January 5, 2003	Sunday	Ziqa’ad 1, 1423

KARACHI, Jan 4: Cotton market on Saturday gave a mixed reaction to the latest arrival figures of phutti into the ginneries, showing a sharp increase of 11.25 per cent over the corresponding total but spinners were happy on the perception of a bumper crop.

“An increase of about 0.9m bales at 8.7m bales gave a pleasant surprise to both the spinners and the exporters”, brokers said “but mills and spinners who were virtually shaken by the earlier reports of a short crop were a bit happy and for good reasons too”.

Higher production figures allayed spinner fears of an imminent price flare-up on the one side and expensive imports on the other, they added.

Although the current crop estimate may still be lower than the annual consumption needs of the textile industry, hopes have been raised that the final figure could be close to their demand.

“If the last season’s mill consumption figures is taken as base, the industry will need about 1.3m bales to see the current season through”, spinners claim adding “because of a massive modernization and replacement more sick mills have resumed operations increasing the intake”.

How much phutti is left in the godowns of leading growers is pretty hard to assess but some analysts claim the third picking is still incomplete and may take another couple of weeks.

Some cotton analysts also fear that the farmers may have dumped their phutti into the ginneries in a bid to get the higher prices and leftover could be well below the market expectations.

The opinions about the future price outlook, therefore, differ. Some say prices could fall from the current level as spinners will keep to the sidelines awaiting the ginners reaction.

But some others say the supply and demand factors will not allow any change in the current price outlook as ginners will hold on to their position after having purchased phutti at much higher rates.

Despite having larger unsold stock of over 2m bales in their godowns, ginners are not worried and hope mills and spinners could not stay out of the market for more than a week owing to the compulsion of the developing situation.

According to arrival figures for the fortnight ended Dec 31, 2002 released by the Pakistan Cotton Ginners Association (PCGA), spinners have so far purchased 6.546m bales, more than a million bales during the corresponding period last year and the private sector exporters 46,000 bales, leaving an unsold stock of 2.143m bales with the ginners.

There was, therefore, post-figures relative quiet on the physical trading as both the buyers and the sellers just marked time and did not bid in a big way.

Official spot rates were marked up by Rs15 per maund but New York cotton futures suffered modest decline of 0.39 and 0.28 cents per lb at 51.62 and 55.10 cents for both the ruling March and the distant May settlements respectively.

On the export front, exporters have registered sale contracts for 2,780 bales, with the Export Promotion Bureau on Jan 2, total foreign sales so far being 60,082 bales.

Ready offtake was modest as spinners stayed on the sidelines anticipating decline in prices owing to higher than market expectations arrivals of phutti, the following being some of the notable deals: 1,000 bales, Khairpur at Rs2,125 to Rs2,135, 300 bales, Shahpur Chakkar at Rs1,960, 1,000 bales, Rahimyar Khan at Rs2,150 and 3,000 bales, D.G.Khan at Rs2,075 to Rs2,125.