KARACHI, Nov 5: The cotton market on Friday was in virtual turmoil as arrival figures of phutti into the ginneries were well above the analysts' predictions and should have crashed it but ginners held on to their unsold positions.
There was no immediate bearish impact on the prices, although some of the deals were done Rs25-50 per maund lower as compared to previous selling rates. But prices are sure to react bearishly to the larger than expected arrival figures during the next couple of sessions, brokers said.
There was, however, panic among the growers and the ginners amid fears of a market crash but on the other hand spinners and mills were more than happy owing to a sudden change in the supply and demand positions, dealers said.
"No one could have an idea of 52 per cent or 2m bales rise in the arrivals figure at this time of the season when growers generally hold on to their positions anticipating further rise in prices", brokers said but the figures surprised the leading analysts who have been putting the figure around 5.2m bales.
Floor brokers said it too early to take an overview of the total crop but if the latest arrivals figure is taken as a base the total crop could be around 12 million bales. But the general perception is that leading growers have been holding on to the long positions in anticipation of an increase but as the market remained depressed for various reasons they dumped the commodity into the ginneries in a bit haste, rising the number of bales to a speculative level.
Larger than expected unsold stock lying with the ginners could worry them as spinners will resort to selective buying on the perception that the crop is enough to meet their annual consumption demand. Falling mill demand could push prices further lower as ginners may not be in a position to hold long positions as huge amounts are tied to them, market sources said.
Reports from the New York cotton market are also not that positive where prices are also declining each session and may breach through the barrier of 40 cents per lb level in due course.
New York cotton futures on Thursday were quoted lower by 1.21 and 1.06 cents at 43.37 and 43.00 cents per lb respectively for both the ruling December and the March contracts respectively. Local official spot rates were also marked further down by Rs25 per maund at Rs1,925. The following are some of the deals gone through late on Thursday evening.
SINDH TYPE: 500 bales, Mirpurkhas at Rs1,800, and 400 bales, Nawabshah at Rs1,900.
PUNJAB VARIETY: 2,000 bales, Bahawalpur at Rs1,900-1,950, 1,000 bales, Rahimyar Khan at Rs1,950 and 1,000 bales, Muridwala at Rs1,940-1,950.
The following are Friday's new crop Karachi Cotton Association (KCA) official spot rates for local dealings in Pak rupees for base grade 3 staple length 1-1/32" micronair value between 3.8 to 4.9 NCL.
