the ginners and the spinners to tilt the price balance in their respective favour but as the ginners are now bold enough to keep sitting on their stocks in the backdrop an expected pressure on ready supply of lint, physical business remains slow.

That is perhaps why ready offtake has fallen to a modest proportions as ginners are not inclined to sell below their asking prices despite the fact that some of the leading spinners having surplus lots are selling them to their counterparts.

“Ginners holding fine lots are eyeing the price level of Rs2,000 per maund and until spinners raise their bids to that level, physical business may remain light”, brokers said.

They said the current increase in prices has curtailed buying by the exporters as they are not in a position to cover positions beyond the rates at which letters of credit have been opened by the foreign buyers. However, there is a remote possibility of default on the part of any exporters leading among them cover forward positions immediately after the signing of the deal.

Official spot rates were revised upward by another Rs25 per maund but in the ready section most of the deals were done above them.

Ready business was modest as till late in the evening about 3,000 bales changed hands as under: 500 bales, Shahdadpur at Rs1,650, 1,200 bales, Bahawalpur at Rs1,900 and 600 bales, mill-to-mill at Rs1,750.