KARACHI, Oct 22: Cotton prices on Wednesday retreated from the all-time peak levels as spinners and mills again extended guarded support to fine lots at the lower rates.
As a result, some big lots changed hands mostly from the Punjab ginneries at a uniform rate of Rs3,300 per maund, which is still claimed to be above the international parity levels. Sindh variety was traded between Rs3,000 and Rs3,100 per maund depending on quality of lint.
The net fall over the last two session in prices in physical trading was Rs200 per maund to Rs3,300 from Rs3,500.
“I don’t think the speculative run on lint is over”, says an analyst “speculative forces are still at work and may try to keep prices within the current levels after selling the idea of a short crop”.
But spinners now appear to alive to the prevailing supply and demand situation and a little patience on the part of their members could restore sanity to the cotton trade.
Both leading growers and the ginners have already got the best price ever for their stocks under the patronage of speculators, leaving the field open for the spinners to correct it, market sources said.
“The snap price flare-up has already caused a tremendous loss to the national exchequer both in terms of sales tax and expensive textile exports but what is in store for future is still unclear”, says a leading broker.
The next few days could be very crucial for the cotton trade and much will depend on how spinners redefine their priorities in the changed cotton outlook in the backdrop of a short crop”, he adds.
Meanwhile, producers of synthetic fibre appear to be bit happy on the cotton situation as both increased mill intake and higher prices have increased their profit margins.
Most of the leading mills have increased the use of synthetic fibre during the last couple of weeks to compensate for the losses of higher lint prices, market sources said.
For the first time during the current price flare-up, official spot rates were lowered by Rs125 per maund at Rs3,275 from the previous Rs3,400.
New York cotton futures showed a fresh modest decline of 0.13 and 0.44 cents at 75.31 and 77.72 cents per lb for both the ruling December and the forward March contracts respectively.
Ready offtake was active as till late in the evening about 15,000 bales from the Punjab ginneries changed hands, the following being some of the notable deals: 3,000 bales, Bahawalpur, 2,000 bales, D.G.Khan, 2,000 bales, Ahmedpur East, 500 bales, Bahawalnagar, 400 bales, each Hasilpur, Gojra and Chichawatni at Rs3,300 per maund without 15 per cent sales tax.