KARACHI, June 25: Physical trading on the cotton market on Wednesday remained at a low ebb as spinners were not inclined to make fresh commitments despite the fact that some of the ginners have lowered their asking price in line with the international parity rates.
Although leading ginners from the southern Punjab ginneries who hold bulk of the unsold stock of the current crop of about 0.1m bales are holding fast to their positions, weaker among them are worried over the Sindh factor.
“Arrivals of new crop phutti into the lower Sindh ginneries
is picking every day owing to clear weather and a fair price indicating a considerable improvement in the ready supplies,” dealers said.
What worries the stock holders of the current crop is the perception that lower new crop prices in Sindh could have a sympathetic bearish impact on the current crop also, they added.
Reports reaching here indicate that some of the ginners have already lowered new crop prices to Rs2,300 or slightly below this level for the forward delivery in late July and are offering lint for August deliveries at the buyers option.
Despite facing pressure on their stock positions and fears of short supply, spinners and mills are watching the developing cotton scenario keeping to the sidelines indicating their re-entry into the market may not be possible before the new fiscal.
“The first week of July could be very crucial for the cotton trade, notably for the spinners as their perception of lower prices may not prove correct,” dealers said.
The future local cotton outlook is for the time being unclear as steep decline in New York cotton prices for the second consecutive day has sent shock waves among the ginners, market sources said.
The general fear among the ginners is that they have to adjust their asking prices in line with the international rates or slightly below them to keep them competitive for the spinners, they said adding “rather making them more attractive so that spinners may not look for supplies from the foreign sources.”
It was perhaps in this background that price tussle between the spinners and the ginners is going on, which in turn has a negative impact on the ready business.
Official spot rates remained basically unchanged at the previous levels, while New York cotton futures suffered a fresh sharp fall of 1.17 and 1.01 cents per lb at 53.53 and 56.34 cents per lb for both the maturing July and the new crop October settlements respectively.
