KARACHI, May 6: Quieter conditions prevailed on the cotton market on Friday ahead of the TCP auction of 60,000 bales of fine type on Saturday amid reports of keen competition among the prospective buyers. Cotton analysts predict a terribly “hot auction” despite falling New York future prices as buyers are expected to rely on the ready stocks of lint on sale rather hoping further decline in prices.
“And in the process, the TCP could be chief beneficiary as all pointers indicate that it could get more than a fair price for its stuff in Saturday’s sales”, they said. Some brokers, however, reported stray business mostly in inferior lots as those spinners and mills who were not participating in the TCP tender tried to grab available stuff from the central Sindh ginners.
Reports coming from the southern Punjab cotton belt where stray stocks of both fine and low-mic lots are still available also indicate that spinners are lifting modest lots below Rs2,100 per maund depending on quality, brokers said.
They said ginners are now inclined to hold on to their positions as the TCP auctions have a negative impact on their price competitiveness, which in the final analysis could reduce their profit margins.
Moreover, ginners are also inclined to clear the backlog of unsold stocks after disposing them of at the prevailing prices to adjust bank overdraft limit well before the year is out.
According to some sources unsold stock of lint with the ginners, notably of upper Sindh and southern Punjab may not be more than 70,000 bales, just a day’s mill off-take in normal trading sessions.
New York cotton futures eased further by 0.40 and 0.63 cents at 54.60 and 53.26 cents per lb for both the maturing May and the ruling July contracts respectively. But there was no change in the local official spot rates which were firmly held at the last close of Rs2,200 per maund.
About 3,000 bales, both from the upper Sindh and central Punjab ginneries changed hands, purchased by mostly the Punjab spinners.
