KARACHI, Dec 10: Physical activity on the cotton market on Friday expanded modestly as spinners made active covering purchases at the prevailing rates amid fears of pressure on ready supplies.
Reports that the government has allowed the TCP to export 1.7m bales at competitive rates, through international tenders, worried spinners and mills about the diminishing stocks of the fine lots, dealers said adding that "both were expecting that the government intended to build-up buffer stock through TCP, which would be sold to them if there was pressure on ready supplies".
According to TCP sources it has finalized deals for 1.813m bales up to Dec 10 including 0.522m bales from the Sindh ginners and 1.282m bales from the Punjab ginneries.
Spinners say the official decision has altogether changed the future market outlook possibly leading to a price flare-up in the coming weeks. "What is more important for us is quality lint, which is being purchased by the TCP at much higher rates", they added.
They said selling from the ginners is progressively drying up as leading among them are holding to their unsold positions for a better price. As a result, ready off-take has fallen to modest proportions.
"We are now eyeing price level above Rs2,000 for the near-term irrespective of the fact that crop figure is on the threshold of setting a new record", says a leading ginner adding "the supply and demand factors will determine the future price outlook".
Market sources also hold the same view and said the market had already hit the bottom early last month but now it appeared to be ginners turn to set selling prices.
They said leading spinners are awaiting the release of arrival figures of phutti for the fortnight ending Dec 15, which in their view will give a fair idea of both the total crop and the future price outlook.
The market is, therefore, stable around the current level as both ginners and spinners are maintaining a status quo at least for the near-term but the ginners are in an optimistic mood, they said.
Official spot rates were revised upward by Rs10 at Rs1,875 but in physical trading most of the deals were done at Rs1,925. New York cotton futures also recovered from the recent lows, up by 0.26 and 0.41 cents at 42.86 and 43.54 cents per lb for both the ruling March and the forward May settlements respectively. Ready off-take was active totalling about 20,000 bales as under:
SINDH TYPE: 1,000 bales, K-68 Sawgin Gothki and 400 bales, Dharki at Rs1,950, 400 bales, Mirpurkhas at Rs1,600-1,650 and 200 bales, Nayabad at Rs1,850.
PUNJAB VARIETY: 4,000 bales, Multan, 2,000 bales, Rahimyar Khan, 1,000 bales, Bahawalpur, 1,000 bales, Rajanpur and Jahania at Rs1,925 and 1,000 bales, Sadiqabad at Rs1,900-1,925.
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.
