KARACHI, July 16: New crop cotton prices on Tuesday declined sharply as some of the leading ginners from the lower Sindh indulged in near-panic selling followed by reports of steady arrivals of phutti into the ginneries.
The weakness was also attributed to the absence of spinners from the market, most of whom remained busy with the tender work to be submitted on Wednesday to the Trading Corporation of Pakistan.
The TCP has invited tenders from the local buyers, including spinners and exporters, for another 20,000 bales, while another tender for foreign buyers is expected to open on Thursday.
“The TCP has stepped up its sales apparently in a bid to sell the entire procured stock of about 0.257m bales at the current higher levels but so far it failed to get competitive bids from the local or the foreign buyers against it quality lint, which is sold at a premium,” says a broker.
According to the market sources, the TCP had already sold well over 0.1m bales and inclined to clear the backlog well before the close of the cotton year on August 31.
“After having purchased lint at much higher rates to support the market when prices had fallen to Rs1,225 early last year, the TCP is not getting viable bids, which could cut its losses,” dealers said.
The TCP has lowered its procurement prices from Rs1,855 and Rs1,955 to Rs1,525 per maund at the fag-end of the season but that bulk of the fine lots have been lifted by the leading spinners.
The current decline in the new crop prices from the lower Sindh ginneries to Rs1,700 per maund from the peak of Rs1,900 owing to selling by larger arrivals of phutti may further affect the TCP sales as buyers now have a choice and alternate sources of supply, the brokers said.
There was, however, no change in the official spot rates but the New York cotton futures continued their slide and fell further by 1.25 and 1.40 cents per lb at 43.49 and 44.90 for both the ruling October and the distant December settlements, respectively. The selling was caused by reports of higher world carryover stocks.
Meanwhile, private sector exporters export sales contracts for another 2,193 bales with the Export Promotion Bureau on July 15, sold to Philippines and some other near eastern countries.
Ready offtake was modest in the absence of spinners as till late in the evening about 1,500 bales of new crop changed hands as under: 200 bales of Sultanabad at Rs1,700 and 1,000 bales of Nawabshah also at Rs1,700.