KARACHI, Jan 26: Cotton market on Thursday showed firm trend as prices tended further higher by Rs25 per maund followed by active short-covering made by spinners and mills.
Some of the leading spinners and mills indulged in big-lot business and were buyers for fine lots around Rs2,575 per maund, brokers said, adding “but ginners held on to their stock anticipating further increase in prices.”
“I don’t think spinners could hold the current price line”, predicts a leading broker “along with higher lint prices, the Rs2 per kg increase in polyester fibre prices could further erode their competitiveness on the foreign markets.”
Spinners seem to have decided to go all-out for the floating stock at the current levels but it may be pretty difficult to contain prices as the counter market forces will be at work once the next fortnightly arrival figures are released by the Pakistan Cotton Ginners Association (PCGA) by the first week of next month.
“Both the higher lint and polyester prices in the backdrop of a short crop could hit spinners’ export targets during the current fiscal ending June 30, 2006 as lint could be more expensive in the weeks to come,” market sources said.
The other negative factor, which could cut on mill export margins, was the persistent increase in New York cotton futures making imports more expensive after adding to it allied costs.
However, there is no SOS from the mills and spinners to the government about the unsold stocks of half a million bales held by the TCP to meet any emergency including the crop shortfall.
The TCP last year had procured 1.6m bales as step to support market and out of which 1.1m bales had already been sold to both foreign and local mills.
Official spot rates were raised by Rs25 at Rs2,525 per maund, while New York cotton futures showed a fresh fractional rise of 0.07 and 0.03 cents for both the ruling March and forward May contracts at 56.53 and 57.69 cents per lb respectively.
Ready off-take was active totalling about 15,000 bales as under: 2,000 bales, upper Sindh at Rs2,550 to Rs2,575, 3,000 bales, Bahawalpur at Rs2,575, 5,000 bales, Khanpur at Rs2,550 and 1,000 bales, D.G. Khan also at this rate, 400 bales, each Chani Goth and Mongi Bungalow at Rs2,525 and Rs2,500 respectively.