KARACHI, Sept 25: Physical business on the cotton market on Wednesday showed a sharp contraction as spinners and mills took a technical breather to have an overview of their inventories before making fresh commitments.

The slowdown in ready offtake was also attributed to the perception that lint prices have almost stabilized below Rs2,000 per maund level after the speculation about a short crop or an extensive damage to the standing crop in the central Punjab cotton failed to get through.

After having made an extensive buying during the last couple of sessions, spinners withdrew to the sidelines apparently in a tactical move to push prices further down, dealers said.

According to them, spinners and mills had purchased about 50,000 bales of new crop during the last three sessions and were expected to stay away for a couple of days in a bid to keep prices within their export parity levels.

To maintain lint prices at a competitive level, leading ginners have also formed a broader cartel to forestall further decline in prices and liquidate positions at an agreed rate to ensure a fair return to the grower, they added.

International price outlook for both cotton yarn and cloth is claimed to be tilting in favour of the local industry and indications are that the local market will remain stable irrespective of conflicting rumours being spread by the vested interests.

While there is relative quiet on the cotton export front, value-added products are finding ready buyers both from the near and Far East importers. Leading spinners who were claiming piling of unsold stocks are silent on the issues.

“Active mill buying reflects that sailing on the export front is steady,” one broker said, adding “larger unsold stocks never allow spinners to indulge in panic buying.”

In line with the fall in prices in the ready section on Tuesday, official spot rates were lowered by Rs20 per maund at Rs1,950.

New York cotton futures, on the other hand, showed a modest rise of 0.35 and 0.79 cents per lb at 42.15 and 44.52 cents for both the ruling October and the distant December settlements, respectively.

On the export front, the TCP has registered export contracts for 1,750 bales, with the Export Promotion Bureau on Sept 20. Total new crop sales since the beginning of the new season from Sept 1, rose to 20,510 bales.

Ready offtake was light as till late in the evening about 3,000 bales from the Sindh ginneries changed hands, the following being some of the notable deals: 200 bales of Nawabshah at Rs1,975 and 200 bales at Rs1,990; 200 bales, Tando Adam at Rs1,965 and 200 bales at Rs1,950; 200 bales, Sanghar at Rs1,950; 200 bales, Khidro at Rs1,975; 200 bales, Shahpur Chakkar at Rs1,975; 400 bales, Sakrand at Rs1,975; 200 bales, Qazi Ahmad at Rs1,975; and 200 bales from Sinjoro at Rs1,945.