20 June 2004	Sunday	01 Jamadi-ul-Awwal 1425

KARACHI, June 19: Cotton prices on Saturday eased from the recent peak levels by Rs50 to Rs100 per maund in the absence of demand from the mills and spinners.

Floor brokers said ginners were worried over the developing situation on cotton front because of the drying up of buying orders from the spinner and were seeking official help to bail them out from the current impasse.

Ginners are still holding on to an unsold stock of 0.450m bales both of fine and inferior lots to which about Rs5 billion are tied and they are unable to meet bank demands to settle overdraft limits before June 30.

"We have to adjust our bank overdraft limits before the financial year is out to avail the facility for the new cotton season", says a leading ginner adding "but because of pressure on our liquidity positions we may be declared defaulter".

In similar situations as the prevailing one, ministry of commerce directs the Trading Corporations of Pakistan (TCP) to bail out the ginners, being victim of falling demand as it had done several time before after renewing its traditional export outlets.

Whether or not the TCP can come to aid of ginners is doubtful as it is already engaged with an identical exercise to bail out the sugar industry which is victim of production glut and the it will enter wheat import trade to make arrangements for 1m tons to make up the local crop shortfall.

Spinners claim a local crop of 9.8m bales is too small to meet our annual consumption needs of about 13m bales and "we have to make emergency imports to meet our shipment deadlines."

According to official figures spinners and mills have already imported about 1.9m bales of lint (170 lbs) from various sources up to April 30, and the figure could swell to 2.5m bales before the new crop arrives on the market.

"The foreign lint is now both cheaper and of better quality as compared to the local stuff and as we have to operate in highly quality-conscious world markets, we have to observe the rules of the game", says a leading spinner.

Ginners are under pressure as there is no consistency in mill buying. They enter the market after a gap of couple of days and then again disappear telling ginners "hold on to their unsold stocks", brokers said.

Official spot rates were firmly held at the last levels as rate committee did not take into consideration the objective market conditions.

Ready offtake was light as some needy mills covered positions, the following some of the notable deals: 2,400 bales, Rahimyar Khan and 200 bales Chingot at Rs3,150 and 400 bales, Khanpur at Rs3,000, and 200 bales, Khanpur at Rs3,000.