20 May 2004	Thursday	29 Rabi-ul-Awwal 1425

KARACHI, May 19: The cotton market on Wednesday showed firm trend as spinners and ginners remained locked in a price war in the backdrop of a considerable decline in size of the crop.

The ginners appear to be in a commanding position as lower-than-market expectations unsold stocks with them have pushed the spinners at the receiving end as they have still to go a long way to see the year through, brokers said.

Already some of them managed to sell stray lots of fine quality at Rs3,150 per maund and are now eyeing the consensus figure of Rs3.200 or above, they said. "Much will depend on their holding capacity and the quality of unsold stocks," some others said. "Leading spinner groups may indulge in panic buying as they have viable export outlets and have already made forward deals with their foreign trading partners."

But their weaker links could feel the pinch of higher prices during the coming weeks and may end the current financial year with accumulated losses, they said. The future price outlook appears to be uncertain and will largely depend partly on the international factors and partly to orderly buying by the spinners and mills.

The textile sector still needs about 2m bales to cover up the supply gaps and any further decline in world prices during the next couple of week will allow them to balance their inventory position, market sources said.

They said in the backdrop of pressure on ready supplies of lint, the new crop, which is due from the lower Sindh cotton belts by the middle of July, may not be that cheaper as being speculated by some of the spinners.

There was a relative quiet on the cotton export front because of higher local prices. No fresh forward deal was reported by the private sector exporters, but physical shipments are being steadily made against the forward deals totalling 0.201m bales up to April 30. During this month consignments totalling about 27,000 bales were shipped to various destinations, according to official figures.

Meanwhile, reports coming from the major cotton growing areas of upper Sindh and Punjab indicate that sowing of the new crop is well in progress and where sowing was completed earlier, the rate of growth of tender plants is satisfactory.

New York cotton futures on Tuesday fell 1.27 and 1.08 cents per lb at 62.94 and 61.12 cents for both the ruling July and the new October crop, respectively. The local official spot rates on the other hand were again firmly held at the previous levels.

Ready offtake was light totalling about 2,000 bales as under: 400 bales, Nawabshah at Rs2,725; 600 bales, Kot Diji at Rs2,710; and 1,000 bales, Haroonabad at Rs3,150.