13 March 2004	Saturday	21 Muharram 1425

KARACHI, March 12: Trading on the cotton market on Friday remained slow as spinners kept to the sidelines followed by reports of falling yarn prices and a considerable decline in local demand.

Some lots did change hands as needy spinners and mills covered positions but the lots in trade were said to be of low-mic needed by them to produce lower counts of cotton yarn.

"A crisis-like situation is developing in the cotton trade as spinners and ginners are facing the problem of parity rates", says a leading cotton analyst commenting on the developing situation in the cotton trade.

After having purchased phutti at an all-time peak level of Rs1,700 per 40 kg, ginners held on to their stocks hoping an identical rise in lint prices in the backdrop of local crop shortage, he said adding most of them did not get out of the market after lint prices ruled between Rs3,400 and Rs3,600 per maund for quite sometime.

"Lint prices instead of rising to their pre-determined level of Rs4,000 fell to Rs3,000 or below depending on the quality sending shock waves among the ginners", he said adding "facing massive price losses they are holding on to their unsold stocks, but how long?"

Spinners are also caught in their long-term price perceptions followed by early rumours of a sharp fall in the local crop owing to late pest attack in the Punjab cotton belt.

"Most of them made near-panic buying from the foreign markets when prices were at their peak levels for the last 15 years", market sources said. But since then world prices had declined by about 15 cents per lb, pushing spinners at a disadvantage on the world markets for their textiles".

The grower was, however, the chief beneficiary of the early rumours of a short crop and is sitting pretty comfortable after having got highest-ever prices of Rs1,700 per 40 during the current season.

The falling daily mill off-take reflects the prevailing conditions on the cotton market and how the spinner and ginner will bail them out from the ugly situation is not immediately clear, brokers said.

Official spot rates were firmly held at the last close apparently in response to recovery on the New York Cotton Exchange, where both the ruling May and the forward July contracts were quoted at 65.93 and 67.35 cents per lb, up by 1.30 and 1.24 cents respectively.

Ready off-take was modest totalling about 4,000 bales as under: 2,500 bales, Haroonabad at Rs2,750, 500 bales, Samandari at Rs3,100 and 400 bales, Rasulabad at Rs2,585.