22 July 2004	Thursday	04 Jamadi-us-Saani 1425

KARACHI, July 21: After having received massive battering during the last couple of weeks, fine lint prices on Wednesday seem to have stabilized around the average rate of Rs2,400.00 per maund.

The resistance to further fall in prices was partly attributed sharp rebound staged by the New York cotton futures and partly to ginners' reluctance to sell new crop lint below Rs2,500 per maund.

But the disturbing factor is that the cotton trade is gradually slipping into the hands of grower as it did during the last seasons followed by reports of a short crop because of late pest attack in the Punjab cotton belt.

Some of the ginners in the central Punjab cotton belt are buying phutti at Rs1,225 per 40 kg as compared to official rate of Rs925 and that of Sindh at Rs1,025. "The ginners may be again trapped by the growers if they continue to purchase phutti well above the official support prices," brokers warned ginners adding "most of them are still to absorb the shock of steep decline in prices from Rs3,600 to Rs2,400 and the consequent heavy losses."

Dealers said although the arrivals of the new crop phutti are still far below the normal daily figure some of the ginners are not inclined to take an over view of the world cotton situation and its negative impact on the local prices.

They said export parity rate of spinners for cotton yarn comes to about Rs2,400 and leading among them may not try to cross the limit as the future price outlook is still unclear.

However, leading cotton analysts are worried over the developing situation on the yarn export front in the backdrop of falling prices but they could not advise ginners to go slow, at least for the next couple of weeks, when the picking operation resumes in the entire cotton belt.

"Grower must get a fair return on his investment but there is need to check speculative tendency in the ruling prices," they said. Official spot rates were again revised downward by Rs50 per maund in line with the new crop lint.

New York cotton futures on the other hand staged a smart rally on revival of speculative support and rose by 1.18 and 1.27 cents per lb for both the ruling October and the distant December settlements respectively. Ready offtake was modest totalling about 1,000 bales including 100 bales, new crop Mirpurkhas at Rs2,400 and 800 bales of current crop, Ahmedpur East at Rs2,500.