Cotton market rules firm

Published December 11, 2005

KARACHI, Dec 10: The cotton market finished the week’s last trading session on a firm note as ginners held on to their unsold positions anticipating further increase in prices.

Most of the deals, mainly in the Punjab variety, were finalized between Rs2,400 and slight below it depending on the quality of lint and station of the origin. There was no deal in the fine variety from upper Sindh ginneries despite steady offering by some of the spinners.

Physical business was, therefore, relatively slow as the spinners also took a breather to have an overview of their inventories after having made an extensive buying during the current week, brokers said.

The current status quo reflects that both sellers and buyers have taken rigid position on selling prices, but at this stage it appears to be a no-win situation, they said.

“While ginners are pretty sure about the size of the crop, the spinners are awaiting the fortnightly arrival figures

of phutti expected to be released by the Pakistan Cotton Ginners Association by late next week,” they added.

The current relative lull on the ready counter may prevail for another couple of sessions but the spinners will have to break the ice as they still need a lot of lint to cover their forward export positions, market sources said.

The heading for a new mid-season phase based on supply and demand factors and in the process, the spinners and mill may be at the receiving end, they added.

Although the ginners are worried over the larger unsold stock to which massive amounts are tied, they are holding long positions on the perception that prices are expected to move further higher during the next year.

But some analysts expect panic sellers from some of the ginners whose holding capacity is not that strong to meet their bank demands to adjust overdraft limits before the year is out and may indulge in hasty selling.

Official spot rates were again held unchanged at the last level but in the ready most of the deals were done above them depending on quality.

Mill ready off-take was light totalling about 10,000 bales as under: 3,000 bales, Lodhran, 1,000 bales, Ahmedpur East, 800 bales, Yazman and 600 bales from other stations between Rs2,360 and Rs2,400 per maund.

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