KARACHI, May 24: Physical activity on the cotton market on Tuesday fell to a modest proportion, as buyers and sellers were locked in a price-war over the fine lots. While southern Punjab and upper Sindh ginners still holding on to modest unsold lots of fine lint are not inclined to lower their asking prices below Rs2,350 per maund, spinners are reluctant to go beyond Rs2,300, brokers said.
As a result, barring some inferior lots, which are changing hands daily mostly on the basis of Karachi delivery were again traded at around Rs2,210, while there was no evidence of fresh business.
In the absence of official figures by the Pakistan Cotton Ginners Association (PCGA), it is pretty difficult to collect the actual size of the unsold stocks lying with the ginners. Market sources put it around 30,000 bales of both inferior and fine lots.
“With the arrival of new crop from lower Sindh which is still two months away, the ginners are little worried over their unsold positions and hope to sell them at higher rate in late June and early July,” says a broker.
“Despite weekly TCP auctions and positive mill response, we are least worried over our modest unsold stocks of few thousands bales,” ginners said. “There is no pressure on our liquidity as most of us have already cleared bank overdrafts and renewed them for the new cotton season.”
Meanwhile, the market sources said the Karachi Cotton Association (KCA) was working out the guidelines for hedge contracts after studying relevant details from other hedge markets to make them fully compatible with the modern forward trading.
The KSE is expected to resume forward trading in the new crop in September and October contracts probably in late July or early August, as it has already at its disposal the basic infrastructure facilities in its premises.
The hedge trading in cotton was banned by the first Bhutto regime in the early 70s, billed as un-Islamic mode of trading sans physical possession, but the commerce minister early this month has given the go ahead signals to the KCA under the cabinet decision.
The official spot rates remained pegged at the last close, but on the other hand New York cotton futures recovered modestly from the previous lows, up by 0.22 and 0.25 cents per lb at 50.27 and 52.00 cents for both the ruling July and the forward October settlements, respectively.
Ready offtake was light, as barring a deal of 400 bales at Rs2,210 per maund, no other lot changed hands.
