KARACHI, Oct 11: Cotton prices on Tuesday tended higher by another Rs75 for the second session in a row as spinners indulged in panic buying amid reports of a damage to standing crop after the attack of whitefly in some areas of the Punjab cotton belt.
Some of the fine lots were traded as higher as Rs2,500 and slightly above and brokers fear the current run-up will continue until the speculation about the size of the total crop ends.
The phenomenon of a global short crop is also well-reflected in the New York cotton futures, which soared by 2.03 cent for the ruling December contract at 55.66 cents per lb, while the forward March rose by 1.70 cents at 57.10 cents per lb. The barrier of 60 cent per lb is expected to be broken shortly on the strength of lower US crop.
What seems to have added to the spinners’ worries was the advice of the Punjab agriculture department to the farmers to keep strict watch on attack of whitefly on bolls and leaves of cotton plants and timely spraying operation, brokers said.
According to ginners, the crop might be short in the Punjab cotton belt as late pest attack had reportedly caused damage to standing crop in some areas of the Punjab, already hit by untimely rain and floods.
“The initial crop damages were around half a million bales,” they said. “But the latest damage estimate is put at around 2.5 to 3.00m bales.”
“The total crop may not exceed the 1.1m bales figure,” a cotton specialist said, adding that “perception is keeping the spinners and mills at their toes for the last couple of weeks, leading to consequent price flare-up.”
Having fully booked for the current quarter ending December and forward orders for the next quarter ending March, mills are not inclined to take risk of low inventories and chasing prices higher, brokers said.
Spinners also fear that global shortage of the lint could make import more expensive and, therefore, are going all-out for the local stuff without taking into account the production costs, they said.
Ready offtake was on the higher side as mills resorted to panic buying, the following being some of the important deals:
SINDH TYPE: 1,200 bales, Mirpurkhas at Rs2,375 to Rs2,425; 600 bales, Sanghar at Rs2,375 to Rs2,400; 600 bales, Nawabshah, 200 bales, Daur, 400 bales, Sarari, at Rs2,425; and 400 and 200 bales, Jhole and Tando Ghulam Muhammad at Rs2,400.
PUNJAB VARIETY: 2,000 bales, each Bahawalpur and Rahimyar Khan, 200 bales each, Shujabad, Hasilpur, Khnewal at Rs2,500; 400 bales, Jahania at Rs2,475 to Rs2,500; 400 bales, Chihawatni at Rs2,450 to Rs2,500; 200 bales, each Arifwala Toba Tek Singh, Muridwala, Mongi Bunglow and DG Khan at Rs2,450; 400 bales, Gojra at Rs2,450 to Rs2,475; 400 bales, Mamon Kanjan at Rs2,440 to Rs2,450 and 800 bales, Alipur at Rs2,450.
