KARACHI, Dec 8: The cotton market on Thursday passed through another actively traded session as spinners continued to build up long positions at the current levels. But the general perception is that prices could rise further as the government has reportedly asked the TCP to re-enter the market to ensure a fair prices for growers, market sources said.
They said the reported increase in the procurement price together with a short crop could push prices in the coming weeks well above the parity level of the spinners and mills, having a negative impact on the export front.
Some of the leading spinners questioned the government decision to direct the TCP to enter the market after an official signal to resume buying operations. The TCP last season purchased 1.6m bales of fine lint directly from ginners at Rs2,159 per 40kg from a bumper crop of about 15m bales.
“Larger unsold stock of 2.6m bales lying with ginners owing to regulated buying by the spinners and mills seems to be chief motivating force behind the official intervention,” some brokers said.
The re-entry of the TCP as a second buyer could certainly push prices further higher — well above the prevailing rates of Rs2,400 per maund after it resumes buying operations, they add.
The spinners and mills tried to grab the floating stocks between Rs2,300 and Rs2,400 per maund, but the ginners were reluctant sellers anticipating further increase in prices.
“In an open market trading level field is provided to the contenders and the fittest always remains on the winning side,” said a ginner.
In the backdrop of reports of a short crop, the cotton market may be heading for a major showdown between buyers and sellers in the coming weeks, he added.
Official spot rates were held unchanged at the overnight level of Rs2,360 but in the ready section most of the deals were done well above them.
New York cotton futures on the other hand showed mixed trend. While the ruling December rose by 0.52 cent, forward March fell by 0.15 cents at 49.62 and 52.37 cents per lb, respectively.
Ready offtake fell from the overnight high figure to 15,000 bales as under:
SINDH VARIETY: 1,500 bales, K-68 sawgin Khairpur at Rs2,350; 1,000 bales, upper Sindh at Rs2,400; and 500 bales, Nawabshah at Rs2,300.
PUNJAB TYPE: 1,000 bales, each Rahimyar Khan, Sadiqabad, Uch Sharif, Ahmedpur East, Bahawalpur and 400 bales, Garah More at Rs2,400; 400 bales, each Haroonabad, Chistian at Rs2,350; 600 bales, Mamon Kanjan at Rs2,300; 400 bales, each Multan and Tiba Sultan at Rs2,375.
