May 30, 2003	Friday	Rabi-ul-Awwal 27,1424

KARACHI, May 29: Cotton prices on Thursday eased from the recent higher levels as some of the ginners indulged in selling having a bearish view of the higher fixation of seedcotton rates for the new crop.

A Rs50 per 40kg increase in prices of seedcotton(phutti), over the previous Rs800, to give incentive to the growers to cover higher costs of inputs including pesticides was apparently not welcomed by the ginners as some of them hastened to unload their unsold positions fearing decline in lint prices, dealers said.

The decline in lint prices may not have any relevance to the increase in phutti prices as the new crop is still far away. In some of the areas sowing is still on and is expected to be completed by the middle of the next month.

However, taking a long-term view of the new crop, ginners are of the view that the new crop lint prices may be much lower than the prevailing ones and “it may well prove risky to hold on to unsold positions for another couple of weeks to sell it at the higher rates.”

“Based on the benchmark price of Rs850 per 40 kg for phutti, the new crop lint price works out at Rs2,100 per maund,” says a broker adding “the perception that the new crop prices may be around this level initially, some of them holding stray stock sold them at the lower rates.”

Floor brokers said lint prices may ease further as ginners will unload their positions before the end of June to settle their bank limits and overdrafts and the current decline could well be a forerunner of the fresh fall.

Although the fixation of phutti is a bit late, some of the leading growers who are still in the sowing process may increase their acreage under the new crop to get the benefit of higher price.

During the current season some of the leading growers had sold their phutti on average rate of Rs1,000 per 40 kg, the highest was touched at Rs1,200. The current increase is expected to push phutti prices further higher during the next season.

Over the last about one week, lint prices have been reduced by Rs40 per maund, which also included Thursday’s downward revision of Rs25, they said.

Ready offtake was light as both ginners and spinners remained busy calculating the future negative impact of the new price in their respective sectors. As a result, till late in the evening no deals were finalized.