KARACHI, July 26: Cotton prices on Tuesday declined from the recent higher levels in the absence of active support both from spinners and mills amid dull trading. Brokers, however, attributed the downward revision in the spot rates to negative signals coming from the Monday’s TCP auction for 86,000 bales of both fine and medium staple length varieties.

“But unlike the previous auctions, the spinners and mills were not that enthusiastic and only bid for a few thousand lots at a rate well below the market rates,” analysts said. TCP sources also admitted that the mill response was terribly disturbing as compared to the previous auctions and the bid rates were too low to finalize profitable deals, they said.

“The poor mill response to the latest TCP offering reflects that the spinners and mills may not need further supplies,” the brokers said. But some others said: “It may be tactical manoeuvre to force the TCP to lower its reference prices.”

However, the statistical position of the mills and spinners shows that both have purchased lint well beyond their seasonal consumption needs, they said and added that they may not need fresh supplies as new crop is around to make its seasonal debut from the lower Sindh cotton belt.

According to official figures, the textile sector had purchased about 12m bales from the ginners during the current season and another about 0.8m bales from the TCP during the last three months in weekly auctions and the total roughly come to 2m bales, far in excess of their annual consumption needs.

“At the best the spinners and mills can consume about 15m bales in the backdrop of higher textiles export projection in the post-WATO regime, the balance could serve as buffer stock to meet any crop failure during the next season,” cotton analysts said.

It was perhaps in this background that the official spot rates were lowered by Rs25 at Rs2,350 per maund after about four weeks in line with the ready rates. New York cotton futures on the other hand were quoted unchanged for the ruling October delivery at 50.20 cents per lb, while the December contract rose by fractions at 51.80. The ready business was nil as the ginners holding stray unsold stocks were not inclined to sell at the lower rates.