KARACHI, June 13: Cotton trade gave a mixed reaction to the new cotton policy as it is claimed to be heavily tilted in favour of growers and spinners, leaving the other sectors at the mercy of counter market forces.
The major associations of growers were demanding that new season’s procurement price should be fixed around Rs900 per 40 kg in line with the increase in inputs, including fertiliser and pesticides, dealers said, adding “the increase of Rs20 per kg though is modest, growers are expected to get more as the fall in acreage could well mean lower production in the new season.”
Most worried appears to be the ginners, who were unhappy with the role played by the TCP during the current season as a market stabilizer as it failed to bail them out from the impasse of larger unsold stocks.
The Karachi Cotton Association was silent on the new cotton policy and is expected to come out with an official reaction, but some insiders said it was opposed to a free cotton trade policy, allowing exporters to enter the market after the new season starts.
“In normal situation, exporters and the TCP should be allowed to enter the export market after assessing the crop size and having taken care of the local demand,” some insiders said.
The early entry of all the participants sometime adds to speculative tendencies and undue price flare-up fuelled by negative and positive reports about the size of the crop.
Spinners were, however, happy over the free trade policy, an option for them to buy from anywhere in the world at competitive prices as they did during the current season and purchased 1.3m bales at much lower rates.
Meanwhile, there was a relative quiet in physical trading as ginners and spinners were assessing the likely impact of the new policy on prices before making fresh commitments.
Official spot rates remained pegged at the previous close, but New York cotton future rose sharply by 1.12 and 0.98 cents per lb for both the ruling July and the forward October settlements at 40.07 and 42.23 cents, respectively, followed by reports of pressure on nearby supplies.