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KARACHI, March 10: Cotton prices on Wednesday fell sharply partly in sympathy with limit-loss in New York cotton futures and partly to slack mill demand.
The official spot rates, which were ruling steady around Rs3,050 per maund for the last couple of sessions were lowered by Rs50 and leading brokers predicted further decline in the coming sessions.
"The fresh limit-fall of 3.00 cents per lb in New York cotton futures has sent shock waves among the ginners who could not precisely decide how to react to the changing world cotton scenario", says a leading broker.
During the last couple of sessions, New York cotton futures have declined from the 15-year peak level of 75 cents to 64 cents per lb on trade and speculative selling after the reports of higher Chinese crop reached the market", he added.
New York May and July contracts on Tuesday were marked down to close at 64.01 and 65.40 cents per lb and indications are that they may fall further as the market is in the tight grip of speculators, dealers said.
On the local front, the situation is unclear as the future market direction will largely be guided by the holding capacity of the ginners and the world market trend, they said.
However, most of the ginners, notably holding long unsold positions are worried over the fast developing situation on the world cotton front and are in the process of "exit strategy".
"It appears to be no-win situation for the ginners as larger unsold stock of 2m bales plus may not be easily sold in a falling market", brokers said. Spinners and mills on the other hand are keeping to the sidelines anticipating further fall in prices, although they have still to a go a long way to cover their annual consumption needs until the new season begins on Sept 1.
Most of them are filling in the supply gap through imports as the current decline in world prices has made import more competitive and some of them are making forward deals at each dip. Ready offtake was, therefore, nil as both the ginners and the spinners remained locked in a price war in a changing world cotton scene.
The following are Wednesday's new crop Karachi Cotton Association (KCA) official spot rates for local dealings in Pak rupees for base grade 3 staple length 1-1/32" micronair value between 3.8 to 4.9 NCL.
| Rate |
for Exgin |
price Ex-gin price |
including Sales Tax Upcountry |
Expenses Spot rate ex-Karachi |
including Sales Tax @ 15% | ||||
| 37.32 kgs | 3,000 | 3,450.00 | 50 | 3,500.00 | |||||
| Equivalent | |||||||||
| 40 kgs | 3,215 | 3,697.25 | 50 | 3,747.25 | |||||
