26 May 2004	Wednesday	06 Rabi-us-Saani 1425

KARACHI, May 25: Cotton market on Tuesday maintained firm trend as spinners and mills indulged in forward trading apparently in an effort to beat an imminent price flare-up based on a short crop.

Most of the leading spinners seem to have a fair idea of the lint price during the next couple of months as they tried to grab the floating stocks at much higher rates on one-month credit, brokers said.

Forward deals of about 4,000 bales were finalized at Rs3,182 per maund on the lower side and Rs3,235 on the higher side for the fine type from a Punjab ginnery. "Whether the rate at which forward deals were made suits to spinners, they have ensured supplies of lint against their sales of cotton yarn during the next two months," they said adding "prices rise or fall in between is at the spinners risk."

Spinners now seem to have realized that it is still economical to hunt for the local lint rather than opting for the foreign stuff, which in the ultimate analysis adds to their production costs, they said. After having an overview of the export trade in lint, a private sector exporter sold 1,500 bales to a local mills at Rs3,150 as the rate suits to the both.

One-month credit at which forward deals are made means the end of the fiscal year that is the first week of new year. But new crop from the lower Sindh cotton belt arrives by that time is doubtful because of irrigation water problems.

Having firm export orders in their kitty, spinners are not inclined to take even a calculated risk about their supply position against forward sales of end-products, dealers said.

"The entry of new trading instrument in the cotton trading is expected to keep spinners and mills in a happy supply position irrespective of the costs attached to it," brokers said.

Reports from the New York Cotton Exchange are bullish where both the ruling July and the forward October settlements finished with gains of 0.54 and 0.75 cents per lb at 63.54 and 61.10 respectively.

But there was again no change in the local spot rates, which were firmly held at the last levels. Ready business was modest as till late in the evening about 5,000 bales changed hands as under: 1,000 bales, Dharki at Rs3,182, 1,400 bales, Mirpur Mathelo also at the same rate on one-month credit, 400 bales, Sarhad at 3,150 and 1,000 bales, Burewala at 3,235, on one-month credit and 1,500 bales, exporter to mill at Rs3,150.