KARACHI, Feb 26: Cotton market on Tuesday passed through another listless session as spinners again adhered to the sidelines awaiting fresh developments in the backdrop of ginners’ SOS.
Reports that the commerce minister has invited the representatives of the cotton trade, including ginners, spinners and growers to agree on a consensus pricing formula suited to all, floor brokers said.
The commerce minister seem to have taken a notice of last week’s happening in Multan where Pakistan Cotton Ginners Association (PCGA) general body meeting has voted out the sitting chairman for his failure to take steps to ease the situation and made a timely decision to defuse the prevailing tension among the close trading partners, they added.
All the warring parties may be right. Spinners claim falling yarn prices have limited their buying operations, ginners say larger unsold stock of 1.8 million bales has strained liquidity position beyond their enduring capacity.
Although the TCP has raised its procurement prices well above the prevailing market rates at Rs1,855, it has its own quality limitations as it has to sell the stuff on the international markets and could not go all out to bail out the ginners, with an allocation of Rs10 billion.
The unsold stock of 1.8 million bales is roughly placed at Rs20 billion, a big amount, bulk of which has to be paid to growers, the market sources said.
They said the Islamabad meeting might not offer an instant solution of the problem of larger unsold stuff, it would certainly defuse the current tension between the trading partners.
“In a free market, prices are generally fixed by the supply and demand factors,” they said, adding as the commodity is “in over-supply prices are dependent on demand.”
Meanwhile, reports coming from the southern Punjab cotton belt indicate that the TCP has purchased about 50,000 bales and taking delivery on the priority basis.
Ready offtake remained light in the absence of strong mill demand totalled about 3,000 bales as under: 400 bales of Bhiria at Rs1,675 on credit, 400 bales, Bahawalpur at Rs1,500 and 1,900 bales of Alipur at Rs1,550.