KARACHI, Aug 7 Sustained buying by spinners helped local cotton market to stay firm on Saturday where prices remained on the higher side. However, devastation caused by rains and floods in cotton growing belt of the Punjab is likely to change the entire cotton scenario.
The expected bumper crop is definitely there but it could be any one's guess that how much damage the flood water, which has now entered into Sindh province, may cause to standing cotton crop.
According to some estimates the flood water in the Punjab has so far damaged phutti (seed cotton) up to one million bales, thereby causing a loss of around Rs25 billion. However, some rough estimates have put the expected total loss to the phutti to the tune of two million bales or Rs50 billion in cash.
Market reports say that spinners are currently in an extremely difficult situation because as raw cotton prices are rising, yarn prices are not moving up in sympathy.
The phutti arrivals during the month of July 2010 had been very encouraging at 0.268 million bales, which is a record because never in the past such a huge quantity of arrivals were reported in a short time.
Spinners having no raw cotton were seen active in replenishing their stocks to meet their immediate future requirement. But rising cotton prices with lower yarn prices could push the spinning industry into crisis, analysts said.
Consequently, Sindh cotton variety was being quoted at around Rs6,100 to Rs6,200 per 40 kg and the Punjab variety between Rs6,900 to Rs7,000 per 40 kg. However, KCA spot rates remained unchanged at Rs6,600.
Cotton analysts fear that more damages could be caused to standing cotton crop in the Punjab once India releases water from its overflowing rivers.
They said that authorities in the Punjab have already started evacuating people from the bed of River Sutlaj because around 600,000 cusecs of water is likely to be released by India in coming days.
On the ready market around 7000 bales were reported to have changed hands on Friday. They are 400 bales, Mirpurkhas at Rs6,050, 200 bales, Shahdadpur at Rs6,100, 200 bales, Sanghar at Rs6,100, 200 bales, Tando Adam at Rs6,100, 600 bales, Khanewal at Rs6,800 to Rs7,000, 600 bales, Bahawalnagar at Rs6,800, 200 bales, Sahiwal at Rs6,800, 200 bales, Mian Channu at Rs6,800, 400 bales, Arifwala at Rs6,800, 200 bales, Kabirwala at Rs6,900, 1000 bales, Burewala at Rs6,800 to Rs6,900 and 200 bales, Depalpur at Rs6,750.