KARACHI, May 19: Cotton prices on Thursday ruled steady around the previous levels but spinners and mills were conspicuous by their absence in view of the approaching TCP auction on Saturday. Some of the deals reported in physical trading were done well above the official spot rates as some of the ginners still holding stray stocks raised their asking prices in line with the TCP auction rates, brokers said.
“The heating up of the market at the fag-end of the season is understandable as some of the spinners who still need a substantial number of bales to cover their forward positions are in the market”, they said.
After having lost all hopes about widely speculated decline in prices in the backdrop of TCP sales, deficient spinners re-entered the market but only to find higher asking prices. An idea of their scramble to replenish their falling stock position may well be had from the fact that some of them opted for inter-mill operations and managed to buy a substantial quantity at much higher rate of Rs2,325 per maund.
According to market sources, financially spinners and mills purchase lint more than their annual consumption needs and sell it to those who need it at much higher rates, without value-addition for export purposes.
They said it is a general practice among the leading textile groups to buy lint around Rs2,000 or slightly above this rate at the beginning of the season when the market shows erratic price movement followed by conflicting reports about the size of crop or pest attack on the standing crop.
How would Saturday’s TCP auction for 67,000 bales affect the local price line is not clear but some cotton analysts predict a further increase in the post-auction trading. Official spot rates were, therefore, firmly held at the previous levels amid slow trading but in the ready section prices were quoted a bit higher.
New York cotton futures on the other hand lacked normal support and showed fresh fractional fall of 0.26 and 0.05 cents per lb for both the ruling July and the forward October contracts at 51.80 and 52.95 cents per lb.
The weak opening of the newcomer July after the matured May was rung off the board, reflects that future prices outlook may be a bit bearish. Ready off-take was modest totalling 2,000 bales, including an inter-mill deal of 1,200 bales at Rs2,325 and 300 bales, Karachi delivery at Rs2,225.
