March 2, 2003	Sunday	Zul Hijjah 28, 1423

KARACHI, March 1: Cotton prices on Saturday remained stable at the previous levels as both ginners and spinners were not inclined to cross the parity limits set by them to sell the end-products to the consumers.

Physical trading was, however, badly affected as most of the brokers remained busy in watching the proceedings of the crucial cricket world cup match between the old rivals Pakistan and India on TV. The full details of data mostly collected from the leading brokerage houses late in the evening could not be collected because of the on-going match.

What seems to have halted the market’s persistent upward drive was the absence of spinners and mills from the market, which restored sanity to the cotton trade at least for the near-term.

For the last couple of sessions ready offtake had dropped to a modest proportions, which demonstrated that element of speculative buying by the spinners has been taken away.

But whether or not the ruling prices, which apparently appear to be stable around Rs2,500 per maund, fall in line with the parity levels of the end-product users, although their protests against the rising prices of cotton yarn tell a different story.

“Spinners are facing a difficult choice,” one broker said. “On the one hand to ensure a fair price to the ancillary industry and on the other to keep their conversion costs within certain limits to compete on the markets.”

But some others fear the current quietness could well prove a lull before the storm after the size of the new crop is fully known. If the figures, being projected by the private surveys are correct, there could be a possible run on the lint during the next couple of weeks.

“What appears to have limited the manoeuvring leverage of the spinners is the ruling world cotton prices, which in the recent past have risen to an inhibiting levels,” spinners say adding “the ruling May contract at 58 cents per lb leaves a little profit margin if the prices of end-products don’t show a sympathetic increase.”

The cotton trade seems to be heading for a major crisis owing to below demand production and higher lint prices, both local and foreign. Spinners need 1.2m bales on the lower side, while production may not touch the mark of 10m bales as the pace of the current arrivals of phutti into the ginneries indicates.

On the export front, private sector exporters sold another 3,970 bales to foreign buyers, notably Bangladesh and Indonesia, the total up to Feb 28, being 0.139m bales.

Official spot rates did not show any change and were quoted at the previous levels but on the other hand New York cotton futures staged a smart rally and recovered to close higher by 1.14 and 1.48 cents per lb for both the matured March and the ruling May settlements at 48.99 and 58.29 cents per lb.

Ready business was light and totalled 3,000 bales from the Punjab ginneries as under: 1,000 bales, each Alipur, Lodhran and Khanewal at Rs2,500.