KARACHI, June 5: Lower than market expectations final cotton crop figures sent a wave of optimism among the ginners who immediately raised their asking prices but spinners were worried about future bullish outlook.
What worried spinners most was the steep decline in the unsold stocks lying with ginners, which are claimed to be far below the consumption needs of spinners for the next three months.
“The unsold figure about 0.650m bales though have put the ginners in a commanding position for the remaining months of the current season ending August 31, but will not ensure recouping only a part of mid-season losses suffered on account for falling prices”, a leading broker said.
Spinners are expected to resort to panic buying despite having imported over a million bales as they still need a million bales to see the current season through.
“The price war now appears certain as both spinners and exporters are expected to re-enter the market in the backdrop of the available supplies,” market sources said adding “ginners could be the chief beneficiary of the developing scenario”.
According to final cotton figures released by the Pakistan Cotton Ginners Association (PCGA) on Wednesday, the total arrivals were placed at 10.314m bales, which are substantially lower than the crop estimate of 10.5m bales some weeks back.
They are also lower than the ex-farm production figure of 10.9m bales released by the official crop committee in its meeting held here on Tuesday.
Of the total, spinners have purchased 9.565m bales and exporters 0.106m bales and slightly above 0.250m bales by the Trading Corporation of Pakistan (TCP).
Although the crop figure showed a modest rise of 1.26 per cent over the last year’s comparable total it was far below the local demand as about a 100 sick units have resumed production from the current year.
Spinners and mills were active buyers after the release of final crop figures but ginners raised their asking prices keeping in view the expected pressure on local supplies and higher New York cotton rates above 40 cents per lb.
Official spot rates were upped by Rs25 per maund immediately after the final crop figures reached the market and dealers predict further rise in the coming session.
After several lean sessions, ready offtake rose to 6,000 bales, the following being some of the notable deals: 1,895 bales, Shahdadpur at Rs1,600, 600 bales, Nayabad at Rs1,450, 540 bales, Multan at Rs1,525, and 305 bales at Rs1,700, 400 bales, Shujabad at Rs1,650, and 2,000 bales, Sardar Lund at Rs1,795.