KARACHI, March 1: Firm conditions prevailed on the cotton market on Tuesday as spinners took a breather after having made strong forward covering purchases from the international trading centres.
The reports that Pakistan and China are on a big shopping list for lint on the world markets to make up their crop shortfall has stimulated speculative buying as leading speculators crept in as a big buyers to push prices further higher for the end-product users, ginners said.
The spate of speculative buying is well-reflected in the current sharp increase in New York cotton futures, which rose by 1.20 and 1.09 cents per lb at 50.30 and 51.27 cents per lb for both the ruling March and the distant May settlements.
The breach of 50-cent per lb mark by the New York cotton futures indicates that the current run-up could be sustained as long as China and Pakistan are among the leading buyers, analysts said.
According to foreign reports China will need another 14.5m bales for its textile industry and Pakistan spinners have already made forward deals for 0.8 to 0.9m bales from various foreign sources so far, they said.
"It is a big quantity and could trigger buy stops from those who are net importers and do not produce cotton," they said adding "well aware of the developing situation on the cotton front and a fair idea of annual demand, spinners did not await the arrival of final crop figures and opted for forward buying."
The post-WTO cotton scenario has witnessed a major change both in terms of quality and quantity and leading spinning groups are working accordingly not to be outwitted by their foreign competitors.
Meanwhile, the Pakistan Cotton Ginners Association (PCGA) is expected to release arrival figures for the fortnight ended Feb 28, which will be close to the final size of the crop. It was in this background that official spot rates were further raised by Rs25 per maund to Rs2,300 and another revision may be overdue.
Ready off take was light as ginners and spinners were locked in a price war and held on to their respective positions. However, stray lot did change hands as under: 2,000 bales, upper Sindh at Rs2.375 to 2,400, 500 bales, Jhole at Rs2,275, and 500 bales, Kabirwal at Rs2,400.
The following are Tuesday'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.
